Sabyasachi Mukharji, J. - (1.) In this reference, under Section 256(1) of the LT. Act, 1961, the following question has been referred to this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount of rebate recoverable from the foreign suppliers should not be deducted in determining the actual cost of the machinery within the meaning of Section 43(1) of the Income-tax Act, 1961?"
(2.) It is necessary to appreciate this question to refer to certain facts. It appears that in the regular assessment, the ITO had allowed depreciation amounting to Rs. 64,57,633. This reference relates to the assessment for the assessment year 1962-63 for which the previous year ended on 31st March, 1962. Under Section 154 of the I.T. Act, 1961, the ITO had rectified the assessment order and reduced the depreciation to Rs. 62,02,200. Thus, he withdrew the depreciation allowable to the extent of Rs. 2,55,433. The details are in the order of the Appellate Tribunal. We are not concerned with all the items. We are only concerned with one item, viz., the rebate recoverable from the foreign supplier, which amounted to Rs. 41,309. The AAC had allowed this item in favour of the assessee. There were appeals both by the revenue as well as the assessee. We are not concerned with the other items. So far as the revenue's appeal about Rs. 41,309 is concerned, it was submitted before the Tribunal that the AAC was not justified in allowing the depreciation on that item. The Tribunal was, however, unable to agree with the submission. In the earlier years, the Tribunal had considered the same point and had held against the revenue and the Tribunal therein had observed, inter alia, as follows ; "Ground No. 17 relates to the rejection of claim for depreciation, extra shift allowance and development rebate, and ground No. 18 concerns the disallowance of depreciation and development rebate on paper Units Nos. 2, 4, 5 and 6 on the ground of rebate from the foreign suppliers. The learned counsel for the assessee-company has placed facts before us in this regard. So far as the rebate is concerned, the Tribunal held in its order in I.T.As. Nos. 3281, 3282 and 3283 of 1966-67 for the assessment years 1955-56, 1956-57 and 1957-58, respectively, decided on 19th December, 1968, that the amount of rebate received by the assessee-company was a revenue receipt for loss of production or loss of profit and that the actual cost of the machinery as adopted in the original assessment did not call for any modification. That order of the Tribunal pertained to the order of the Income-tax Officer modifying and reducing the depreciation on account of rebate received by the assessee-company in respect of paper machinery No. 2. The facts in regard to the other paper units are the same and, therefore, we hold that the rebate received by the assessee-company should be treated as revenue receipt and depreciation on the written down value based on the full cost of the actual cost of the units should be allowed. It, has been stated before us on behalf of the assessee-company, that the Income-tax Officer has treated the amount of rebate as a revenue receipt and has fixed this year and has also disallowed depreciation. In view of the Tribunal's earlier order, there was no justification for reducing the depreciation and development rebate on account of the rebate received by the assessee-company."
(3.) The Tribunal noted that it was held by the Tribunal that there was no justification in reducing the depreciation and development rebate on account of rebate received by the assessee. Therefore, the Tribunal upheld the order of the AAC and the appeal preferred by the revenue was dismissed.;