Search Results For: 43(1)


Spectrum Coal & Power Ltd vs. ACIT (ITAT Mumbai)

COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS: , ,
COUNSEL:
DATE: August 3, 2017 (Date of pronouncement)
DATE: August 17, 2017 (Date of publication)
AY: 2000-01 to 2008-09
FILE: Click here to view full post with file download link
CITATION:
S. 43(1) Explanation 10: The law laid down in PJ Chemicals 210 ITR 830 (SC) that only a subsidy or grant given to offset the cost of an asset can be reduced from the "actual cost" of the asset and not a general subsidy continues to hold good even after the insertion of Explanation 10 to s. 43(1). A subsidy/ grant from a foreign sovereign Country does not fall within Expl 10 because the foreign Country is not a "person" as defined in s. 2(31)

We have also gone through the provisions of Section 43(1) as well as Explanation 10 thereof. We noted that Section 43(1) defines the actual cost to mean the actual cost of the assets of the assessee reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by other person or authority. In the impugned case, we noted that what the ICICI has financed by way of conditional grant to the assessee is the amount received from USA under the project grant agreement for the Program for Acceleration of Commercial Energy Research. Now the question arises whether USA can be regarded to be a person or authority. In our view, this provision cannot be read without Explanation 10. From the reading of the said explanation, it is explicitly clear that if a portion of a cost of an asset acquired by the assessee has been met directly or indirectly by Central Government or State Government or any authority established under any law or by any other person in the form of a subsidy or a grant or reimbursement, said subsidy grant or reimbursement as is relatable to the asset shall be reduced out of the actual cost of the assessee to the assessee. USA is a sovereign and cannot be Central Government or State Government or any authority established by any law in India

UniDeritend Limited vs. ACIT (ITAT Mumbai)

COURT:
CORAM: ,
SECTION(S): , ,
GENRE:
CATCH WORDS: , , , ,
COUNSEL:
DATE: November 26, 2015 (Date of pronouncement)
DATE: January 29, 2016 (Date of publication)
AY: 2008-09
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CITATION:
Subsidy granted to set up a wind project is a capital receipt. the subsidy cannot be reduced under Explanation 10 to s. 43(1) from the cost of the assets acquired though 100% depreciation is allowed on the cost of the assets. The subsidy is also not assessable either u/s 41(1) or u/s 50

So far as the contention of the AO that the subsidy is liable to be taxed under section 50 of the Act is concerned, we find that in this case neither there was a transfer of any asset from the block nor did the block has ceased to exist. It is not a case of capital gains by way of transfer but it is only a case of capital receipt as observed above as an incentive by the state government to promote the generation of electricity through non conventional sources. In view of the above, in our view, the subsidy received by the assessee is not taxable under section 41(1) neither under section 43(1) and nor under section 50 of the Act

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