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Section 43(1) of the Income-tax Act, 1961 - Actual cost Amount of subsidy cannot be reduced to arrive at actual cost of assets under section 43(1) In view of the law laid down by the Apex Court in CIT v. P.J. Chemicals Ltd. [1994] 121 CTR (SC) 201, the amount of subsidy cannot be reduced to arrive at the actual cost of assets under section 43(1). Ms. Vandana Kuthiala for the Applicant. Atulpiingan and Amit S. Chandel for the Respondent. JUDGMENT The following two questions had been referred for the opinion of this court: "1. R. A. No. 286 Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in allowing a sum of Rs. 67,237 paid on account of rent of guest house maintained by the assessee when there is specific provision for disallowance under section 37(4) of the Income-tax Act, 1961? 2. R. A. No. 287 Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in upholding the decision of the first appellate authority in directing the Assessing Officer not to reduce the amount of subsidy to arrive at the actual cost of assets under section 43(1) of the Income-tax Act, 1961, for allowing depreciation?'' The first question is squarely covered by a judgment of the apex court in Britannia Industries Ltd. v. CIT [2005] 278 ITR 546 (SC) ; [2006] 1 SCC 646, where in paragraph 29 (page 657) the apex court held as under (page 558) : "The only question which we are called upon to consider in the instant case is whether the expression 'premises and buildings' referred to in sections 30 and 32 and used for the purposes of business or profession would include within its scope and ambit the expression 'residential accommodation including any accommodation in the nature of a guest house' used in sub-sections (3), (4) and (5) of section 37 of the Act. While the two expressions can be similarly interpreted, a distinction has been sought to be introduced for the purposes of section 37 by specifying the nature of building to be a guest house. In our view, the intention of the Legislature appears to be clear and unambiguous and was intended to exclude the expenses towards…

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