Law:

Section:

Section 32, read with section 256 of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of - Assessment year 1977-78 - Whether where Tribunal had not entertained assessee's ground of appeal regarding non deductibility of capital subsidy in arriving at actual cost of assets for purpose of calculating depreciation, a referable question of law did arise from its order - Held, yes FACTS On second appeal the assessee company contended before the Tribunal that the ITO erred in deducting the amount of capital subsidy from the cost of fixed assets for allowing depreciation. The Tribunal did not allow the assessee to raise that contention and dismissed the appeal. The reference application filed by the assessee was also rejected. On an application under section 256(2): HELD The question whether the Tribunal was justified in not entertaining the ground of appeal regarding the deductibility of capital subsidy in arriving at the actual cost of the assets for the purpose of calculating depreciation, was a question of law which arose out of order of the Tribunal. Accordingly, the Tribunal was directed to refer the same. A.M. Mathur for the Applicant. R.C. Mukati for the Respondent. JUDGMENT G.G. Sohani, Actg., C.J.-This is an application under section 256(2) of the Income-tax Act, 1961. The material facts giving rise to this application, briefly, are as follows: Aggrieved by the order of assessment for the assessment year 1977-78, the assessee preferred an appeal before the Commissioner of…

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