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2013 (3) TMI 99 - HC - Income TaxNature of subsidy received - Capital or revenue receipt - compensation for loss of profit - held that:- The Janta Cloth Scheme for the handloom sector was introduced with the twin objective of providing sustained employment to the unemployed and underemployed handloom weavers and at the same time to provide cheaper cloth to the weaker section of the population of our country. The subsidy was payable on the basis of actual deliveries of Janta Cloth. 20% of the subsidy was meant for meeting overhead expenses whereas 80% was to be utilised for meeting the cost of production. Applying the principles laid down by the Apex Court [in the case of Sahney Steel & Press Works Ltd. Versus Commissioner of Income Tax,A.P.-I, Hyderabad, (1997 (9) TMI 3 - SUPREME COURT)] to the facts of the present case, we find that one of the objectives of the Janta Cloth Scheme was to provide cheaper cloth to the weaker section of the population of our country. The subsidy was payable on actual deliveries made and not on the portion relating to goods returned. 20% of the subsidy was meant for meeting the overhead expenses while 80% was to be utilised for meeting the cost of production. Anything incurred towards overhead expenses and cost of production is necessarily a revenue expenditure. Therefore, amount given as subsidy to meet any revenue expenditure can safely be termed as revenue receipt. - Decided in favor of revenue.
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