- (1.) HEARD the learned counsel for the Revenue, Mr. Mathur.
(2.) THE issue before us for consideration is as to whether the subsidy amount should be deducted from the cost of the assets for the purpose of depreciation and investment allowance. This issue has been considered by their Lordships in the case of CIT vs. P.J. Chemicals Ltd. (1994) 121 CTR (SC) 201 : (1994) 210 ITR 830 (SC) : TC 29R.367, wherein their Lordships held that grant of subsidy by the Government as incentive for setting up industries in backward areas does not provide to meet the cost of the assets. Therefore, the amount of subsidy not to be deducted in computing the actual cost of assets. Their Lordships also observed in P.J. Chemicals Ltd.'s case (supra) which reads as under : "The Government subsidy, it is not unreasonable to say, is an incentive not for the specific purpose of meeting a portion of the cost of the assets, though quantified as or geared to a percentage of such cost. If that be so, it does not partake of the character of a payment intended either directly or indirectly to meet the 'actual cost'. We should prefer the reasoning of the majority of the High Courts to the one found acceptable by the High Court of Punjab and Haryana." Following the view taken by their Lordships in the aforesaid case, no case is made out for notice, the application filed under S. 256(2) is rejected. Therefore, we decline to answer this part of the question. It is also made clear that Mr. Mathur, the learned counsel for the Revenue, fairly admits that there was no dispute regarding the written down value. The issue as to whether the depreciation or investment allowance should be allowed on written down value or not, that has neither been raised nor has been decided by the Departmental authorities. Therefore, we decline to answer this part of the question.;