| Case ID |
e435d201-6db5-46ec-be84-ff6984e4a96d |
| Body |
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| Case Number |
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| Decision Date |
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| Hearing Date |
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| Decision |
The Income-tax Appellate Tribunal held that the central subsidy received by the assessee-company could not be deducted from the actual cost of the assets for the purposes of calculating depreciation. Following the precedent set in CIT v. Godavari Plywoods Ltd., the order of the Tribunal was justified. The case was decided in favor of the assessee, affirming that such subsidies do not reduce the actual cost for depreciation calculations. |
| Summary |
This case revolves around the interpretation of Section 43(1) of the Income-tax Act, 1961, particularly regarding the treatment of central subsidies in calculating depreciation. The Tribunal's ruling emphasized that the central subsidy should not be deducted from the actual cost of assets, establishing an important precedent for future tax assessments. This decision aligns with prior rulings, ensuring consistency in how subsidies are treated under tax law. The ruling is significant for corporate entities as it clarifies the implications of receiving government subsidies on their asset valuations for depreciation purposes. The case reinforces the legal framework governing taxation and asset valuation, providing clarity for taxpayers and legal practitioners alike. It highlights the necessity for businesses to understand the intricacies of tax legislation and its impact on financial reporting. The outcome serves as a crucial reference point for similar cases, ensuring that companies do not inadvertently reduce their asset values based on subsidies received, which could affect their tax liabilities. This ruling contributes to the body of case law that defines the relationship between government assistance programs and corporate tax obligations. |
| Court |
High Court
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| Entities Involved |
Commissioner of Income Tax,
Sree Rayalaseema Paper Mills Ltd.
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| Judges |
A. Lakshmana Rao,
P. Venkatarama Reddy
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| Lawyers |
S.R. Ashok
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| Petitioners |
Not available
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| Respondents |
Sree Rayalaseema Paper Mills Ltd.
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| Citations |
1992 SLD 1883,
(1992) 198 ITR 156
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| Other Citations |
CIT v. Godavari Plywoods Ltd. [1987] 168 ITR 632 (AP)
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| Laws Involved |
Income-tax Act, 1961
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| Sections |
43(1)
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