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2009 (12) TMI 87 - HC - Income TaxRespondent-assessee had received a sum of Rs. 3,73,000 as a subsidy granted by the State to encourage a hotel industry set up by the assessee - Admittedly, the subsidy has been announced by the State of Karnataka to encourage the hotel industry and the State is in the habit of releasing subsidy amount depending upon the budgetary allocation in each year. This court has come across in several cases that the State has released subsidy amount even after ten years of the commencement of the project. Therefore, the contention of the Revenue that since the assessee received the amount of subsidy after completion of the hotel project and commencing of the business, such receipt had to be taken as revenue receipt and not a capital receipt, cannot be accepted – held that, the subsidy received had to be treated as a capital receipt not liable to tax - Decided in favor of the assessee
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