Central investment subsidy does not reduce asset cost for depreciation; assessee's depreciation claim was upheld.

Central investment subsidy was held not to reduce the actual cost or written down value of assets for depreciation purposes. The Tribunal applied the settled depreciation principle that such subsidy does not form a deduction from asset cost, and it held that a later ruling on whether subsidy is revenue or capital receipt did not alter that position. The assessee's claim to depreciation without reducing the subsidy from the asset base was upheld.

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Issues: Whether the central investment subsidy received by the assessee was required to be deducted from the cost of the assets or written down value for the purpose of allowing depreciation.

Analysis: The Tribunal followed the settled position that, for depreciation purposes, a subsidy of this nature does not reduce the actual cost or written down value of the assets. The later decision concerning the character of subsidy as revenue or capital receipt did not displace the earlier ruling governing deduction from asset cost under the depreciation provisions.

Conclusion: The central subsidy was not deductible from the cost of assets or written down value while computing depreciation, and the finding in favour of the assessee was upheld.

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