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2013 (11) TMI 1488 - HC - Income TaxSubvention payment - Revenue receipt or capital receipt - Held that:- Huge amounts were paid by the parent company not only to make good the loss, but also to see that the assessee would run more profitably - The monies paid were not utilized either for repayment of the loan undertaken by the assessee for setting up their unit or for expansion of existing unit/business - The main eligibility condition with which we are concerned is that the amount ought to have been utilized by the assessee to meet recurring expenses and/or to run their business more profitably and so also to get out of the loss that they were suffering at the relevant time - It is the object which is relevant for the financial assistance which determines the nature of such assistance The character of the receipts in the hands of the assessee has to be determined with respect to the purpose for which payment was made. If the financial assistance is extended for repayment of the loan undertaken by the assessee for setting up new unit or for expansion of existing business then the receipt of such aid could be termed as capital in nature - If the financial assistance is extended to run business more profitably or to meet recurring expenses, such payment will have to be treated as revenue receipt - In the present case, the financial assistance was extended neither for setting up any unit or expansion of existing business or for acquiring any assets - Decided in favour of Revenue.
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