Commissioner of Income Tax v. Himachal Engineering Co. Pvt. Ltd.

1. FACTS OF THE CASE

Ten references raised the common question whether government subsidy should reduce the actual cost of assets for depreciation under sections 32 and 43(1). The Tribunal had answered for the assessee but referred the issue in light of conflicting High Court views. The judgment supplies no subsidy amount, scheme detail or assessment-year mapping for the individual references.

Source: PDF pp.1–2

2. DISCUSSION BY THE COURT

The Court referred to Ruchira Papers and applied the Supreme Court’s P.J. Chemicals ruling. The quoted principle distinguished an industrial incentive, even when calculated as a percentage of asset cost, from a payment specifically intended directly or indirectly to meet that cost. The contrary Jindal Bros. Rice Mills view had been set aside by the Supreme Court.

Source: PDF pp.2–3

3. JUDICIAL DECISION

The common reference was answered for the assessee and against Revenue on the law settled by the Supreme Court. A copy was directed to the Tribunal.

Source: PDF p.3

4. OUTCOME

The taxpayer-favourable treatment of subsidy without reducing actual cost for depreciation prevailed across the listed references. No quantified depreciation computation or broader subsidy-taxability ruling was made.

Source: PDF pp.1 and 3

5. Expert Comments

AKHB editorial analysis, distinct from the Court’s findings.

Purpose and method of measurement are different inquiries

The adopted reasoning treats a percentage-of-cost formula as insufficient by itself to establish that the subsidy meets asset cost. The purpose of the assistance remains central. For another scheme, its operative terms must therefore support the claimed incentive character; this short judgment does not supply those terms for every grant.

Source: PDF p.2 · PDF p.3

The holding concerns depreciation cost, not every subsidy consequence

The referred question is confined to sections 32 and 43(1). It does not classify every subsidy as a capital receipt, exempt it from tax or decide later statutory rules. Those conclusions cannot be imported from the favourable actual-cost answer.

Source: PDF p.1 · PDF p.2 · PDF p.3

Preserve the common-order scope without inventing individual facts

All ten docket numbers belong to this common decision, but the source does not map separate years, amounts or schemes to them. The result may be recorded for each listed reference while leaving those missing details unstated. The cited P.J. Chemicals principle, rather than the inconsistent printed reporter year, supplies the expressed basis.

Source: PDF p.1 · PDF p.2 · PDF p.3