JUDGMENT S. N. Phukan, C. J.—By this common judgment and order we propose to dispose of the above said Income Tax References. 2. All the references are under sub-section (I) of section 256 of the Indian Income-tax Act, 1961 ("the Act" in short) from the Income-tax Appellate Tribunal, Chandigarh on the prayer of the Revenue. The common question has been referred to this Court for opinion. We may refer to only one question in Income-tax Reference No. 1 of 1991. The said question is : "Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that cash subsidies received by the assessee are not to be deducted from the cost of machinery and plant and building under section 43 (1) of the Income-tax Act, 1961, for determining their actual cost for the purposes of depreciation under section 32 of the Act.” 3. We may also refer to the facts of the case in the above Reference (1 of 1991). The Assessing Officer in this case found that subsidy received for the value of capital assets, the assessee did not reduce the said subsidy to work out depreciation and investment allowance. Accordingly the Assessing Officer disallowed the deduction of subsidy received in that respect and made the assessment accordingly; thereby allowing the depreciation and investment allowance after reducing the subsidy from the value of assets. Being aggrieved, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) who decided the case in favour of the assessee. An appeal was laid by the Revenue before the Tribunal which was also decided in favour of the assessee. 4. The Tribunal took note of the decisions of Madhya Pradesh High Court in Commissioner of Income tax v. Bhandari Capacitors Private Ltd.% (1987) 169 ITR 647 and Commissioner of Income-tax v. Premier Extraction (P) Ltd, (1989) 175 ITR 22 (Indore Bench) and also the decision of Karnataka High Court in Commissioner of Income-tax v. Diamond Dies Manufacturing Corporation Ltd., (1988) 172 ITR 655, and noted that there are conflicting views expressed by various High Courts and accordingly made the present references holding that the above question being a question of law is referable to this Court. We have heard the learned Counsel for the Revenue as well as the learned Counsel for the assessees. We have heard the learned Counsel for the Revenue as well as the learned Counsel for the assessees. Before considering the question independently we may first refer to various decisions of different High Courts on this point. 5. The Madhya Pradesh High Court in Bhandari Capacitors case (supra) considered the question, namely, whether the capital subsidy was not deductible in computing the actual cost of the asset as defined in section 43 (1) of the Act for the purposes of calculating the depreciation and investment allowance admissible to the assessee and relying upon the decision of Madhya Pradesh High Court in Commissioner of Income-tax v. Godavari Plywood Ltd., (1987) 168 ITR 632, held that as the cash subsidy was not granted for the specified purpose of meeting any portion of the fixed capital costs, machinery etc, therefore, the amount of such subsidy was not deductible in computing the actual costs and asset as defined in section 43 (1) of the Act. In Godavari Plywoods case (supra)9 the same High Court while considering central subsidy scheme as well as State incentive schemes for such subsidies took the similar view. 6. The same point was also considered by Karnataka High Court in Diamond Diess case (supra) and held that subsidy cannot be deducted from the actual costs and assets and the depreciation shall be allowed without reducing the same by the amount of subsidy granted. The Madhya Pradesh High Court in Premier Extractions case (supra) also considered the same question and answered it in favour of the assessee and against the Revenue. The same view was expressed by Gujarat High Court in Com missioner of Income-tax v. Grace Paper Industries Pvt. Ltd. etc., (1990) 183 ITR 591, and also by Kerala High Court in Commissioner of Income-tax v. Kerala State Drugs and Pharmaceuticals Ltd, (1990) 184 ITR 424. Madras High Court was also of similar view as reported in Srinivas Industries v. Commissioner of Income-tax, (1991) 188 ITR 22. 7. Madras High Court was also of similar view as reported in Srinivas Industries v. Commissioner of Income-tax, (1991) 188 ITR 22. 7. A similar view was taken on the same question by different High Courts in the following cases, Commissioner of Income-tax v. Cochin Co, (P) Ltd, (1990) 184 ITR 230 ; Commissioner of Income-tax v. Ambica Electrolytic Capacitors Pvt. Ltd. and others, (1991) 191 ITR 494 ; Commissioner of Income-tax v. Shree Rayalaseema Paper Mills Ltd., (19^2) 198 ITR 156 ; Commissioner of Income-tax v. Orissa Industries Ltd., (1992) 198 ITR 251 ; Commissioner of Income-tax v. Coromandel Leathers (Pvt.) Ltd., (1992) 198 ITR 260 ; Commissioner of Income-tax v. Kalinga Jute Products Pvt. Ltd., (1992) 196 ITR 633 ; Commissioner of Income-tax v. Metal Powder Co. Ltd, (1992) 197 ITR 516 ; Commissioner of Income-tax v. Progressive Engineering, (1993) 200 ITR 231 and Commissioner of Income-tax v. Meghalaya Plywood Ltd, (1993) 202 ITR 343. 8. This question also came up before this Court and the same answer was given. The decision was rendered in Commissioner of Income-tax v. Muchira Papers Ltd., (1994) 208 ITR 601. 9. It may be stated that only Punjab and Haryana High Court has taken a contrary view in Ludhiana Central Co-operative Consumers Store v. Commissioner of Income-tax, (1980) 122 ITR 942. We are unable to accept the view expressed by Punjab and Haryana High Court and instead accept the view expressed by other High Courts for the reasons stated below. 10. From the facts of the cases we find that subsidy was granted to promote industries in backward areas by affording incentive to entrepreneurs to start industries in such areas. This subsidy is, however, refundable if industry is not operated for five years. It appears from the record that this amount of subsidy can be used for any purpose connected with industry as it desires and the subsidy amount is relative to the cost of land, the rent or the building or plant and machinery and out of the total amount, a percentage is given as cost. 11 Section 43 of the Act defines certain terms relevant to income from profits and gains of business or profession. 11 Section 43 of the Act defines certain terms relevant to income from profits and gains of business or profession. Sub-section (1) of the said section inter alia provides that for the purpose of sections 28 to 41 and section 43, "actual cost’ means the actual cost of the assets to the assessee, reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority. 12. From the subsidy scheme it appears that the subsidy is not to subsidise the cost of any particular asset such as plant and machinery but the purpose of the said scheme is to give incentive to entrepreneurs. Therefore,, it cannot be said that the subsidy offered or granted is to subsidise the cost of plant or machinery. The assessee has to pay the full cost of plant and machinery and that being the position and as the subsidy is not granted to meet any portion of the cost of acquiring any plant and machinery, the subsidy received by the assessee from the Government is not deductible from the cost of plant and machinery for the purpose of calculating depreciation thereon. We say so as this subsidy will not come under section 43 of the Act. We may also add that the assessee may spend the subsidy as he desires in connection with the industry established by him as it is a monetary incentive to set up industry for backward areas. 13. For the above reasons, we are unable to agree with the views expressed by Punjab and Haryana High Court but accept the view expressed by other High Courts. 14. We, therefore, answer the question in the affirmative, that is, in favour of the assessee and against the Revenue and dispose of all the abovesaid references accordingly. A copy of the judgment under the signature of the Registrar and seal of the High Court shall be transmitted to the Appellate Tribunal. No order as to costs. Order accordingly.