Industrialisation subsidy and depreciation cost: subsidy not deducted from plant and machinery cost for depreciation.

Industrialisation subsidy was treated as an incentive to promote investment, not as a contribution towards the cost of any specific plant or machinery. Depreciation was therefore to be computed on the gross cost actually incurred, without reducing the subsidy from the asset cost. Where two interpretations were possible, the view favourable to the assessee was preferred. The subsidy was not deductible from the cost of plant and machinery for depreciation purposes, and the issue was decided in favour of the assessee.

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Issues: Whether subsidy received from the Government for industrialisation was required to be deducted from the cost of plant and machinery while computing depreciation.

Analysis: The subsidy was held to be granted to promote industrialisation and not as a contribution by the Government towards the cost of any specific asset. The Tribunal followed its consistent view that depreciation must be computed on the gross cost actually incurred on the plant and machinery without reducing the subsidy amount. Support was also drawn from the view that both constructions were possible, but the interpretation favourable to the assessee was preferred.

Conclusion: The subsidy was not deductible from the cost of plant and machinery for depreciation purposes, and the issue was decided in favour of the assessee.

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