Assistant Commissioner of Vs. Tushar Harit (P) Ltd. - Court Judgment

Excerpt:

.....vs. p.j.chemicals (1994) 210 itr 830 ( sc), and rajasthan high court, the department still objects to accept the decision for the reason that the facts are not fully gone into. further, the learned departmental representative contended that after p.j. chemical's decision, the hon'ble supreme court had the occasion to consider in a later decision in case of sahney steel & press works ltd. vs. cit (1997) 228 itr 253 (sc) and the ratio of the said decision appears to be in conflict with the earlier decision given in p.j. chemical's case (supra).3. the learned counsel for the assessee countered the argument of the learned departmental representative and contended that sahney steel's case (supra) is clearly distinguishable. the question for consideration in that case was limited only to decide whether the subsidy is to be allowed as revenue receipt or capital receipt. but it was not considered whether it is deductible while working out wdv for the purpose of depreciation under s. 43(1) and, therefore, p.j. chemical's case (supra) was not at all disturbed since there was no occasion to deal with the same. thus the learned counsel for the assessee contended that the point at.....

Judgment:

1. This is a Revenue's appeal for asst. yr. 1989-90 against the order of CIT(A), dt. 18th January, 1994. The only point for consideration in this appeal is whether the central subsidy granted to the assessee, which is a company and which is running a hotel towards central investment subsidy of Rs. 7,63,000 are liable to the deducted from the WDV while claiming depreciation.

2. On behalf of the Department, it is contended that the matter though decided in favour of the assessee by following the case of CIT vs. P.J.Chemicals (1994) 210 ITR 830 ( SC), and Rajasthan High Court, the Department still objects to accept the decision for the reason that the facts are not fully gone into. Further, the learned Departmental Representative contended that after P.J. Chemical's decision, the Hon'ble Supreme Court had the occasion to consider in a later decision in case of Sahney Steel & Press Works Ltd. vs. CIT (1997) 228 ITR 253 (SC) and the ratio of the said decision appears to be in conflict with the earlier decision given in P.J. Chemical's case (supra).

3. The learned counsel for the assessee countered the argument of the learned Departmental Representative and contended that Sahney Steel's case (supra) is clearly distinguishable. The question for consideration in that case was limited only to decide whether the subsidy is to be allowed as revenue receipt or capital receipt. But it was not considered whether it is deductible while working out WDV for the purpose of depreciation under s. 43(1) and, therefore, P.J. Chemical's case (supra) was not at all disturbed since there was no occasion to deal with the same. Thus the learned counsel for the assessee contended that the point at issue applicable to the facts of the case is as applicable in P.J. Chemical's case (supra) and not in Sahney Steel's case (supra).

4. After considering the arguments of both sides, we are inclined to agree with the arguments advanced by the learned counsel of the assessee. We hold, by following (1994) 210 ITR 830 (SC) (supra), that the CIT(A) had rightly refused to deduct the central subsidy from the cost of assets/WDV while granting depreciation or ordering depreciation to be allowed to the assessee. Therefore, we fail to see merit in the Revenue's appeal, which is dismissed.

5. In the grounds of appeal the Revenue had taken stand that a mention is made about Punjab & Haryana High Court decision in CIT vs. Jindal Bros Rice Mills (1989) 179 ITR 470 (P&H) and a SLP having been taken against the same to the Supreme Court. It is stated by the learned Departmental Representative that the SLP was dismissed following (1994) 210 ITR 830 (SC) and, therefore (1989) 179 ITR 470 (P&H) (supra) does not advance the case of the Revenue.