Commissioner of Income Tax vs Premier Mills Ltd.

Somasundaram, J.—This is a petition filed by the Revenue u/s 256(2) of the Income Tax Act, 1961, seeking a direction to the Tribunal to

state the case and refer the following question of law for the decision of this court :

Whether, on the facts and in the circumstances of the case and in view of section 43(1) of the Income Tax Act, the Tribunal is justified in holding

that the amount of capital subsidy received by the assessee would not go to reduce the cost of assets for the purpose of allowing depreciation and

investment allowance ?

Though the above question is covered by the decision in Srinivas Industries Vs. Commissioner of Income Tax, , the Supreme Court has granted

special leave to the assessee against the decision of the Punjab and Haryana High Court on an identical question, which decision is in CIT v. Janak

Steel Tubes (Pvt.) Ltd. [1989] 179 ITR 536. Similarly, in a SLP filed by the Department against the judgment of the Andhra Pradesh High Court

in Commissioner of Income Tax Vs. Godavari Plywoods Ltd., involving an identical question of law, the Supreme Court has granted special leave

to the Department to appeal against that said decision by order dated April 22, 1991, in SLP (Civil) Nos. 1238 and 1239 of 1989 and 5571 of

1991 (see [1991] 189 ITR 119). Under these circumstances, we are inclined to hold that a referable question of law does arise out of the order of

the Tribunal. Therefore, the Tribunal is directed to state the case referring the aforesaid question of law for the decision of this court. No costs.