District of Kutch suffered due to devastating earthquake. Subsidy was granted under schemes framed by State and Central Government which was to be given to assessees who set up new industry in Kutch District. Scheme was envisaged to encourage investment which would in turn, provide fresh employment opportunity in district. State Government introduced Sales Tax Exemption/deferment scheme on new investment for specific period. Similarly, Central Government offered Central Excise Exemption Scheme for a specified period.  Tribunal held that amount of subsidy was not to be deducted from actual cost for purpose of calculating depreciation etc.  On appeal by the revenue dismissing the appeal the Court held that even though subsidy was to be calculated on basis of sales tax or excise duty, such subsidy would be capital in nature because same was given for purpose of setting up new industry. Since subsidy was not payment towards acquisition of plant or machinery/capital assets, amount of subsidy was not to be deducted from actual cost under S. 43(1) for purpose of calculating depreciation etc.  (AY. 2009 -10)