https://www.taxtmi.com/caselaws?id=783888 The dominant issue was whether a State capital subsidy received for setting up a small hydro power project constituted a receipt toward the cost of depreciable assets warranting reduction of actual cost and consequent restriction of depreciation. Applying the "purpose test," the Tribunal held the subsidy scheme's conditions showed the support was to encourage entrepreneurs, not to meet asset cost, as release could be deferred until successful commissioning and generation. It further held that s. 2(24)(xviii) had only prospective operation and did not govern the relevant AY. Consequently, the AO's reduction of asset cost and disallowance of depreciation (affirmed by CIT(A)) was set aside and the depreciation disallowance was deleted. en-us Fri, 19 Dec 2025 00:00:00 +0530 Wed, 24 Dec 2025 07:51:28 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=783888 The dominant issue was whether a State capital subsidy received for setting up a small hydro power project constituted a receipt toward the cost of depreciable assets warranting reduction of actual cost and consequent restriction of depreciation. Applying the "purpose test," the Tribunal held the subsidy scheme's conditions showed the support was to encourage entrepreneurs, not to meet asset cost, as release could be deferred until successful commissioning and generation. It further held that s. 2(24)(xviii) had only prospective operation and did not govern the relevant AY. Consequently, the AO's reduction of asset cost and disallowance of depreciation (affirmed by CIT(A)) was set aside and the depreciation disallowance was deleted. Case-Laws Income Tax Fri, 19 Dec 2025 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=783888