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of <h1>Tribunal Upholds Decision on Depreciation Expenditure</h1> <h3>Commissioner Of Income-Tax Versus Malwa Oxygen And Industrial (Private) Limited</h3> Commissioner Of Income-Tax Versus Malwa Oxygen And Industrial (Private) Limited - [1997] 224 ITR 72 Issues:1. Deductibility of capital subsidy from the cost of assets for depreciation.2. 100% depreciation on pre-production expenditure on gas cylinders.3. Justification of canceling the order of the Commissioner of Income-tax when the assessment was prejudicial to the interests of the Revenue.Analysis:The judgment pertains to an application under section 256(2) of the Income-tax Act, 1961, seeking direction to the Tribunal to state the case and refer proposed questions of law arising from an order dated June 28, 1991. The issues raised were the deductibility of capital subsidy from the cost of assets for depreciation and the justification of 100% depreciation on pre-production expenditure on gas cylinders. The Commissioner of Income-tax considered the order erroneous and prejudicial to the Revenue's interests, leading to an appeal before the Tribunal. The Tribunal allowed the appeal, prompting the applicant to file an application under section 256(1) of the Act, which was rejected. The applicant then filed the current application.The Tribunal held that the Income-tax Officer correctly computed depreciation without deducting the capital subsidy from the cost of assets, citing relevant case law. Regarding the cost of gas cylinders, the Tribunal referred to a Supreme Court decision emphasizing that 'actual cost' includes all expenses incurred to bring the asset into existence and operational. The Tribunal found that the Commissioner of Income-tax erred in considering the gas cylinders as complete units without installation expenses. Consequently, the Tribunal deemed the Commissioner's order under section 263 of the Act as baseless and allowed the appeal based on the aforementioned decisions.The application under section 256(1) was rejected on the basis that the issues were covered by the previous decisions cited by the Tribunal and did not raise any referable questions of law. The Court concurred with the Tribunal's decision, finding no error in refusing to state the case due to the existing legal precedents. As a result, the application was dismissed as lacking merit, with counsel's fee for the applicant's counsel allowed at Rs. 750 if certified.
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