TMI Blog2022 (5) TMI 1415X X X X Extracts X X X X X X X X Extracts X X X X ..... organization or has been constituted as a profit making venture. The matter can be viewed from another angle. The term income as defined in Section 2(24) is inclusive of various heads mentioned therein. Prior to amending Act 20 of 2015, there was nothing specific in Section 2(24) of the Act which would include grant-in-aid by the Central or the State Government called by whatever name. It was only by way of said amendment, made effective from 01.04.2016 that such monetary release by State or Central Government has been incorporated as income by way of Section 2(24) (xviii). Even in this clause exemption has been carved out in respect of subsidy or grant by Central Government for the purpose of corpus of a trust or institution established by the Central Government or State Government, as the case may be. This clearly illustrates the legislative intent that prior to 01.04.2016, the type of grant as is the subject matter of instant lis was not specifically included as income. The latter inclusion of such provision will not have retrospective application. Even by way of aforesaid amendment, exemption is available to the institutions like the assessee, as noticed above. In Kalpna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id provided by the Government of India subject to following conditions: - (i) Audited statement of expenditure and Utilization Certificate for sanctioned amount from the competent authority should be furnished to the Nursing Adviser, Ministry of Health and Family Welfare, Nirman Bhawan, New Delhi-110011 Tel. 23062726 (Fax No. 23062310). (ii) The funds may be deposited in a separate Bank Account opened for this purpose only. Further, interest earned on the grant should also be accounted for and utilized for the same scheme/purpose. (iii) For speedy implementation of the scheme, the civil construction under the scheme may be got executed through the agencies approved by the State Govt. (iv) The funds sanctioned will be utilized for the purpose for which it is sanctioned. (v) This is one time assistance both for non-recurring and recurring expenditure for the entire XI plan period. The State Govt. will bear the recurring expenditure form XII plan onwards. (vi) Quarterly Progress report may be sent to Mr. T. Dileep Kumar, Nursing Adviser, Ministry of Health Family Welfare, Nirman Bhawan, New Delhi. (vii) The expenditure should be incurred as per gui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel for the appellant Mrs Vandana Kuthiala, learned Counsel for the respondent and have also gone through the entire record. 7. The primary issue is whether the grant-in-aid received by the assessee was capital receipt or revenue receipt? Thus, the substantial questions (c) and (d) are being taken for consideration in the first instance. 8. Section 2(24) of the Act defines income. According to assessment order, the grant-in-aid was income of assessee under Section 2(24)(iia) of the Act. Before adverting further, it will be gainful to analyse the nature of transaction by way of which the assessee received grant-in-aid. 9. Assessee is an institution which is the creation of Himachal Pradesh Nursing Registration Council Act, 1977. The purpose of constitution of assessee is to carry out the provisions of the Act supra. Assessee is substantially funded by the Government. The predominant function of the assessee is to regulate the registration of nursing and allied staff and to maintain the high standards of professionalism in nursing profession. The assessee has thus gratuitous functions without any independent source of income. 10. The grant-in-aid was issued in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... normal working of the undertaking. The giving of financial aid or subsidy is at the discretion of the Government. The grantin- aid, thus, in that case was not held to be a product of normal business activity. The case in hand, in our considered view, has better footing. 13. The matter can be viewed from another angle. The term income as defined in Section 2(24) is inclusive of various heads mentioned therein. Prior to amending Act 20 of 2015, there was nothing specific in Section 2(24) of the Act which would include grant-in-aid by the Central or the State Government called by whatever name. It was only by way of said amendment, made effective from 01.04.2016 that such monetary release by State or Central Government has been incorporated as income by way of Section 2(24) (xviii). Even in this clause exemption has been carved out in respect of subsidy or grant by Central Government for the purpose of corpus of a trust or institution established by the Central Government or State Government, as the case may be. This clearly illustrates the legislative intent that prior to 01.04.2016, the type of grant as is the subject matter of instant lis was not specifically included as income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d year after year only after setting up of the new industry and only after commencement of production and, therefore, such a subsidy could only be treated as assistance given for the purpose of carrying on the business of the assessee. Consequently, the contentions raised on behalf of the assessee on the facts of that case stood rejected and it was held that the subsidy received by Sahney Steel could not be regarded as anything but a revenue receipt. Accordingly, the matter was decided against the assessee. The importance of the judgment of this Court in Sahney Steel case lies in the fact that it has discussed and analysed the entire case law and it has laid down the basic test to be applied in judging the character of a subsidy. That test is that the character of the receipt in the hands of the assessee has to be determined with respect to the purpose for which the subsidy is given. In other words, in such cases, one has to apply the purpose test. The point of time at which the subsidy is paid is not relevant. The source is immaterial. The form of subsidy is immaterial. The main eligibility condition in the scheme with which we are concerned in this case is that the incentive must ..... X X X X Extracts X X X X X X X X Extracts X X X X
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