BHAGABATI PRASAD BANERJEE J.

( 1 ) THE Tribunal has referred to this court the following question of law under Section 256 (1) of the Income-tax Act, 1961 ("the Act") :"whether, on the facts and in the circumstances of the case and on a correct interpretation of Section 43 (1) of the Income-tax Act, 1961, the Tribunal was right in holding that a sum of Rs. 11,22,102 received by the assessee as subsidy under the 'central Outright Grant or Subsidy Scheme, 1971,' should not be deducted from the cost of the capital assets mainly plant and machinery and factory building ?"

( 2 ) THE assessment year involved is 1980-81 for which the relevant accounting year ended on June 30, 1979.

( 3 ) THE facts of this case, as is evident from the statement of case, are as follows :"the assessee is a private limited company. It derives income from the business in the manufacture and sale of raw silk fabrics. The assessment year involved in this reference is 1980-81, the relevant previous year was the year ending June 30, 1979. Under the Central Outright Grant or Subsidy Scheme, 1971, introduced by the Central Government and implemented by different State Governments, the assessee received certain sum

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