2018 (5) TMI 127

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..../- made on account of depreciation on capital subsidy in the facts and circumstances of the case. 3. After hearing both the parties, we find that the issue raised in the appeal is covered by the order dt. 02-04-2014, copy of the same is on record, in assessee's own case in ITA No. 1398/Kol/2011 for the A.Y 2007-08, wherein the Tribunal following the decision of the Hon'ble Supreme Court in the case of P.J. Chemicals Ltd upheld the order of the CIT-A in allowing the claim on depreciation on capital subsidy. The ld. AR submits that the said order was challenged by the appellant revenue before the Hon'ble High Court of Calcutta, wherein the Hon'ble High Court of Calcutta was pleased to dismiss the question of law framed by the revenue in ch....

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.... amount of subsidy received from the actual cost/WDV of the fixed assets while claiming depreciation. It is also a fact that revenue during scrutiny assessments of the assessee for A.Y 2003-04 and 2004-05, the above stated subsidy was considered as capital receipt accepting the contention of the assessee. For the sake of consistency also the AO should not have managed the stand now. Even Hon'ble Supreme Court in the case of CIT vs. P.J. Chemicals Ltd (1994) 210 ITR 830(SC) has considered this issue and held that where Government subsidy is intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries, the specified percentage of the fixed capital cost, which the basis for determining the subsidy, bei....

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....ny authority established under any law or by any other person, in the form of subsidy or grant or reimbursement ( by whatever name called), then, so much of the cost as is relatable to such subsidy or grant or reimbursement shall not be included in the actual cost of the asset to the assessee. It is further, provided thereunder that where such subsidy or grant or reimbursement of such nature that it cannot be directly relatable to the asset acquired, so much of the amount which bears to the total subsidy or reimbursement or grant the same proportion as such asset bears to all the assets in respect of or with reference to which the subsidy or grant or reimbursement is so received, shall not be included in the actual cost of the asset to the ....