Commissioner of Income Tax vs Sriram Oil Extractions

On an application filed u/s 256(2) of the income tax Act, 1961 (''the Act''), the assessee prays that the Tribunal be directed to refer the following question, as set-out in para 6 of the reference application for the opinion of this Court: Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in upholding the decision of the Commissioner (Appeals), who has directed the Assessing Officer to allow depreciation by taking into consideration the written down value or the cost of the assets as the case may be and without making any deduction on account of the amount of subsidy therefrom ?

The admitted facts are that the subsidy has been given as incentive for the establishment of the factory in backward area. Their Lordships of the Apex Court in the case of Commissioner of Income Tax, Hyderabad Vs. M/s. P.J. Chemicals Ltd., have taken the view that if the subsidy is given by the Government as incentive for setting-up of industry in the backward area, that amount of subsidy cannot be deducted in computing the actual cost of assets u/s 43(1) of the Act.

Considering the view of their Lordships in the case of P.J. Chemicals Ltd. (supra), no case is made out for notice. The application filed u/s 256(2) is rejected.