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Judgment
V. K. SINGHAL, J. :
The Tribunal has referred the following question of law arising out of its order dt. 17th Nov., 1986 in respect of asst. yr. 1981-82 under s. 256(1) of the IT Act, 196 :
"Whether the Tribunal was right in holding that the amount of subsidy received from the Central/State Government is not to be deducted from the cost of plant and machinery, building etc. for working out the cost for the purpose of depreciation, investment allowance, etc."
The matter with regard to the interpretation of s. 43(1) of the IT Act, for determining the actual cost of plant, machinery and building etc. was considered by this Court in the case of Commissioner of Income Tax Vs. Ambica Electrolytic Capacitors Pvt. Ltd. and Others, and it was held that the amount of subsidy received by the assessee from the Government is not to be deducted from the cost of the plant, machinery and building etc. It was also held by this Court that the subsidy or investment subsidy given by the Government for the development of industries in backward areas cannot be deducted from the actual cost for purpose of depreciation or investment allowance.
In view of the above decision, the Reference is answered in favour of the assessee and against the Revenue. No order as to costs.