JUDGMENT : K.S. Jhaveri, J. 1. Tax Appeal No. 61/2008 has been admitted for consideration of the following substantial question of law: "Whether on the facts and in the circumstances of the case and in law, the ITAT was right in law in treating expenditure of computer software as revenue expenditure?" 1.1 Whereas, Tax Appeal No. 69/2008 has been admitted for consideration of the following substantial question of law: "Whether on the facts and circumstances of the case and in law the Appellate Tribunal was justified in holding that the exchange rate difference pertaining to exports made in earlier year is part and parcel of export proceeds only and was 'profit of business' within the meaning of Section 80HHC of the Act?" 2. The issue involved in these Tax Appeals is already decided by this Court in a judgment rendered in Tax Appeal No. 114/2008 decided on 09.06.2016. For ready reference, the said judgment is reproduced hereunder; "1. The appellant assessee in this appeal under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act) has challenged the order dated 23.03.2007 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench Camp at Baroda (hereinafter referred to as the Tribunal) in ITA No. 1999/Ahd/2004 for the assessment year 2001-02. 2. This court, vide order dated 03.03.2008 had admitted the appeal on the following substantial questions of law: 1. Whether on the facts and in the circumstances of the case and in law, the ITAT was right in law in holding that assessee is entitled to claim depreciation on the 30% of the value of the plant and machinery received by way of grant from NDDB under 70% Loan and 30% Grant Scheme? 2. Whether on the facts and in the circumstances of the case and in law, the ITAT was right in law in treating expenditure of computer software as revenue expenditure? 3. The assessee is a Co-operative Society incorporated under the Gujarat Co-operative Society Act and is engaged in the business of marketing and manufacturing of milk and milk products and consignee agent of NDDBs edible oil and safal drink and also a consignee agent of Member Union for milk products. In the period relevant to the assessment year 1997-98, the assessee established a milk processing unit at Gandhinagar. In the period relevant to the assessment year 1997-98, the assessee established a milk processing unit at Gandhinagar. The finance for this project was provided by the NDDB partly by way of loan and partly by way of grant under the direction of the Govt. of India, Ministry of Agriculture and Irrigation (Dept. of Agriculture) vide their letter dated 26.06.1987. The NDDB reimbursed 30% of the sum invested in the project by way of the said grant. Thus, the purpose of this grant was directly to reimburse 30% of the cost of the project, the balance 70% having been lent by the NDDB as per separate agreement dated 30.10.1991. The Assessing Officer reduced the cost of the assets of the project by the amount of grant for the purpose of computing depreciation in accordance with section 43(1) of the Act by observing that the grant was given for the project as a whole and therefore it was not directly linked with the cost of any particular asset. The Tribunal confirmed the order of CIT(A) concurring with his finding. Being aggrieved by the said orders, the present appeal is preferred. 4. Mr. K.M. Parikh, learned advocate appearing for the department assessor submitted that so far as question No. 1 is concerned, the Tribunal has substantially erred in law and on facts in confirming the order of CIT(A) who negatived the reduction under section 43(1) of the actual cost of the assets by the amount of grant given by the NDDB without considering the ratio laid down by the Apex Court in the case of CIT v. P.J. Chemicals Ltd. as well as the subsequent enactment of explanation 10 to section 43(1). 4.1 Mr. Parikh further submitted that the Tribunal also erred in holding the expenditure on acquisition of computer software as revenue expenditure by disregarding the enduring nature of benefit arising from the expenditure and the ratio settled in several case laws on the subject. 5. On the other hand, Mr. S.N. Soparkar, learned Senior Counsel appearing with Ms. 4.1 Mr. Parikh further submitted that the Tribunal also erred in holding the expenditure on acquisition of computer software as revenue expenditure by disregarding the enduring nature of benefit arising from the expenditure and the ratio settled in several case laws on the subject. 5. On the other hand, Mr. S.N. Soparkar, learned Senior Counsel appearing with Ms. Swati Soparkar, learned advocate for the assessee supported the impugned order passed by the Tribunal and submitted that the actual cost must depend on the amount paid by the assessee to acquire the asset and that it is settled provision of law that even if an asset is purchased from non-repayable subsidy received from the Government, the cost of the asset will be the price paid by the assessee for acquiring the asset and that the price cannot change by any event subsequent to the acquisition of the asset. He submitted the so far as question No. 1 is concerned, the same is covered by the decision of this Court rendered in Tax Appeal No. 255 of 2007 dated 05.10.2015. 5.1 So far as question No. 2 is concerned, he submitted that the Tribunal has rightly answered the issue in favour of the assessee by holding that the software programmes cannot be said to be an acquisition of asset or an expenditure of enduring nature. 6. We have adverted to the merits of the rival submissions. So far as issue No. 1 is concerned, we are of the opinion that the same is covered by the decision of this Court rendered on 05.10.2015 in Tax Appeal No. 255 of 2007, relevant portion of which reads as under: "8. The facts of the case are required to be examined in the light of the above statutory provisions. At the relevant time when the assets came to be acquired in the year 1993-94, the subsidy, though sanctioned had not been disbursed. At the time when the assets came to be acquired, section 43(1) of the Act did not provide for non-inclusion of the subsidy received in the actual cost. Accordingly, the actual cost came to be computed in terms of the provisions in force at the relevant time. It may be noted that the assets in relation to which subsidy has been granted, form part of a block of assets and depreciation is granted on the written down value of the block of assets. Accordingly, the actual cost came to be computed in terms of the provisions in force at the relevant time. It may be noted that the assets in relation to which subsidy has been granted, form part of a block of assets and depreciation is granted on the written down value of the block of assets. In relation to block of assets, it is not possible to segregate items falling within the block for the purposes of granting depreciation or restricting the claim thereof. The subsidy of Rs. 25,00,000/- in relation to the assets in question came to be released in the year under consideration, by which time Explanation 10 to section 43(1) came to be inserted in the statute book, and accordingly, the Assessing Officer held that the cost of assets is required to be reduced out of the written down value of their respective blocks to the extent of Rs. 25,00,000/-. 9. At this juncture, it may be noted that the expression actual cost envisages the actual cost of asset as reduced by any amount received directly or indirectly from any person or authority and Explanation 10 to section 43(1) of the Act, clearly provides that where a portion of the cost of an asset acquired by the assessee had been met directly or indirectly by the Central Government or a State Government or any authority established under any law or by any person, in the form of a subsidy, then, so much of the cost as is relatable to such subsidy, shall not be included in the actual cost of the asset to the assessee. A plain reading of section 43(1) of the Act, shows that, ordinarily, when any subsidy is received qua an asset, it would not be included in the actual cost of the asset to the assessee. In other words, the cost of the asset in the hands of the assessee would stand reduced to the extent of subsidy received by the assessee for the purchase of such asset. However, in the present case, the assessee created total facility by constructing building and installing various machineries in 1993-94. Thus, the actual cost of the assets in respect of which subsidy has been granted, came to be determined at the relevant time. However, in the present case, the assessee created total facility by constructing building and installing various machineries in 1993-94. Thus, the actual cost of the assets in respect of which subsidy has been granted, came to be determined at the relevant time. Thereafter, the assets entered the block of assets and lost their independent identity and the cost of such assets merged with the other assets in the block. At the time when the actual cost of the assets came to be computed under section 43(1) of the Act, Explanation 10 was not on the statute book and therefore, the assessee was not required to reduce the amount of subsidy from the actual cost. Moreover, at that point of time, though the subsidy had been sanctioned, the same was not disbursed. The subsidy came to be actually given in the year under consideration; a long time after the actual cost of assets came to be determined under section 43(1) of the Act. The question that arises for consideration is as to whether Explanation 10 to section 43(1) of the Act can be given effect to in the facts and circumstances of this case, by reducing the actual cost of the assets by the amount of subsidy received by the assessee. To put it differently, whether at this stage it would be possible to ascertain the actual cost of such assets in terms of Explanation 10 to section 43(1) of the Act, inasmuch as, once such assets enter the block, the depreciation is computed on the written down value of the block of assets as envisaged in section 43(6)(c) of the Act. In terms of section 43(6)(c) of the Act, the written down value can be computed only in the manner provided thereunder, namely, by adding the actual cost of any asset falling within that block acquired during the previous year or by deducting the moneys payable in respect of any asset within the block, which is sold, discarded or demolished or destroyed during the previous year together with the amount of the scrap value. The statute does not contemplate any other category for computing the written down value of a block of assets. The statute does not contemplate any other category for computing the written down value of a block of assets. Therefore, section 43(6)(c) of the Act does not permit reducing the written down value of the block of assets by the amount of subsidy received in relation to some of the assets forming part of the block of assets. Consequently, the costs of assets cannot be reduced out of the written down value of their respective blocks to the extent of Rs. 25,00,000/- as the statute does not envisage any manner of doing so. When the Assessing Officer reduces the cost of assets out of the written down value of the block of assets, he is reducing not only the cost of assets in relation to which the subsidy is granted, but the cost of all assets forming part of the block, irrespective of whether any subsidy was granted in respect of such assets. Under the circumstances, when the statute does not contemplate computation of actual cost of asset after it becomes part of a block of assets, Explanation 10 to sub-section (1) of section 43 of the Act cannot be made applicable to assets of which the actual cost has been determined much before the insertion thereof and which also form part of a block of assets. Therefore, when it is not possible to apply Explanation 10 of section 43(1) of the Act, in relation to an asset which has entered into the block much before the insertion thereof, it must be regarded as never having been intended by the legislature to apply to assets forming part of a block of assets which have entered the block much before the insertion of Explanation 10 to sub-section (1) of section 43 of the Act. 10. Another aspect of the matter is that on the date when the assessee had invested in fixed capital assets, Explanation 10 to subsection (1) of section 43 of the Act was not on the statute book and hence, the actual cost came to be computed in terms of the law as existing at the relevant time. Nothing happened in the year under consideration so as to justify the action of reduction from the written down value of the block of assets. Nothing happened in the year under consideration so as to justify the action of reduction from the written down value of the block of assets. Explanation 10 to sub-section (1) of section 43 of the Act came into effect only from 1.4.1999 that too prospectively and, therefore, has no application, more so, when plant itself was set-up in assessment year 1993-94. 11. In the light of the above discussion, the first question is answered in the negative that is in favour of the appellant assessee and against the revenue. It is, accordingly, held that the Income Tax Appellate Tribunal was not right in law in holding that the amount of subsidy received prior to insertion of Explanation 10 to sub-section (1) of section 43 of the Act can still be reduced from the cost of assets." 7. Thus, in light of the above discussion we answer the first question in favour of the assessee and against the revenue. 8. So far as question No. 2 is concerned, we are of the opinion that the Tribunal was justified in answering the issue in favour of the assessee and against the revenue. The Tribunal has relied upon another decision of the Tribunal in the assessees own case for assessment year 2000-01 in ITA No. 102/Ahd/2006 vide order dated 26.09.2006. We are in complete agreement with the same and therefore answer question No. 2 also in favour of assessee and against the revenue. 9. In the premises aforesaid, both the questions are answered in favour of the assessee and against the revenue. Appeals are dismissed accordingly." 3. In view of the aforesaid, the questions raised in both the appeals are answered in favour of the assessee and against the Revenue. Both the appeals are, accordingly, dismissed. No order as to costs.