IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR THURSDAY, THE 7TH FEBRUARY 2008 / 18TH MAGHA 1929 ITA.No. 27 of 2002() -------------------- AGAINST THE ORDER DATED 19/07/2000 IN COCH. IN ITA.972/1990 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT : ----------------- THE COMMISSIONER OF INCOMETAX, COCHIN. BY ADV. SRI.P.K.R.MENON(SR.),SC FOR IT SRI.GEORGE K. GEORGE, SC FOR IT RESPONDENTS/RESPONDENT: ------------- M/S.ALAMPALLY BROTHERS LTD., ALUVA. BY ADV. SRI.JOSEPH MARKOSE SRI.JOSEPH KODIANTHARA THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 07/02/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & T.R.RAMACHANDRAN NAIR, JJ. ------------------------- I.T.A. No. 27 of 2002 --------------------------------- Dated, this the 7th day of February, 2008 J U D G M E N T C.N.Ramachandran Nair, J. The revenue has raised two questions of law as arising from the order of the Tribunal in the appeal filed by them. The first question raised that is whether the investment subsidy received by the assessee is not to be deducted from the cost of the asset to arrive at actual cost for the purpose of allowing depreciation is already decided by the Supreme Court against the revenue in Commissioner of Income Tax Vs. P.J.Chemicals Limited, reported in 210 ITR 830. Even though learned counsel for the revenue has relied on another decision of the Supreme Court in Sahney Steel and Press Works Limited and Others Vs. Commissioner of Income Tax, reported in 228 ITR 253, we do not think that this decision can apply in this case because that was a case where the Supreme Court found that subsidy received is revenue in nature. However, in this case, the subsidy is part of the project cost and therefore, capital expenditure in nature. In the circumstances, we uphold the order of the Tribunal allowing the assessee's claim following the decision of the Supreme Court as above. Accordingly, appeal filed by the revenue on this issue is ITA No.27/2002 -2- dismissed. 2. The next question raised pertains to the assessee's entitlement to carry forward loss from the assessment year 1986- 87. While the case of the revenue is that by virtue of Section 80 of the IT Act the assessee is not entitled to carry forward loss to the next assessment year on account of delay in filing return, the case of the assessee is that there is no delay because return was filed before the expiry of extension of time applied for, for filing return. It is seen that the assessee filed return within the time applied for by him. However, application for extension of time was rejected only when the assessment was taken up i.e. after filing of return by the assessee. Learned counsel has relied on the decision in Commissioner of Income Tax Vs. Ajanta Electricals, reported in 215 ITR 114, wherein the Apex Court held that application for extension of time can be made even after expiry of the statutory time for filing return. We find that the Tribunal has confirmed the assessment as per the above decision of the Supreme Court. We, therefore, reject the appeal on this ground also. This I.T.Appeal is dismissed. (C.N.RAMACHANDRAN NAIR, JUDGE) (T.R.RAMACHANDRAN NAIR, JUDGE) jg