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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
S.P. Bharucha and Shivaraj V. Patil, JJ.
Commissioner of Income Tax —Appellant
Vs.
Progressive Engineering and Annapurna Roller Flour Mills Pvt. Ltd. —Respondent
Income Tax Referred Cases Nos. 33 of 1991 and 17 of 1992
Decided on : 05-03-1992
Subsidy - Taxation - Depreciation and Investment Allowance - The court held that the subsidy received by the assessee should not be deducted from the cost of the capital asset for the purpose of grant of depreciation and investment allowance.
Fact of the Case:
The court addressed a reference at the instance of the Revenue regarding the deduction of subsidy received by the assessee from the cost of the capital asset for the purpose of grant of depreciation and investment allowance.
Finding of the Court:
The court found in favor of the assessee, stating that the subsidy received should not be deducted from the cost of the capital asset for the purpose of grant of depreciation and investment allowance, in line with the decision in Commissioner of Income Tax Vs. Diamond Dies Manufacturing Corporation Ltd., (1988) 172 ITR 655 KAR.
Issues: The issue was whether the subsidy received by the assessee should be deducted from the cost of the capital asset for the purpose of grant of depreciation and investment allowance.
Ratio Decidendi: The court's decision was influenced by the interpretation that the subsidy should not be deducted from the cost of the capital asset, as established in the referenced case law.
Final Decision: The court answered the question in the affirmative and in favor of the assessee, in line with the decision in Commissioner of Income Tax Vs. Diamond Dies Manufacturing Corporation Ltd., (1988) 172 ITR 655 KAR.
S.P. Bharucha J.--This is a reference at the instance of the Revenue. The question that is referred reads thus :
"Whether, on the facts and circumstances of the case the Appellate Tribunal is right in law in holding that the subsidy received by the assessee should not be deducted from the cost of the capital asset for the purpose of grant of depreciation and investment allowance ?"
2. The matter is on board today only because the notice to the respondent has not yet been returned, but Mr. H. Raghavendra Rao, learned counsel for the Revenue, fairly states that the question is to be answered in the affirmative and in favour of the assessee in view of the decision of this court in Commissioner of Income Tax Vs. Diamond Dies Manufacturing Corporation Ltd., (1988) 172 ITR 655 KAR Accordingly, the question is answered in the affirmative and in favour of the assessee.
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