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2011 (5) TMI 23 - HC - Income Tax
Whether the subsidy granted by the Government of West Bengal in favour of the assessee to the extent of Rs.5,34,86,887/- should be treated to be a capital receipt or not - held that if the object of the Subsidy Scheme was to enable the assessee to run the business more profitably the receipt is on revenue account - if the object of the assistance under the Subsidy Scheme was to enable the assessee to set up a new unit or to expand the existing unit the receipt of the subsidy was on capital account - merely because the amount of subsidy was equivalent to 90% of the sales tax paid by the beneficiary does not imply that the same was in the form of refund of sale tax paid - Supreme Court in the case of Senairam Doongarmall Vs. Commissioner of Income-tax, Assam, reported in (1961 -TMI - 49504 - SUPREME Court), it is the quality of the payment that is decisive of the character of the payment and not the method of the payment or its measure, and makes it fall within capital or revenue - Accordingly decided in the favour of the assessee