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2013 (9) TMI 299 - HC - Income TaxCapital or Revenue receipt - Nature of Subsidy received from holding company State Trading Corporation of India (STC) - Held that:- In the present case, Rs.25 lakhs was not paid by a third party or by a public authority but by the holding company. It was not on account of any trade or a commercial transaction between the subsidiary and holding company. The holding company was a shareholder and the shares partake and were in nature of capital. Share subscription money received in the hands of the respondent assessee was a capital receipt. The intention and purpose behind the said payment was to secure and protect the capital investment made by STC Ltd. in the respondent. The payment of grant by STC and receipt thereof by the respondent was not during the course of trade or performance of trade, thus, could be categorised or classified as a gift or a capital grant and did not partake character of a trading receipts. - The receipt is capital in nature - Decided in favor of assessee. The findings recorded by the Delhi High Court in their earlier decision in the case of the respondent/assessee [1981 (12) TMI 25 - DELHI High Court] is the grant given by the holding company was of capital nature and not revenue or contributing to the trading income of the respondent. Even when we apply the purpose test applied in the case of Sahney Steel & Press Works Ltd. (1997 (9) TMI 3 - SUPREME Court) as explained in Ponni Sugar and Chemicals Ltd. (2008 (9) TMI 14 - SUPREME COURT). It cannot be said that the earlier decision of the Delhi High Court [1981 (12) TMI 25 - DELHI High Court] has been overturned or overruled by the Supreme Court in the two decisions mentioned above. - Decided against Revenue.
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