Law:

Section:

Section 43(1) of the Income-tax Act, 1961 - Actual cost - Whether amount of capital subsidy received by assessee-company from State Government was not deductible from cost of assets under section 43(1) for purpose of allowing depreciation and investment allowance - Held, yes Facts During the relevant assessment year the assessee-company received a capital subsidy of certain amount from the State Government in pursuance of certain scheme of the Government. While framing assessment, the ITO reduced the cost of fixed assets by the amount of aforesaid subsidy for the purpose of allowing depreciation. On appeal, the Commissioner (Appeals) held that the ITO was not right in deducting the amount of capital subsidy from the cost of assets for the purpose of allowing depreciation. On appeal by the revenue, the Tribunal upheld the order of the Commissioner (Appeals). On reference : Held Following the decision in the case of CIT v. Bhandari Capacitors (P.) Ltd. [1987] 168 ITR 647 ( MP) in the instant case the Tribunal was justified in holding that the amount of capital subsidy received by the assessee from theState Government was not deductible from the cost of the assets for allowing depreciation and investment allowance under section 43(1 ). Section 35B of the Income-tax Act, 1961 - Export markets development allowance - Whether on facts assessee-company was entitled to weighted deduction under section 35B in respect of expenditure incurred in making payment by way of commission to Indian agents - Held, yes Facts For the relevant assessment year, the assessee-company claimed deduction under section 35B in respect of the expenditure incurred in making payment by way of commission to Indian agents. The ITO disallowed the assessee's claim. On second appeal the Tribunal allowed assessee's claim. On reference : Held In the instant case, on consideration of the material produced before the Tribunal, the Tribunal was satisfied that the assessee was entitled to weighted deduction in respect of the commission paid to the Indian agents. Now, the reference was not sought by the revenue on the question as to whether there was any evidence to support the finding of the Tribunal…

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