Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (4) TMI 675 - AT - Income TaxCharacterization of income - subsidy receipt as capital in nature or revenue - HELD THAT:- From the Preamble of Package Scheme Incentive, 2007, it is clear that the object of subsidy is only to encourage the dispersal of industries to the less developed areas of the State, Government has been giving a Package of Incentives to New / Expansion Units set up in the developing region of the State since 1964 under a Scheme popularly known as the Package of Incentives and scheme was amended from time to time, known as 2001 Scheme which is operative from the 1st April, 2001 to 31st March, 2007. It is clear that the object of the subsidy was to encourage setting up of industries in less developed areas. It is settled proposition of law that the test to be applied to determine whether the subsidy is capital or revenue in nature is the purposive test as held by the Apex Court in the case of Ponni Sugars and Chemicals Ltd. [2008 (9) TMI 14 - SUPREME COURT] and the identical issue was decided by the Hyderabad Bench of Tribunal (wherein A.M. is Author of order) in the case of Thermo Cables Limited Vs. ACIT [2018 (8) TMI 2026 - ITAT HYDERABAD] Thus it is undisputed fact that the object of the Subsidy Scheme is only to encourage the setting up of industries and not to subsidize the operating expenses of industry. Therefore, we are of the considered opinion that the subsidy received by the assessee is only capital in nature. Accordingly, we reverse the orders of authorities below and allow the appeal filed by the assessee.
|