Case Law Details
Spectrum Coal & Power Ltd. Vs. ACIT (ITAT Mumbai)
From reading of Explanation 10 to section 43(1) it is explicitly clear that if a portion of cost of an asset as acquired, had been met directly or indirectly by Central Government or State Government or any authority established under any law or by any other person in the form of a subsidy or a grant or reimbursement, said subsidy grant or reimbursement as was relatable to the asset would be reduced out of the actual cost of the asset to assessee. In the instant case, it was apparent from the terms of agreement between assessee and ICICI that the grant was to create an institutional environment for was made by ICICI. Such grant even if considered as subsidy as alleged by AO, however, the same was not for a specific plant and machinery. Also, sovereign could not be regarded as Central Government for State Government or any authority established by any law in India or any other person, even financial assistance given by ICICI could not be taken as cost met directly or indirectly by any other person. Accordingly, explanation 10 to section 43(1) did not get attracted and AO was directed to allow depreciation without deducting the amount of the conditional grant received by assessee from the actual cost/WDV of plant and machinery.
Full Text of the ITAT Order is as follows:-
All these appeals since relate to the same assessee, therefore, they are being disposed of by this common order.
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