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2014 (5) TMI 586 - HC - Income TaxSpecial capital incentive - to set up a new unit - revenue receipt or capital receipt – Held that:- Following Commissioner of Income Tax v/s Ponni Sugars & Chemicals Limited [2008 (9) TMI 14 - SUPREME COURT] - The Revenue has misunderstood and misconstrued the nature of receipts - Whenever new industries are to be set up in the State, there are incentives offered by the State Governments - They are offered directly or through some canalizing agencies like SICOM – also in Sahney Steel and Press Works Limited v/s Commissioner of Income Tax [1997 (9) TMI 3 - SUPREME Court] it has been that the character of receipt in the hands of the Assessee has to be determined with respect to the purpose for which the subsidy is given - The purpose test has to be applied - The point of time at which the subsidy is given is not relevant - The source is immaterial - The form of subsidy is immaterial - The main condition and with which the Court should be concerned is that the incentive must be utilized by the Assessee to set up a new unit or for substantial expansion of existing unit - If the object of the subsidy scheme is to enable the Assessee to run the business more profitably, then, the receipt is on the revenue account – no substantial question of law arises for consideration – Decided against Revenue.
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