- (1.) THIS is a reference at the instance of the Income -tax Department (the Department) under section of the Income -tax Act, 1961 (the Act) for the assessment year 1985 -86. The Income -tax Appellate Tribunal (the Tribunal) has referred the following two questions: (i) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in allowing relief in respect of sales tax payable which amount was paid subsequent to the close of the accounting year and not before the close of the accounting year? (ii) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the subsidy received for generator set is not contribution made by the Government towards the cost of the generator and further whether the Tribunal was right in law in allowing depreciation on generator at 20 per cent? The facts
(2.) THE assessee was a registered firm carrying on a business of manufacturing and sale of glass wares. It filed return for the assessment year 1985 -86 and claimed: Deduction of sales tax collected in the month of March 1985 but deposited in the month of April 1985; Depreciation on the cost of the generator.
(3.) THE assessee also claimed some other benefits with which we are not concerned in this reference. The Assessing Officer by his order dated February 18, 1986 added the sales tax deposited in the month of April, 1985 and gave depreciation of 15 per cent on the cost of the generator after reducing it by the subsidy received from the State Government.;