IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM MONDAY, THE 13TH JULY 2009 / 22ND ASHADHA 1931 ITA.No. 183 of 2009() --------------------- ITA.1137/COCH/2004 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT: -------------------- THE COMMISSIONER OF INCOME TAX, TRIVANDRUM. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): --------------- M/S.ENGLISH INDIAN CLAYS LTD., TRIVANDRUM. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 13/07/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & C.K.ABDUL REHIM, JJ. .................................................................... I.T. Appeal No.183 of 2009 .................................................................... Dated this the 13th day of July, 2009. JUDGMENT Ramachandran Nair, J. Three issues are raised in the appeal filed by the revenue. First one pertains to department's claim that subsidy received is to be treated as revenue assessable for tax. On going through the Tribunal's order we find that subsidy is given for investment in pollution control measures taken by the assessee and it is in the form of reimbursing part of the cost of pollution control equipment purchased by the assessee. We are in agreement with the finding of the Tribunal that subsidy is towards capital outlay and hence not a revenue receipt. 2. The next issue pertains to addition on lease rentals deleted by the lower authorities in appeal. Department's case is that the assessee has been taking lease rentals in the previous years on accrual basis, but discontinued the practice and therefore, rent for this year also is assessable. However, it is the finding of the first appellate authority that after changing the pattern of accounts, assessee credited the 2 amount on cash basis and remitted the tax in later years. Consequently we do not find any ground to interfere with the order in appeal issued by the Tribunal confirming the first appellate authority's order. 3. The last issue pertains to depreciation at the higher rate in respect of plant and machinery. In the preceding year, while considering the claim the appellate authority directed the assessee to produce certificate of eligibility which was in fact produced in revised assessment proceedings and the claim was allowed. In fact, this year's claim is exactly of the same nature and pertaining to the same plant and machinery. We do not find any ground to interfere with the finding of the Tribunal on this issue also. In view of the foregoing findings, we dismiss the department's appeal. C.N.RAMACHANDRAN NAIR Judge C.K.ABDUL REHIM Judge pms