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2023 (7) TMI 1281 - AT - Income TaxNature/Character of receipt - subsidy receipt - revenue or capital receipt - Applicability of purpose test - HELD THAT:- The amount of subsidy received by the assessee is towards the investment made in expansion of its industrial unit under the Package Incentive Scheme 2001. Applying the ‘purpose’ test, it would be characterised as a ‘Capital’ receipt. Further, it is not the case of the AO that Explanation 10 to section 43(1) is attracted. Thus, section 2(24)(xviii) would be attracted, in principle, but would not apply as the assessment year under consideration is prior to the insertion of the proviso. It is, therefore, held that the authorities below were not justified in treating the amount of subsidy as a ‘Revenue’ receipt chargeable to tax.
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