Commissioner of Income Tax vs Goenka Polypack (P) Ltd.

The Income Tax Appellate Tribunal, Allahabad, has referred the following question of law u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as ''the Act'') for opinion to this Court:

"Whether, on the facts and in the circumstances of the case, the ITAT is correct in law in holding that the subsidy of Rs. 3,64,416 was given to the industry as a whole to remove the industrial backwardness of the region in selected districts and would not go to reduce the cost of the assets for the purpose of sections 32 and 32A of the Income Tax Act, 1961?"

The present reference relates to the assessment year 1983-84.

We have heard Sri Shambhoo Chopra, learned standing counsel for the revenue. Nobody has appeared on behalf of the respondent-assessee.

In view of the decision of the Apex Court in the case of Commissioner of Income Tax, Hyderabad Vs. M/s. P.J. Chemicals Ltd., , the amount of subsidy received by the respondent cannot be deducted while working out the actual cost for the purposes of sections 32 and 32A of the Act. We, accordingly, answer the question referred to us in the affirmative, i.e., in favour of the assessee and against the revenue. However, there shall be no order as to costs.