Government subsidy does not reduce asset cost for depreciation, development rebate, and section 80J computation.

A Central Government subsidy was held not to reduce the actual cost of assets for computing depreciation, development rebate, and deduction under section 80J of the Income-tax Act, 1961. The earlier binding view on the same point was followed, and the Tribunal's conclusion that the subsidy could not be deducted from asset cost was upheld. The operative principle was that the subsidy did not form a basis for lowering actual cost in these computations, so the issue was answered against the Revenue and in favour of the assessee.

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Issues: Whether subsidy received from the Central Government was liable to be deducted from the actual cost of the assets for computing depreciation, development rebate, and deduction under section 80J.

Analysis: The earlier decision on the same point had held that the subsidy received by the assessee did not reduce the cost of the asset for purposes of depreciation, development rebate, and deduction under section 80J of the Income-tax Act, 1961. Following that binding view, the Tribunal's conclusion that the subsidy could not be deducted from the asset cost was upheld.

Conclusion: The subsidy was not deductible from the actual cost of the assets; the question was answered in the affirmative, against the Revenue and in favour of the assessee.

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