COMMISSIONER OF INCOME TAX vs. GUJARAT METAL CAST P LTD

ITR/303/1987HC GujaratGJHC24012033198719 July 2001Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE D.A.MEHTA2 pages
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What were the facts?

This case involves an Income Tax Reference filed by the revenue (Commissioner of Income Tax) at the instance of the Income Tax Appellate Tribunal, Ahmedabad Bench 'A'. The reference was made under Section 256(1) of the Income-tax Act, 1961, for the court's opinion on a specific question of law. The assessee is Gujarat Metal Cast Pvt. Ltd. The dispute concerns whether the assessee was entitled to depreciation, investment allowance, and relief under Section 80J on the cost of assets without reducing the subsidy received from the Government. The judgment does not specify the assessment year(s) or the amount in dispute.

What did the High Court hold?

The High Court, per Mr. Justice A.R. Dave, answered the referred question in the affirmative, in favour of the assessee and against the revenue. The court's decision was based on the fair submission by both learned advocates that the issue had already been authoritatively decided by the Hon'ble Supreme Court in the case of CIT v. P.J. Chemicals Ltd., reported in 210 ITR 830. The ratio decidendi is that government subsidies received for acquiring assets do not reduce the actual cost of those assets for the purpose of claiming depreciation, investment allowance, and other statutory reliefs. The reference was disposed of accordingly with no order as to costs.

What were the issues?

1. Whether the assessee was entitled to depreciation on the cost of assets without reducing the subsidy received from the Government, as per Section 32 of the Income-tax Act, 1961? 2. Whether the assessee was entitled to investment allowance on the cost of assets without reducing the subsidy received from the Government, as per Section 32A of the Income-tax Act, 1961? 3. Whether the assessee was entitled to relief under Section 80J on the cost of assets without reducing the subsidy received from the Government? Assessee's Contention: The assessee argued that they were entitled to claim depreciation, investment allowance, and relief under Section 80J on the full cost of assets, without deducting the government subsidy received. Revenue's Contention: The revenue contended that the subsidy received from the government should be deducted from the cost of assets before calculating depreciation, investment allowance, and relief under Section 80J.

Which sections of the Income-tax Act were involved?

Section 256(1),Section 32,Section 32A,Section 80J

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 303 of 1987

For Approval and Signature:

Hon'ble MR.JUSTICE A.R.DAVE and Hon'ble MR.JUSTICE D.A.MEHTA

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge? : NO

The order continues below.

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