These three appeals filed by Department relate to same assessee. Hence they are heard together and disposed by this common order for sake of convenience. first two common grounds taken in these three appeals are as under: "1. For that ld. CIT (A) was not justified in giving directions that investment allowance under s. 32A should be granted to assessee without deducting central subsidy received by assessee. For that ld. CIT (A) was not justified in directing that depreciation should be allowed to assessee without deducting central subsidy received by assessee." assessee is limited company deriving income from manufacture and sale of Asbestos. assessment years involved in these three appeals are 1979-80, 1980-81 and 1981-82. assessee received certain amounts as subsidy under Central investment subsidy scheme. This scheme applied to industrially backward districts/areas, as listed in annexure to scheme. According to scheme, new industrial units engaged in manufacture of certain items are eligible to claim 10 per cent to 15 per cent central investment subsidy under said scheme. amount is calculated at 10 per cent to 15 per cent of fixed capital investments made on or after 1st March, 1973 subject to ceiling of Rs. 15 lakhs. elaborate procedure has been laid down for claiming subsidy and verification of claim and final payment. It may be mentioned that amount of subsidy is not given for purpose of purchasing plant or machinery or any particular asset. intention of scheme is clear form introduction stetted in first paragraph of scheme, namely, encouragement of setting up of industrial units in backward areas of country. reference be 10 per cent to 15 per cent of capital investments is only measure of subsidy and is not meant to offset cost of any particular asset of assessee. AO held view that aforesaid subsidy amount received by assessee should be deducted from cost of plant and machinery of purpose of determining their actual cost under s. 43(1). Accordingly, he allowed depreciation on plant and machinery only on balance arrived at after deducting subsidy amount received by assessee form cost of these assets. assessee appealed to CIT(A) and contended that AO was not justified in reducing cost of plant and machinery by amount of subsidy for purpose of granting depreciation allowance. CIT(A) agreed with contention of assessee and directed AO to allow depreciation on full cost of plant and machinery without deducting subsidy amount therefrom. Shri R. C. Joshi, ld. Representative for Department urged before us that CIT(A) erred in his decision. He relied on following cases in support of his contentions: CIT vs. Ambala Cantt. Electric Supply (1971) 82 ITR 217 (P&H) CIT vs. Hides & Leather Products (1975) 101 ITR 61 (Guj) Lucknow Producers Cooperative Milk Union vs. CIT (1983) 34 CTR (All) 81: (1983) 143 ITR 60 (All). Shri H. Khound, ld. Representative for assessee, on other hand, stated that decision relied on ld. Representative for Department are either distinguishable on facts or has been considered by Special Bench of Tribunal in case of Pioneer Match Works vs. ITO (1982) 1 SOT 331 (Mad) (SB) and decision of Tribunal in case of ITO vs. Embee Textiles (P) Ltd. (1985) 21 TTJ (Mad) 578 (TM): (1984) 10 ITD 75 (Mad) (TM). He took us through Central subsidy scheme form which we have already noted down essential features of scheme in earlier part of this order. He urged that Spl. Bench of Tribunal in case of Pioneer Match Works (supra) and other Bench of Tribunal which was decided by majority of 2 to 1 in case of Embee Textiles (P) Ltd. (supra) have exhaustively considered all aspects of issue now before us and have come to conclusion that case like this, no deduction of subsidy amount can be made from cost of plant and machinery either for purpose of depreciation or for purpose of investment allowance. We have considered contentions of both parties as well as facts We have considered contentions of both parties as well as facts on record. We find force in contentions raised for assessee. We have gone through aforesaid two decisions of Tribunal. We also find that decision cited by ld. Representative for Department has been considered in these cases except case of Ambala Cantt. Electirc Supply (supra). We have gone through aforesaid case but we find that facts therein were different from those of case before us. That reported case was of electric supply company decided under India IT Act, 1922. It was also held therein that actual cost means cost actually ascertained and do not mean that cost should necessarily be defrayed form assessee s now resources. Consequently, that case was decided in favour of assessee inasmuch as depreciation was allowed on entire cost of asset without deducting recovery form customers therefrom. Hence, we do not find this case to be of any help to revenue. On contrary aforesaid two decisions have considered matter from all angles and come to categorical finding that where lump sum subsidy is given for encouraging industrialisation of backward areas without any intention to reduce cost of any plant and machinery, then such subsidy cannot be deducted from cost of plant and machinery, for purpose of allowing depreciation or investment allowance. Respectfully, following said decisions, we upheld order of CIT(A). In other words, we decide that CIT(A) was justified in directing AO to allow investment allowance as well as depreciation on cost of plant and machinery without deducting subsidy received from Govt. This disposes of first two common grounds. We may state that two grounds taken in asst. yr. 1981-82 are misconceived as no subsidy was received during that year. only other common ground relates to asst. yr. 1979-80 and 1981- 82. ground taken in this regard in asst. yr. 1980-81 is misconceived as there has been no tubewell during this year. This common ground states that CIT(A) erred in directing that investment allowance should be granted to assessee on tubewell dug by assessee inside its factory premises. A O did not allow investment allowance, on cost of boring these tubewells. On appeal CIT(A) found that tubewells were necessary to supply water needed for during Asbestos manufactured by assessee. These tubewells were not used for supplying drinking water at any residential premises. These deed tubewells were part and parcel of factory complex itself. Hence, he directed that investment allowance in accordance with law should be allowed on these tubewells. We have heard Shri R. C. Joshi, ld. Representative for Department who stated that CIT(A) erred in his decision. On other hand, Shri H. Khound, ld. Representative for assessee supported order of CIT(A). We have considered contentions of both parties as well as facts on record. We find force in contentions raised for assessee. In out opinion CIT(A) has arrived at correct decision in facts and circumstances of case and so we uphold his order on this point. In result, three appeal are dismissed. *** INSPECTING ASSISTANT COMMISSIONER OF INCOME TAX v. ASSAM ASBESTOS LIMITED