Kishor Kumar Shamji, Cochin V. DCIT, Mattancherry

ITA 880/COCH/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4375 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2010
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 19-04-2010
• Assessment Year: 1997-1998
• Appeal Filed On: 08-09-2008
• Court: TRIBUNAL
• Department Lawyers: T J VINCENT
• Assessee Lawyers: R KISHORE KUMAR
• Keywords: Capital asset; Depreciation; Difference of opinion; Assessment record; Capital receipt; Onus to prove
• Section: 143(3); 250; 208; 32; 147; 10; 154

Judgement Text

IN THE INCOME TAX APPELLATE TR IBUNAL COCHIN BENCH, COC HIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY ARORA , AM I.T.A. NO. 880/COCH./ 2008 ASSESSMENT YEAR : 1997-98 SHRI KISHORKUMAR SHAMJI, PROP.:M/S. KISHOR SPICES CO., JEW TOWN, KOCHI- 682 002. [PAN: AIWPS 8621B] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, MATTANCHERRY. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI R.KISHORE KUMAR, ADV. REVENUE BY SHRI T.J.VINCENT, DR O R D E R PER SANJAY ARORA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOCHI (CIT(A) FOR SHO RT) DATED 30.5.2008 FOR THE ASSESSMENT YEAR (A.Y.) 1997-98. 2. THE ONLY ISSUE ARISING FOR ADJUDICATION IN THE P RESENT APPEAL FOR ADJUDICATION IS THE MAINTAINABILITY OF THE REVENUES ACTION IN PROC EEDING TO ASSESS THE AMOUNT OF SUBSIDY OF RS. 8 LAKHS RECEIVED BY THE ASSESSEE, AN INDIVIDUAL, DURING THE RELEVANT PREVIOUS YEAR, AS ITS INCOME SUBJECT TO TAX, RELYIN G ON THE DECISION BY THE HONBLE APEX COURT IN THE CASE OF SAHNEY STEEL AND PRESS WORKS LTD. VS. CIT , 228 ITR 253 (SC). 3. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT IN TH E INSTANT CASE STOOD FRAMED U/S. 147 R.W.S. 143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT HEREINAFTER) ON 24.11.2000, DETERMINING THE TOTAL INCOME AT RS. 21,43,530/-, WH ICH STOOD LATER REDUCED TO RS. 1,15,310/- IN FIRST APPEAL VIDE ORDER U/S. 250 DATE D 18.12.2003. IT WAS SUBSEQUENTLY NOTICED THAT THE ASSESSEE, AN EXPORTER IN SPICES, H AD RECEIVED GRANT-IN-AID FROM THE ITA NO. 880/COCH./2008 2 SPICES BOARD, DULY CREDITED TO HIS CAPITAL ACCOUNT IN THE BOOKS OF ACCOUNT FOR THE YEAR, WHICH WAS LIABLE TO TAX, BEING ONLY IN THE FORM OF ASSISTANCE TO BUSINESS, GRANTED AFTER THE START OF PRODUCTION, SO THAT IT WAS REVENUE IN NATURE, AS CLARIFIED BY THE APEX COURT IN THE CASE OF SAHNEY STEEL AND PRESS WORKS LTD. (SUPRA). ACCORDINGLY, THE SAME STOOD BROUGHT TO TAX VIDE ORDER U/S. 154 DATED 3.12.2007, AFTER ALLOWING HEARING TO THE ASSESSEE, IN TERMS OF SECTION 154(3) OF THE ACT. IN APPEAL, THE SAME STOOD CONFIRMED BY THE LD. CIT(A) ON THE SAME BASIS; THE FIRST APPELLA TE AUTHORITY FINDING THE ISSUE AS COVERED BY THE SAID DECISION BY THE APEX COURT. AGG RIEVED, THE ASSESSEE IS IN APPEAL. 4.1 BEFORE US, IT WAS EMPHASIZED BY THE .LD. AR THA T THERE CAN BE NO UNIFORM CLASSIFICATION OF SUBSIDY, WHICH WOULD HAVE TO BE D ETERMINED, IN EACH CASE, WITH REFERENCE TO THE PROVISIONS OF THE UNDERLYING SCHEM E GRANTING THE SUBSIDY. ADVERTING TO THE PRESENT SCHEME BY THE SPICES BOARD, I.E., UN DER WHICH THE ASSESSEES GRANT FELL, COPY OF WHICH STOOD PLACED BY HIM ON RECORD, IT WAS SUBMITTED THAT THE OBJECTIVE OF THE SCHEME WAS TO ASSIST THE INDUSTRY TO DEVELOP/AD OPT NEW TECHNOLOGY FOR VALUE ADDED PRODUCTS WITH A VIEW TO DEVELOP NEW/PROCESSED SPICE PRODUCTS, FREE FROM VARIOUS CONTAMINATIONS AND CONFORMING TO THE CHANGI NG MARKET REQUIREMENTS AND CONSUMER EXPECTATIONS IN THE INTERNATIONAL MARKET, I.E., TECHNOLOGY UPGRADATION. THE ASSISTANCE WAS FURTHER DIRECTLY LINKED WITH THE COS T OF THE CAPITAL INVESTMENT, BEING PLANT AND MACHINERY, INCLUDING ELECTRICAL WORKS, GE NERATORS, ETC., I.E., @ 25% OF THE INVESTMENT, SUBJECT TO A CAP OF RS. 8 LACS. AS SUCH , THE SAME WAS CLEARLY WITH A VIEW TO PROMOTE UP-GRADATION OF THE EXISTING TECHNOLOGY, WITH REFERENCE TO THE CAPITAL INVESTMENT IN THE DEFINED AREAS OF THE PRODUCTION P ROCESS AND, AS SUCH, ONLY A CAPITAL RECEIPT IN THE HANDS OF THE BENEFICIARY. THE SAME, THEREFORE, WAS RIGHTLY NOT OFFERED TO TAX AS INCOME, AND CREDITED TO THE ASSESSEE CAPITA L ACCOUNT. 4.2 THE LD. DR, ON THE OTHER HAND, WOULD SUBMIT THA T THE RELEASE OF THE GRANT-IN-AID WAS SUBJECT TO THE EXPORTER-BENEFICIARY EFFECTING ` ADDITIONAL EXPORT OF SPICES EQUAL TO FIVE TIMES THE GRANT AMOUNT, TO BE ACHIEVED IN FIVE YEARS FROM THE DATE OF RECEIPT OF THE AMOUNT. IN CASE THE EXPORT OBLIGATION IS NOT FULFIL LED WITHIN THE STIPULATED TIME, THE ITA NO. 880/COCH./2008 3 SUBSIDY AMOUNT WAS LIABLE TO BE RECOVERED ALONG WIT H INTEREST AS APPLICABLE TO THE COMMERCIAL LOANS BY NATIONALISED BANKS. AS SUCH, TH E SAME WAS CLEARLY WITH A VIEW TO PROMOTE EXPORTS, AND THE LINKAGE WITH THE COST OF C APITAL INVESTMENT WAS ONLY A MANNER OF QUANTIFYING THE SUBSIDY. THE LD. AR, IN R EJOINDER, STATED THAT THE PRE- REQUISITE FOR THE GRANT WAS THE INSTALLATION OF THE RELEVANT PLANT AND MACHINERY, SO THAT THERE IS NO QUESTION OF IT BEING NOT DIRECTLY LINKE D TO THE COST OF SETTING UP THE FACILITY. 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, AS WELL AS THE CASE LAW CITED. 5.1 THE ONUS TO PROVE THAT A PARTICULAR RECEIP T IS INCOME, IT IS TRITE, IS ON THE REVENUE. IT IS ONLY WHERE THE SAME STANDS SATISFIED , THAT THE BURDEN IS ON THE ASSESSEE TO SHOW THAT IT FALLS WITHIN THE EXEMPTION PROVISIO N. IN THE INSTANT CASE, WHILE THE ASSESSEE CLAIMS THE IMPUGNED SUM TO BE A CAPITAL GR ANT WITH REFERENCE TO THE RELEVANT SCHEME, THE REVENUE CLAIMS IT AS NOT SO, CONTENDING IT TO BE REVENUE AND, THUS, A TAXABLE RECEIPT, WITH REFERENCE TO THE DECISION IN THE CASE OF SAHNEY STEEL AND PRESS WORKS LTD. (SUPRA). A DECISION BY THE APEX COURT SETTLES THE L AW, SO THAT RECTIFICATION, WHERE THE FACTS ARE OTHERWISE NOT IN DISPUTE, WITH REFERENCE TO THE SAME, IS PERMISSIBLE IN LAW. THIS IS AS ITS DECISION WOULD HAVE RETROSPE CTIVE APPLICATION IN-AS-MUCH AS PER THE SAME THE APEX COURT ONLY CLARIFIES THE LAW AS I T ALWAYS STOOD AND, THUS, MUST BE UNDERSTOOD AS. AS SUCH, WE WOULD BE REQUIRED TO UND ERSTAND THE LAW LAID DOWN VIDE THE DECISION RELIED UPON BY THE REVENUE IN BRINGING THE IMPUGNED AMOUNT TO TAX. 5.2 IN THE CASE OF SAHNEY STEEL AND PRESS WORKS LTD. (SUPRA), IT STANDS CLARIFIED BY THE APEX COURT THAT WHERE A SUBSIDY OUT OF PUBLIC F UNDS IS GIVEN BY THE GOVERNMENT, ITS CHARACTER, DEPENDING UPON THE PURPOSE OF THE GR ANT, COULD BE EITHER CAPITAL OR REVENUE. WHERE IT IS GIVEN TO ENABLE THE RUNNING OF A BUSINESS MORE PROFITABLY OR EFFICIENTLY, AFTER AND CONDITIONAL ON THE COMMENCEM ENT OF THE PRODUCTION, IT WOULD ONLY BE FOR THE PURPOSES OF THE TRADE AND, THUS, RE VENUE IN NATURE. ON THE OTHER HAND, IF IT IS TO SET UP THE BUSINESS OR COMPLETE A PROJECT, THE MONIES MUST NECESSARILY BE REGARDED AS FOR CAPITAL PURPOSES, AND THUS CONSTITU TE A CAPITAL RECEIPT. THE APEX COURT ITA NO. 880/COCH./2008 4 HAS THUS LAID DOWN THE GUIDELINES, BASED ON THE INT ENDED OBJECTIVE OF THE SCHEME, WHICH WOULD DETERMINE THE CHARACTER OF THE RECEIPT AND, CONSEQUENTLY, ITS EXIGIBILITY OR OTHERWISE TO TAX. 5.3 THE PROCEEDINGS UNDER CHALLENGE BEING U/S. 154 OF T HE ACT, THE SCOPE OF WHICH IS RESTRICTED TO THE RECTIFICATION OF A MISTAKE APPARE NT FROM RECORD, IT IS ONLY ON A UNEQUIVOCAL VIEW OF THE GRANT BEING TOWARD ENHANCED EFFICIENCY OF PRODUCTION OR A BETTER CONDUCT OF ITS BUSINESS, I.E., FOR ASSISTING IN CARRYING OUT THE BUSINESS OPERATIONS OR TRADE, THAT IT WOULD QUALIFY TO BE A TRADE RECEI PT. IN OTHER WORDS, ANY CONFLICT OR DIFFERENCE OF OPINION, WOULD OUST THE REVENUES ACT ION FOR BEING OUTSIDE THE KEN OF S. 154. WE HAVE PERUSED THE SCHEME, WHICH FORMS PART OF THE ASSESSMENT RECORD. ITS OBJECTIVE, AS LISTED THEREIN, IS AS: - DEVELOP/ADOPT NEW TECHNOLOGY FOR VALUE ADDED PROD UCTS WITH A VIEW TO DEVELOP NEW/PROCESSED SPICE PRODUCTS FREE FROM VARIOUS CONT AMINATIONS AND CONFORMING TO THE CHANGING MARKET REQUIREMENTS AND CONSUMER EXPEC TATIONS IN THE INTERNATIONAL MARKET. - TAKE A LEAD AMONG SPICE PRODUCING COUNTRIES IN MA NUFACTURING PROCESSED SPICES AND QUALITY IMPROVEMENT TO HAVE A STRONG PRESENCE I N THE INTERNATIONAL MARKET. AS REGARDS ITS PROCEDURE, THE INVESTMENT IS TO BE IN THE VARIOUS PREFERRED ACTIVITIES FROM AMONG THOSE INVOLVED IN THE PROCESSING OF SPIC ES. THE APPLICATION FOR THE GRANT, CONTAINING DETAILS OF THE PROPOSED ACQUISITION OF T ECHNOLOGY/KNOWHOW; THE LIST OF THE PLANT AND MACHINERY, ETC., ALONG WITH THE EXPORT PO TENTIAL OF THE PROJECT, IS FIRST VETTED BY A SELECTION COMMITTEE (FORMED BY THE BOARD). ONL Y AFTER CONFIRMATION OF APPROVAL THEREBY, WOULD THE APPLICANT START THE PROJECT. ON ITS COMPLETION, IN ACCORDANCE WITH THE APPROVED PLAN, ENTAILING INSPECTION OF THE UNIT BY A TEAM OF EXPERTS AND SUBMISSION OF AN INSPECTION REPORT BY IT, THE MATTE R IS PLACED BEFORE THE SELECTION COMMITTEE FOR CONSIDERATION OF THE GRANT-IN-AID, AN D ON ITS SATISFACTION, THE EXPORTER ENTITLED TO THE BENEFIT OF THE SCHEME. THE RELEASE OF THE GRANT IS THUS AFTER THE INSTALLATION OF THE EQUIPMENT, AND ON FURNISHING A LEGAL UNDERTAKING REGARDING NON- TRANSFERABILITY THEREOF. ITA NO. 880/COCH./2008 5 5.4 THE IMPORT OF THE SCHEME IS, THUS, TO FACILI TATE THE EXPORTER IN HIS ENDEAVOUR TO BECOME MORE COMPETITIVE IN THE EXPORT MARKET BY ADO PTION OF TECHNOLOGY IN DEFINED AREAS OF PRODUCTION, LEADING TO IMPROVED/VALUE ADDE D PRODUCTS. AN ADDITIONAL EXPORT OF FIVE TIMES THE GRANT, WHICH WOULD JUSTIFY IT, RE SULTING IN A LIABILITY FOR REFUND, ALONG WITH INTEREST, IN CASE OF NON-FULFILMENT THEREOF, S IGNIFIES THE END OBJECTIVE OF THE SCHEME. IN OTHER WORDS, NOTWITHSTANDING THE INVESTM ENT IN PLANT & MACHINERY, THE ELIGIBILITY FOR THE GRANT IS LINKED TO A QUANTIFIED IMPROVEMENT IN THE EXPORT PERFORMANCE. THE SAME, THUS, IS ONLY TOWARD PROMOTI ON OF EXPORTS OF THE INDIVIDUAL EXPORTERS, WITH THE LARGER PICTURE OF AN INCREASED PRESENCE OF THE INDIAN SPICES/SPICE PRODUCTS IN THE INTERNATIONAL MARKET; THE FORMER LE ADING TO THE LATTER. AT THE SAME TIME, IT CANNOT BE SAID T HAT THE EXPORTER IS FREE TO UTILIZE THE GRANT IN ANY MANNER HE LIKED, I.E., WITH THE ONLY RESTRIC TION OF IT BEING RETAINED IN HIS BUSINESS. HE IS, IN TERMS THEREOF, DEFINITELY OBLIG ED TO UNDERTAKE INVESTMENT IN THE DEFINED AREAS OF PRODUCTION. IT MAY BE THAT THE INV ESTMENT, UNDER THE GIVEN PROCEDURE FOR THE RELEASE OF THE GRANT, IS TO BE MADE PRIOR T O THE RELEASE, WHICH ALONE WOULD ENTITLE THE SAME. BUT THEN, THE SAME IS ONLY A MATT ER OF PROCEDURE, AND CANNOT IN ANY WAY DETRACT FROM THE FACT THAT THE SCHEME OBLIGES, AND BY ITS VERY PROCESS, ENSURES FRESH INVESTMENT TOWARD TECHNOLOGY UPGRADATION. RAT HER, ONLY THAT SUBSEQUENT TO THE APPROVAL OF ITS PROPOSAL WOULD QUALIFY FOR BEING CO NSIDERED AS PART OF THE ELIGIBLE PROJECT. AND, IN VIEW THEREOF, THERE CAN BE NO MANN ER OF ANY DOUBT THAT THE GRANT IS TOWARD SETTING UP OF FRESH INVESTMENT IN PLANT AND MACHINERY, WHICH ITSELF STANDS DEFINED UNDER THE SCHEME. IT WOULD, UNDER THE CIRCUMSTANCES, NOT BE WRONG TO SAY THAT THE SCHEME IS TOWARD CAPACITY BUILDING IN DEFINED AREAS OF PRODUC TION, OR OF QUALITATIVELY IMPROVED SPICE PRODUCTS, CONFORMING TO THE INTERNATIONAL STA NDARDS. THE FACT THAT THE EXPORTER HAS TO MEET AN EXPORT OBLIGATION WITH REFERENCE TO THE GRANT AMOUNT WOULD NOT DETRACT FROM THE SAME IN-AS-MUCH AS THEREBY IT HAS ONLY SOU GHT TO ENSURE THAT THE EXPORTER HAS ACTUALLY ACHIEVED THE DESIRED OBJECTIVE; THE END OB JECTIVE OF ALL INVESTMENT BEING A HIGHER VALUE ADDITION/MARKET SHARE. NEVERTHELESS, T HE SAME AS PER THE SCHEME ITSELF - IS ONLY THROUGH THE PROCESS OF INVESTMENT IN BETT ER TECHNOLOGY, A FACT WHICH CANNOT ITA NO. 880/COCH./2008 6 BE LOST SIGHT OF. THE SAME IS MANDATORY, AND IT CAN NOT BE SAID TO BE EITHER MERELY INCIDENTAL, OR OF THE SCHEME AS BEING ONLY A FACILI TATIVE FACTOR THEREFOR. IN FACT, A HOLISTIC READING OF THE SCHEME WOULD REVEAL ADOPTIO N OR DEVELOPMENT OF NEW TECHNOLOGY AS BEING AS INTEGRAL THERETO AS THE PROD UCTION OF NEW/PROCESSED SPICE PRODUCTS. THE ASSESSEES CASE IS, THUS, WELL MERITE D, AND THE GRANT, IN OUR CLEAR VIEW, STANDS RIGHTLY CONSIDERED BY IT AS A CAPITAL RECEIP T. 5.5 THAT, HOWEVER, WOULD NOT, TO OUR MIND, BE THE END O F THE PRESENT CONTROVERSY. THIS IS AS IT BEING THE ASSESSEES ADMITTED CASE TH AT THE SUBSIDY IS A CAPITAL GRANT FOR THE SETTING UP OF FRESH INVESTMENT IN BETTER TECHNO LOGY, THE QUESTION ARISES AS TO WHY WOULD ITS INVESTMENT COST, HAVING BEEN MET THEREBY, AT DIRECTLY AT THAT, NOT LEAD TO ITS REDUCTION TO THAT EXTENT FOR THE PURPOSE OF CLAIM O F DEPRECIATION ALLOWANCE U/S. 32 OF THE ACT. THE SAME STOOD POSED BY THE BENCH DURING H EARING, AND TO WHICH IT WAS EXPLAINED BY THE LD. AR THAT EXPLANATION 10 TO SECTION 43(1), STIPULATING THUS, STANDS CO-OPTED ON THE STATUTE W.E.F. 1.4.1999, SO THAT IT WOULD HAVE NO APPLICATION FOR THE CURRENT YEAR, BEING PRIOR THERETO. FURTHER, THE SAI D EXPLANATION ITSELF CAME ON THE STATUTE IN VIEW OF THE DECISION BY THE APEX COURT I N THE CASE OF CIT VS. P. J. CHEMICALS LTD. , 210 ITR 830 (SC). WE FIND LITTLE SUBSTANCE IN THE ASSESSEES CONTENTION. THIS IS FOR THE SIMPLE REASON THAT SEC. 43(1), WHICH DEFINES THE TERM `ACTUAL COST OF A CAPITAL ASSET, STATES OF ITS REDUCTION TO THE EXTENT THE SAME STANDS MET DIRECTLY OR INDIRECTLY BY ANY PERSON OR AUTHORITY. TRUE, EXPLANATION 10 TO S. 43(1), CLARIFYING THIS ABUNDANTLY, CANNOT BE TAKEN TO BE R ETROSPECTIVE. HOWEVER, AS THE FOREGOING ANALYSIS, BASED ONLY ON THE TERMS OF THE SCHEME, WHICH FORMS PART OF THE ASSESSMENT RECORD, WOULD REVEAL, THE ACQUISITION OF TECHNOLOGY BY INVESTMENT IN THE DEFINED AREAS, IS A PRE-REQUISITE FOR THE ELIGIBILI TY FOR THE GRANT-IN-AID UNDER REFERENCE, AND AN AVOWED OBJECTIVE OF THE SCHEME, WHICH IS APP ROPRIATELY TITLED AS: `SCHEME FOR GRANT-IN-AID FOR TECHNOLOGY TRANSFER AND PROCESS UP GRADATION . REFERENCE IN THIS CONTEXT BE MADE TO ENTIRE PROCEDURE FOR THE RELEASE OF THE GRANT, WHICH STANDS ENLISTED AT PARA # 5.3 ABOVE . IT IS NOT A CASE OF A CASUAL NEXUS OF THE SUBSID Y AMOUNT WITH THE COST OF THE PLANT & MACHINERY, SO THAT IT COULD BE SAID TO BE MERELY INCIDENTAL. IN FACT, ITA NO. 880/COCH./2008 7 OUR SAID FINDING, WHICH IS ONLY IN AGREEMENT WITH T HE ASSESSEES OWN CASE, CONTESTING THE REVENUES STAND (REFER: PARA 4.1, 4.2 ABOVE ), EITHER BEFORE THE AUTHORITIES BELOW OR BEFORE US, SHOULD BE SUFFICIENT TO RESOLVE THIS ASP ECT OF THE MATTER, WHEN CONSIDERED IN LIGHT OF THE DECISION IN THE CASE OF SAHNEY STEEL AND PRESS WORKS LTD. (SUPRA) AND CIT V. BOKARO STEEL LTD ., 236 ITR 315 (SC); THE GRANT UNDER QUESTION BEING SPECIFICALLY FOR SETTING UP OF ADDITIONAL FACILITY OR BRINGING I NTO EXISTENCE NEW SPECIFIED ASSET(S) . THE DECISION IN THE CASE OF P. J. CHEMICALS LTD. (SUPRA), AS WELL AS EXPLANATION 10 TO S. 43(1) , ARE IN A DIFFERENT CONTEXT, AND WOULD NOT IN ANY MANNER OPERATE TO HINDER THE APPLICATION OF THE LAW IN THE MATTER. IN THE CASE O F P. J. CHEMICALS LTD. (SUPRA), THE SUBSIDY INVOLVED WERE FOR INDUSTRIES LOCATED IN THE BACKWARD AREAS, SO THE COURT FOUND, AS DID THE VARIOUS HIGH COURTS PRIOR THERETO, THAT THE SCHEME DID NOT PROVIDE AS TO HOW THE SUBSIDY AMOUNT SHOULD BE UTILIZED AND FOR WHICH ASSETS. THE SAID OBSERVATION, AMONG OTHERS, IS ITSELF SUFFICIENT TO DISLODGE THE ASSESSEES CASE, I.E., THE SAID DECISION WOULD ALSO BEAR OUT TO THE INVALIDITY OF THE ASSESS EES CLAIM IN THIS REGARD. EXPLANATION 10 TO S. 43(1), EVEN AS POINTED OUT BY THE LD. AR, ST OOD BROUGHT ON THE STATUTE TO WIDEN THE AMBIT OF S. 43(1), AND AS A PE RUSAL OF ITS TERMS WOULD SHOW, TO BRING IN TO THE FOLD OF `ACTUAL COST, ALL CAPITAL GRANTS, IRRESPECTIVE OF WHETHER EXTENDED SPECIFICALLY TO MEET THE COST OF A CAPITAL ASSET(S) , SO THAT, THEREBY, THE SCOPE OF THE WORD `INDIRECTLY EMPLOYED IN S. 43(1) STANDS CLARI FIED OR FURTHER AMPLIFIED. IN THE PRESENT CASE, ON THE OTHER HAND, THE GRANT UNDER RE FERENCE IS SPECIFICALLY TOWARD INVESTMENT IN BETTER TECHNOLOGY, EVEN LAYING DOWN T HE SPECIFICS OF THE PROCESSES IN WHICH THE SAME, TO BE ELIGIBLE, MUST FLOW IN. FURTH ER, THAT IT OBLIGES THE EXPORTER TO UNDERTAKE AN EXPORT OBLIGATION, IS, AS FOUND OUT BY US, ONLY A MANNER OF ENSURING THAT THE NEW TECHNOLOGY STANDS ACTUALLY ABSORBED BY THE BENEFICIARY-EXPORTER, AND THE LARGER OBJECTIVE OF THE INVESTMENT LEADING TO HIGHE R EXPORT MARKET FOR COUNTRY IN THE RELEVANT PRODUCTS, ACHIEVED. THE SAME WOULD, THEREF ORE, NOT OBSTRUCT IN ACCORDING A NORMATIVE INTERPRETATION AND MEANING TO THE PLAIN L ANGUAGE OF THE PROVISION. 5.6 WE, THEREFORE, WHILE DISMISSING THE REVENUE S CLAIMS, CONSIDER ITS STAND OF SOME MERIT, INASMUCH AS THE FINDING OF THE IMPUGNED SUM BEING A CAPITAL RECEIPT ITA NO. 880/COCH./2008 8 RESULTS IN A MODIFICATION IN THE ASSESSEES CLAIM FOR DEPRECIATION AND, CONSEQUENTLY, THE ASSESSEES INCOME. WE, ACCORDINGLY, DIRECT THAT THE COST OF THE RELEVANT ASSETS, ACQUIRED BY THE ASSESSEE UNDER THE SCHEME, AND WITH REFERENCE TO WHICH IT APPLICATION/PROPOSAL THERE-UNDER STOOD APPROVED/SAN CTIONED, BE REDUCED ON A PRO-RATA BASIS, AND THEIR `ACTUAL COST U/S. 43(1) BE DETERM INED ACCORDINGLY, WITH THE CONSEQUENT REVISION IN ITS CLAIM FOR DEPRECIATION ALLOWANCE U/S. 32(1) FOR THE CURRENT AND, TO BE FAIR TO IT, ALSO FOR FOLLOWING YEARS. TH E ASSESSEE SHALL EXTEND DUE COOPERATION TO THE REVENUE IN THIS REGARD, I.E., EN ABLE PROPER EFFECT BEING GIVEN TO THE SAID DIRECTION. WE FIND OURSELVES SUPPORTED IN OUR SAID DECISION BY THE DECISION IN THE CASE OF MEPCO INDUSTRIES LTD. V. CIT , 319 ITR 208 (SC). WE DECIDE ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 31ST MAY, 2010 GJ COPY TO: 1. SHRI KISHORKUMAR SHAMJI, PROP. KISHOR SPICES CO. , JEW TOWN, KOCHI- 682 002. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, MATTANCHERRY. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R./I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) ITA NO. 880/COCH./2008 9