2004 (8) TMI 38

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....sment year 1978-79 by adopting the W.D.V. as per the assessment order for the assessment year 1977-78 dated June 3, 1978?" Briefly stated, the facts giving rise to the present reference are as follows: The present matter relates to the assessment year 1978-79. The respondent-assessee is a registered firm and ran a cold storage, called M/s. Rakesh Cold Storage. It maintained its account on mercantile basis. It purchased a generator for Rs. 2,18,035 on November 17, 1974, falling in the assessment year 1976-77. The Income-tax Officer had allowed depreciation of Rs. 21,803.00 at 10 per cent, on the total cost of the generator. Subsequently, it was found that the respondent-assessee had received subsidy, sanctioned vide order dated October....

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....n such reduced amount. This order was cancelled by the Appellate Assistant Commissioner following the order of the Tribunal dated December 26, 1980. Departmental appeals against this order were dismissed by the Tribunal vide order dated February 11, 1983, against which reference applications under section 256(1) of the Act were filed by the Department and the matter was referred on April 6, 1984. For the assessment year 1978-79 (account period being December 24, 1976 to December 31, 1977), original assessment was made on June 23, 1979 wherein depreciation was allowed as under: ---------------------------------------------------------------------------               &....

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....nbsp;                 1,39,885.00 Less: Depreciation for the assessment year 1976-77 at 10%       13,988.00                                                             ---------------                           &n....

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....x Officer in the assessment order dated June 3, 1978 would not be changed or varied. Viewed thus, we uphold the order of the Appellate Assistant Commissioner." We have heard Shri Shambhoo Chopra, learned counsel for the Revenue. Nobody has put in appearance on behalf of the respondent-assessee. The question as to whether the amount of subsidy received should be deducted while working out the cost of a capital asset, has been considered by the hon'ble Supreme Court in the case of CIT v. P.J. Chemicals Ltd. [1994] 210 ITR 830. The hon'ble Supreme Court has held as under (headnote): "Where Government subsidy is intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries, the specified percent....