CIT v. P.J. Chemicals Ltd.

210 ITR 830Supreme Court of India1994#622 most cited

What is CIT v. P.J. Chemicals Ltd. authority for?

This Supreme Court decision clarifies the conditions under which a capital subsidy received by an assessee should be reduced from the 'actual cost' of an asset for computing depreciation under Section 43(1) of the Income-tax Act, depending on whether the subsidy directly meets the cost of the asset.

158

judgments rely on this decision, according to BharatTax’s citation analysis of 292,668 Indian tax judgments — from 2007 to 2026.

Also referred to as

CIT v. P.J. Chemicals Ltd. · P.J. Chemicals · section 43(1) · actual cost · capital subsidy · reduction from cost of assets · depreciation allowance · section 32 · written down value · purpose of subsidy

Also reported as

121 CTR 20176 Taxmann 611

Sections most often in play

Section 43(1)Section 143(3)Section 32 Section 2(24)(xviii)Section 143(2)Section 153A Section 234B Section 234C

Issues it is cited on

section 2(24)(xviii)section 32(1)(i)section 43(1)initial assessment year section 32(1)(iia)section 80h minimum alternate tax written down value block of assets section 43a section 143(1)(a)(ii)section 80hh

Judgments citing CIT v. P.J. Chemicals Ltd.

DCIT, CENTRAL CIRCLE , GHAZIABAD vs. AMRIT BANASPATI COMPANY LTD., NOIDA

Appeals are partly allowed in the foregoing terms

ITA 4925/DEL/2018[2012-13]Status: DisposedITAT Delhi13 Mar 2026AY 2012-13

Bench: Shri Satbeer Singh Godara & Shri M. Balaganesh

Section 143(3)Section 43(1)

…in as much as the subsidy has not been granted for meeting cost of any asset but for larger public interest of industrial development of the State of Punjab. 17. An identical issue was considered by the Hon'ble Supreme Court in the case of P.J. Chemicals Ltd. 210 ITR 830. In that case, the assessee had received a capital subsidy, which was claimed as capital receipt, not exigible to Income-tax. The Assessing Officer held that such subsidy is liable to be reduced form the cost of assets, in terms of the provisions of section 43(1) of the Act. The matter travelled upto the Hon'ble Supreme Court and the Hon'ble Supr…

DCIT, CENTRAL CIRCLE , GHAZIABAD vs. AMRIT BANASPATI COMPANY LTD., NOIDA

Appeals are partly allowed in the foregoing terms

ITA 4923/DEL/2018[2010-11]Status: DisposedITAT Delhi13 Mar 2026AY 2010-11

Bench: Shri Satbeer Singh Godara & Shri M. Balaganesh

Section 143(3)Section 43(1)

…in as much as the subsidy has not been granted for meeting cost of any asset but for larger public interest of industrial development of the State of Punjab. 17. An identical issue was considered by the Hon'ble Supreme Court in the case of P.J. Chemicals Ltd. 210 ITR 830. In that case, the assessee had received a capital subsidy, which was claimed as capital receipt, not exigible to Income-tax. The Assessing Officer held that such subsidy is liable to be reduced form the cost of assets, in terms of the provisions of section 43(1) of the Act. The matter travelled upto the Hon'ble Supreme Court and the Hon'ble Supr…

AMRIT BANASPATI COMPANY LTD.,NOIDA vs. DCIT, CENTRAL CIRCLE , GHAZIABAD

Appeals are partly allowed in the foregoing terms

ITA 3434/DEL/2018[2012-13]Status: DisposedITAT Delhi13 Mar 2026AY 2012-13

Bench: Shri Satbeer Singh Godara & Shri M. Balaganesh

Section 143(3)Section 43(1)

…in as much as the subsidy has not been granted for meeting cost of any asset but for larger public interest of industrial development of the State of Punjab. 17. An identical issue was considered by the Hon'ble Supreme Court in the case of P.J. Chemicals Ltd. 210 ITR 830. In that case, the assessee had received a capital subsidy, which was claimed as capital receipt, not exigible to Income-tax. The Assessing Officer held that such subsidy is liable to be reduced form the cost of assets, in terms of the provisions of section 43(1) of the Act. The matter travelled upto the Hon'ble Supreme Court and the Hon'ble Supr…

AMRIT BANASPATI COMPANY LTD.,NOIDA vs. DCIT, CENTRAL CIRCLE , GHAZIABAD

Appeals are partly allowed in the foregoing terms

ITA 3433/DEL/2018[2011-12]Status: DisposedITAT Delhi13 Mar 2026AY 2011-12

Bench: Shri Satbeer Singh Godara & Shri M. Balaganesh

Section 143(3)Section 43(1)

…in as much as the subsidy has not been granted for meeting cost of any asset but for larger public interest of industrial development of the State of Punjab. 17. An identical issue was considered by the Hon'ble Supreme Court in the case of P.J. Chemicals Ltd. 210 ITR 830. In that case, the assessee had received a capital subsidy, which was claimed as capital receipt, not exigible to Income-tax. The Assessing Officer held that such subsidy is liable to be reduced form the cost of assets, in terms of the provisions of section 43(1) of the Act. The matter travelled upto the Hon'ble Supreme Court and the Hon'ble Supr…

AMRIT BANASPATI COMPANY LTD.,NOIDA vs. DCIT, CENTRAL CIRCLE , GHAZIABAD

Appeals are partly allowed in the foregoing terms

ITA 3432/DEL/2018[2010-11]Status: DisposedITAT Delhi13 Mar 2026AY 2010-11

Bench: Shri Satbeer Singh Godara & Shri M. Balaganesh

Section 143(3)Section 43(1)

…in as much as the subsidy has not been granted for meeting cost of any asset but for larger public interest of industrial development of the State of Punjab. 17. An identical issue was considered by the Hon'ble Supreme Court in the case of P.J. Chemicals Ltd. 210 ITR 830. In that case, the assessee had received a capital subsidy, which was claimed as capital receipt, not exigible to Income-tax. The Assessing Officer held that such subsidy is liable to be reduced form the cost of assets, in terms of the provisions of section 43(1) of the Act. The matter travelled upto the Hon'ble Supreme Court and the Hon'ble Supr…

SHRINIWAS ENGINEERING AUTO COMPONENTS PVT. LTD,PUNE vs. ITO WARD6(1), PUNE

In the result, ITA Nos.154 to 156/PUN/2025 filed by the\nassessee are partly allowed for statistical purposes, ITA\nNo

ITA 157/PUN/2025[2020-21]Status: DisposedITAT Pune22 Dec 2025AY 2020-21

Section 143(1)(a)Section 143(2)Section 2(24)(xviii)Section 43

…the actual fixed assets,\nmerely because the amount of subsidy is calculated in term of\ncertain percentage of investment in fixed assets. The Hon'ble\nSupreme Court had an occasion to consider the identical issue\nin the case of CIT vs. P.J. Chemicals Ltd., 210 ITR 830 and\nafter review of the case law on the point, the Hon'ble Supreme\nCourt held as under :-\n\n11.\n“Where Government subsidy is intended as an incentive\nto encourage entrepreneurs to move to backward areas\nand establish industries, the specified percentage of the\nfixed capital cost, which is the basis for determining the\nsubsidy, being only…

SHRINIWAS ENGINEERING AUTO COMPONENTS PVT. LTD,PUNE vs. NATIONAL FACELESS APPEAL CENTRE, PUNE

In the result, ITA Nos. 154 to 156/PUN/2025 filed by the assessee are partly allowed for statistical purposes, ITA

ITA 156/PUN/2025[2018-19]Status: DisposedITAT Pune22 Dec 2025AY 2018-19

Bench: Dr.Manish Borad & Shri Vinay Bhamoreआयकर अपील सं. / Ita Nos.154 To 156/Pun/2025 Assessment Years : 2016-17 To 2018-19

For Respondent: Shri Amit Bobde

Section 143(1)(a)Section 143(2)Section 2(24)(xviii)Section 43

…t of the actual fixed assets, merely because the amount of subsidy is calculated in term of certain percentage of investment in fixed assets. The Hon’ble Supreme Court had an occasion to consider the identical issue in the case of CIT vs. P.J. Chemicals Ltd., 210 ITR 830 and after review of the case law on the point, the Hon’ble Supreme Court held as under :- “Where Government subsidy is intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries, the specified percentage of the fixed capital cost, which is the basis for determining the subsidy, being only a measure ado…

SHRINIWAS ENGINEERING AUTO COMPONENTS PVT. LTD,PUNE vs. ITO WARD 6(1), PUNE

In the result, ITA Nos.154 to 156/PUN/2025 filed by the\nassessee are partly allowed for statistical purposes, ITA\nNo

ITA 155/PUN/2025[2017-198]Status: DisposedITAT Pune22 Dec 2025AY 2017-198

Section 143(1)(a)Section 143(2)Section 2(24)(xviii)Section 43

…the actual fixed assets,\nmerely because the amount of subsidy is calculated in term of\ncertain percentage of investment in fixed assets. The Hon'ble\nSupreme Court had an occasion to consider the identical issue\nin the case of CIT vs. P.J. Chemicals Ltd., 210 ITR 830 and\nafter review of the case law on the point, the Hon'ble Supreme\nCourt held as under :-\n11.\n“Where Government subsidy is intended as an incentive\nto encourage entrepreneurs to move to backward areas\nand establish industries, the specified percentage of the\nfixed capital cost, which is the basis for determining the\nsubsidy, being only a…

SHRINIWAS ENGINEERING AUTO COMPONENTS PVT. LTD,PUNE vs. NATIONAL FACELESS APPEAL CENTRE, PUNE

In the result, ITA Nos. 154 to 156/PUN/2025 filed by the assessee are partly allowed for statistical purposes, ITA

ITA 154/PUN/2025[2016-17]Status: DisposedITAT Pune22 Dec 2025AY 2016-17

Bench: Dr.Manish Borad & Shri Vinay Bhamoreआयकर अपील सं. / Ita Nos.154 To 156/Pun/2025 Assessment Years : 2016-17 To 2018-19

For Respondent: Shri Amit Bobde

Section 143(1)(a)Section 143(2)Section 2(24)(xviii)Section 43

…t of the actual fixed assets, merely because the amount of subsidy is calculated in term of certain percentage of investment in fixed assets. The Hon’ble Supreme Court had an occasion to consider the identical issue in the case of CIT vs. P.J. Chemicals Ltd., 210 ITR 830 and after review of the case law on the point, the Hon’ble Supreme Court held as under :- “Where Government subsidy is intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries, the specified percentage of the fixed capital cost, which is the basis for determining the subsidy, being only a measure ado…

SHRINIWAS ENGINEERING AUTO COMPONENTS PVT. LTD.,PUNE vs. ACIT, CIRCLE-5, PUNE, PUNE

In the result, ITA Nos. 154 to 156/PUN/2025 filed by the assessee are partly allowed for statistical purposes, ITA

ITA 1423/PUN/2025[2019-20]Status: DisposedITAT Pune22 Dec 2025AY 2019-20

Bench: Dr.Manish Borad & Shri Vinay Bhamoreआयकर अपील सं. / Ita Nos.154 To 156/Pun/2025 Assessment Years : 2016-17 To 2018-19

For Respondent: Shri Amit Bobde

Section 143(1)(a)Section 143(2)Section 2(24)(xviii)Section 43

…t of the actual fixed assets, merely because the amount of subsidy is calculated in term of certain percentage of investment in fixed assets. The Hon’ble Supreme Court had an occasion to consider the identical issue in the case of CIT vs. P.J. Chemicals Ltd., 210 ITR 830 and after review of the case law on the point, the Hon’ble Supreme Court held as under :- “Where Government subsidy is intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries, the specified percentage of the fixed capital cost, which is the basis for determining the subsidy, being only a measure ado…

DY. COMMISSIONER OF INCOME-TAX, CIRCLE-5, PUNE vs. SHRINIWAS ENGINEERING AUTO COMPONENTS PVT. LTD., PUNE

In the result, ITA Nos. 154 to 156/PUN/2025 filed by the assessee are partly allowed for statistical purposes, ITA

ITA 114/PUN/2025[2020]Status: DisposedITAT Pune22 Dec 2025

Bench: Dr.Manish Borad & Shri Vinay Bhamoreआयकर अपील सं. / Ita Nos.154 To 156/Pun/2025 Assessment Years : 2016-17 To 2018-19

For Respondent: Shri Amit Bobde

Section 143(1)(a)Section 143(2)Section 2(24)(xviii)Section 43

…t of the actual fixed assets, merely because the amount of subsidy is calculated in term of certain percentage of investment in fixed assets. The Hon’ble Supreme Court had an occasion to consider the identical issue in the case of CIT vs. P.J. Chemicals Ltd., 210 ITR 830 and after review of the case law on the point, the Hon’ble Supreme Court held as under :- “Where Government subsidy is intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries, the specified percentage of the fixed capital cost, which is the basis for determining the subsidy, being only a measure ado…

ACIT, CIRCLE-5, PUNE, PUNE vs. SHRINIWAS ENGINEERING AUTO COMPONENTS PRIVATE LIMITED, PUNE

In the result, ITA Nos. 154 to 156/PUN/2025 filed by the assessee are partly allowed for statistical purposes, ITA

ITA 1844/PUN/2024[2019]Status: DisposedITAT Pune22 Dec 2025

Bench: Dr.Manish Borad & Shri Vinay Bhamoreआयकर अपील सं. / Ita Nos.154 To 156/Pun/2025 Assessment Years : 2016-17 To 2018-19

For Respondent: Shri Amit Bobde

Section 143(1)(a)Section 143(2)Section 2(24)(xviii)Section 43

…t of the actual fixed assets, merely because the amount of subsidy is calculated in term of certain percentage of investment in fixed assets. The Hon’ble Supreme Court had an occasion to consider the identical issue in the case of CIT vs. P.J. Chemicals Ltd., 210 ITR 830 and after review of the case law on the point, the Hon’ble Supreme Court held as under :- “Where Government subsidy is intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries, the specified percentage of the fixed capital cost, which is the basis for determining the subsidy, being only a measure ado…

ACIT, PUNE vs. SHRINIWAS ENGINEERING AUTO COMPONENTS PRIVATE LIMITED, PUNE

In the result, ITA Nos.154 to 156/PUN/2025 filed by the\nassessee are partly allowed for statistical purposes, ITA\nNo

ITA 1843/PUN/2024[2018]Status: DisposedITAT Pune22 Dec 2025

Section 2(24)(xviii)Section 43

…the actual fixed assets,\nmerely because the amount of subsidy is calculated in term of\ncertain percentage of investment in fixed assets. The Hon'ble\nSupreme Court had an occasion to consider the identical issue\nin the case of CIT vs. P.J. Chemicals Ltd., 210 ITR 830 and\nafter review of the case law on the point, the Hon'ble Supreme\nCourt held as under :-\n11.\n“Where Government subsidy is intended as an incentive\nto encourage entrepreneurs to move to backward areas\nand establish industries, the specified percentage of the\nfixed capital cost, which is the basis for determining the\nsubsidy, being only a…

PURI OIL MILLS LTD.,NEW DELHI vs. DCIT, CIRCLE- 20(1), NEW DELHI

In the result, appeal of the assessee is allowed

ITA 1681/DEL/2018[2014-15]Status: DisposedITAT Delhi19 Dec 2025AY 2014-15

Bench: Vikas Awasthy & Shri Brajesh Kumar Singh

Section 143(2)Section 143(3)Section 2(24)Section 44Section 44ASection 5

…trepreneurs to set up SHPs in the state of Himachal Pradesh and Haryana and not towards meeting the cost of the capital assets installed by the assessee. The ld. AR further submitted that the decision of the apex court in the case of P.J. Chemical Ltd. (1994) 210 ITR 830 and the decision of the Andhra Pradesh High Court in Godavari Plywoods Ltd. (1987) 168 ITR 632 are applicable mutatis mutandis to the facts of the instant case. 10. The ld. Sr DR supported the order of the authorities below. 11. We have heard both the parties and perused the material on record. The issue in dispute in this appeal is regarding the…

SHRINIWAS ENGINEERING AUTO COMPONENTS PVT. LTD,PUNE vs. ACIT CIRCLE 6, PUNE

In the result, the appeal filed by the assessee is allowed

ITA 201/PUN/2025[2015-16]Status: DisposedITAT Pune10 Dec 2025AY 2015-16

Bench: Dr.Manish Borad & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.201/Pun/2025 Assessment Year : 2015-16

For Appellant: Shri Hari KrishanFor Respondent: Shri Amit Bobde

Section 143(1)Section 143(2)Section 143(3)Section 2(24)(xviii)Section 43

…t of the actual fixed assets, merely because the amount of subsidy is calculated in term of certain percentage of investment in fixed assets. The Hon’ble Supreme Court had an occasion to consider the identical issue in the case of CIT vs. P.J. Chemicals Ltd., 210 ITR 830 and after review of the case law on the point, the Hon’ble Supreme Court held as under :- “Where Government subsidy is intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries, the specified percentage of the fixed capital cost, which is the basis for determining the subsidy, being only a measure ado…

MAHUA BHARATPUR EXPRESSWAYS LIMITED (FORMERLY KNOWN AS MADHUCON AGRA- JAIPUR EXPRESSWAYS LIMITED),),HYDERABAD vs. ACIT, CIRCLE-16(2), HYDERABAD

In the result, Revenue appeals for the A

ITA 308/HYD/2021[2013-14]Status: DisposedITAT Hyderabad02 Jun 2025AY 2013-14

Bench: Shri Vijay Pal Rao, Vice-A N D Shri Manjunatha, G.आ.अपी.सं /Ita Nos.285 & 286/Hyd/2018 (िनधा"रण वष"/Assessment Years: 2013-14 & 2014-15)

For Appellant: Shri P Murali Mohan Rao, CAFor Respondent: Shri B Balakrishna, CIT (DR)

Section 43Section 43(1)

…d CIT (A) and contended that the cost of an asset can be reduced only as per the provisions of Explanation 10 to section 43(1) of the I.T. Act, 1961. The assessee relied upon the judgment of the Hon'ble Supreme Court in the case of CIT vs. P.J. Chemicals Ltd (210 ITR 830) as well as other judgments to buttress the point that if government subsidy is an incentive not for specific purpose of meeting a portion of cost of asset, though quantified as percentage of such cost, it does not partake the character of the payment intended directly or indirectly to meet the cost. The learned CIT (A) accepted the claim of the…

DY. COMMISSIONER OF INCOME TAX , CIRCLE-16(2), HYDERABAD vs. MADHUCON AGRA JAIPUR EXPRESSWAYS LIMITED, HYDERABAD

In the result, Revenue appeals for the A

ITA 286/HYD/2018[2014-15]Status: DisposedITAT Hyderabad02 Jun 2025AY 2014-15

Bench: Shri Vijay Pal Rao, Vice-A N D Shri Manjunatha, G.आ.अपी.सं /Ita Nos.285 & 286/Hyd/2018 (िनधा"रण वष"/Assessment Years: 2013-14 & 2014-15)

For Appellant: Shri P Murali Mohan Rao, CAFor Respondent: Shri B Balakrishna, CIT (DR)

Section 43Section 43(1)

…d CIT (A) and contended that the cost of an asset can be reduced only as per the provisions of Explanation 10 to section 43(1) of the I.T. Act, 1961. The assessee relied upon the judgment of the Hon'ble Supreme Court in the case of CIT vs. P.J. Chemicals Ltd (210 ITR 830) as well as other judgments to buttress the point that if government subsidy is an incentive not for specific purpose of meeting a portion of cost of asset, though quantified as percentage of such cost, it does not partake the character of the payment intended directly or indirectly to meet the cost. The learned CIT (A) accepted the claim of the…

DY. COMMISSIONER OF INCOME TAX , CIRCLE-16(2), HYDERABAD vs. MADHUCON AGRA JAIPUR EXPRESSWAYS LIMITED, HYDERABAD

In the result, Revenue appeals for the A

ITA 285/HYD/2018[2013-14]Status: DisposedITAT Hyderabad02 Jun 2025AY 2013-14

Bench: Shri Vijay Pal Rao, Vice-A N D Shri Manjunatha, G.आ.अपी.सं /Ita Nos.285 & 286/Hyd/2018 (िनधा"रण वष"/Assessment Years: 2013-14 & 2014-15)

For Appellant: Shri P Murali Mohan Rao, CAFor Respondent: Shri B Balakrishna, CIT (DR)

Section 43Section 43(1)

…d CIT (A) and contended that the cost of an asset can be reduced only as per the provisions of Explanation 10 to section 43(1) of the I.T. Act, 1961. The assessee relied upon the judgment of the Hon'ble Supreme Court in the case of CIT vs. P.J. Chemicals Ltd (210 ITR 830) as well as other judgments to buttress the point that if government subsidy is an incentive not for specific purpose of meeting a portion of cost of asset, though quantified as percentage of such cost, it does not partake the character of the payment intended directly or indirectly to meet the cost. The learned CIT (A) accepted the claim of the…

M/S. MUNJAL AUTO INDUSTRIES LTD.,,BARODA vs. THE INCOME TAX OFFICER,WARD-4(1),, BARODA

Appeal is dismissed

ITA 784/AHD/2013[2003-04]Status: DisposedITAT Ahmedabad25 Mar 2025AY 2003-04

Bench: Shri T.R. Senthil Kumar & Shri Makarand V. Mahadeokarआयकर अपील सं/ िनधा"रण वष"/ Sl. Appeal(S) By :

For Appellant: Ms. Amrin Pathan, ARFor Respondent: Shri Waghe Prasadrao, Sr.DR

Section 115JSection 43(1)

…AR also referred to the Hon’ble Gujarat High Court’s decision in CIT vs. Grace Paper Industries Pvt. Ltd. [183 ITR 591] and CIT vs. Swastik Sanitary Works Ltd. [286 ITR 544], as well as the Hon’ble Supreme Court’s ruling in CIT vs. P.J. Chemicals Ltd. [(1994) 210 ITR 830], where similar principles were upheld. Additionally, the AR argues that the revenue’s reliance on Explanation 10 to Section 43(1) is misplaced, as this provision applies only when a subsidy or grant is directly linked to the acquisition of an asset. 4.5. The AR concluded that the incentive received by the assessee does not satisfy the condition…

THE DCIT, CIRCLE-4,, VADODARA vs. M/S. MUNJAL AUTO INDUSTRIES LTD.,, VADODARA

Appeal is dismissed

ITA 1383/AHD/2009[2006-07]Status: DisposedITAT Ahmedabad25 Mar 2025AY 2006-07

Bench: Shri T.R. Senthil Kumar & Shri Makarand V. Mahadeokarआयकर अपील सं/ िनधा"रण वष"/ Sl. Appeal(S) By :

For Appellant: Ms. Amrin Pathan, ARFor Respondent: Shri Waghe Prasadrao, Sr.DR

Section 115JSection 43(1)

…AR also referred to the Hon’ble Gujarat High Court’s decision in CIT vs. Grace Paper Industries Pvt. Ltd. [183 ITR 591] and CIT vs. Swastik Sanitary Works Ltd. [286 ITR 544], as well as the Hon’ble Supreme Court’s ruling in CIT vs. P.J. Chemicals Ltd. [(1994) 210 ITR 830], where similar principles were upheld. Additionally, the AR argues that the revenue’s reliance on Explanation 10 to Section 43(1) is misplaced, as this provision applies only when a subsidy or grant is directly linked to the acquisition of an asset. 4.5. The AR concluded that the incentive received by the assessee does not satisfy the condition…

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CIT v. P.J. Chemicals Ltd. (210 ITR 830) — Cited in 158 Judgments | BharatTax