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2017 (2) TMI 1296 - HC - Income TaxGrant received by Assessee from Government of India - accrual of income - Held that:- In the case in hand grant/subsidy was forwarded by Government of India to help Assessee in its revival by making payment to employees towards VRS. It was a voluntary remittance fund by Government of India to Assessee. Despite our repeated query learned counsel appearing for appellant could not show anything so as to bring 'grant' or 'subsidy' same within any particular clause of Section 2 (24) of Act, 1961. Sub-clause (xviii) has been inserted in Section 2(24) by Finance Act, 2015 with effect from 01.04.2016 which deals with certain kind of subsidy or grant or cash incentive etc. by Government of India or State Government but that clause has no application in the present case. In view thereof, we answer Questions-(i) and (ii) both in favour of Assessee and against Revenue holding that amount of grant received by Assessee from Government of India could not have been treated as "income" and that being so, addition made by AO of amount of grant and upheld by Commissioner and Tribunal is not in accordance with law. Both these Questions are answered in favour of Assessee. Payment made to L.I.C. under Gratuity Insurance Scheme by referring to Section 40(A)(vii) - disallowance observing that fund was not recognized by Department - Held that:- A similar question was considered in CIT Vs. Textool Co. Ltd. (2009 (9) TMI 66 - SUPREME COURT) where also payment was made to L.I.C. towards group life assurance scheme and this was held to be an approved Scheme and there was no violation of Section 36(1)(v) of Act, 1961. Court held that a narrow interpretation straining language of Sub-Clause (v) so as to deny deduction to Assessee should not be followed since the objective of fund was achieved. - Decided in favour of assessee.
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