Case Law Details
Jindal Steel & Power Limited Vs Addl. CIT (ITAT Delhi)
Facts in brief are that the assessing officer has, in the assessment order, while holding the impugned subsidy as revenue receipt, simultaneously reduced the same from cost of fixed assets, while applying provisions of Explanation 10 to section 43(1) of the Act resulting in double taxation of same amount of subsidy.
It has been submitted by the assessee that even assuming, without admitting, that the subsidy received is a revenue receipt, the action of the assessing officer in reducing such subsidy from cost of fixed assets by applying the provisions of Explanation 10 to section 43(1) of the Act is patently erroneous as the same resulted in double taxation of the very same amount, viz., (i) by bringing the amount received to tax as income; and (ii) by reducing the claim of depreciation on account of reduction of the very same amount from the cost of the depreciable assets. Ld. Counsel submitted that the assessing officer, , cannot blow hot and cold in the same breadth and, therefore, the action of the assessing officer in making reduction of the amount of subsidy from the cost of fixed assets was not called for and accordingly rightly reversed by the CIT(A).
Further, if its to be held that the subsidy received is in the nature of capital receipt, even then, provisions of Explanation 10 to section 43(1) of the Act are not applicable, for the following reasons:
> Explanation 10 to section 43(1) of the Act, only applies in a case where any portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Government/ State Government/ any other authority/ any other person in the form of subsidy or grant or reimbursement, etc. The said Explanation 10 reads as under:
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