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2018 (9) TMI 714 - HC - Income TaxAmount received from the State Government in the form of grant-in-aid - whether to be treated as revenue receipt, on the basis of application of funds so received, which was utilized for clearing salary, Provident Fund dues and flood relief? - Held that:- There is no separate business consideration on record between the grantor, that is the State Government and the recipient thereof being the assessee. The principle of law as laid down in the case of Siemens Pub. Communication Network P. Ltd. [2016 (12) TMI 507 - SUPREME COURT] is that voluntary payments made by the parent company to its loss making Indian subsidiary can also be understood to be payments made in order to protect the capital investment of the assessee company. Though the grant-in-aid in this case was received from public funds, the State Government being 100% shareholder, in our opinion, its position would be similar to that of, or at par with a parent company making voluntary payments to its loss making undertaking. No other specific business consideration on the part of the State has been demonstrated before us in this appeal. The assistance extended appears to us to be measures to keep the assesse company floating, the assessee being, for all practical purposes an extended arm of the State. Though large part of the funds were applied for salary and provident fund dues, the object of extension of assistance, it was argued before us, to ensure survival of the company. As regards the funds extended for flood relief, the same cannot constitute revenue receipt. Flood relief does not constitute part of business of the assessee. - Decided in favour of the assessee
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