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2020 (9) TMI 667 - AT - Income TaxSales tax subsidy received as per UP Govt. Scheme - Revenue or capital receipts - HELD THAT:- Keeping in perspective the principle laid down in Ponni Sugars [2008 (9) TMI 14 - SUPREME COURT] case referred to above, if we examine the U.P. Government subsidy scheme under which the assessee has received the sales tax incentive it is to be noted that the purpose of the subsidy scheme is to attract people to invest and take part in industrialization of certain areas in the State. The subsidy scheme nowhere states that it is for the benefit of generating product purchase from the town I district of U.P. As held by the Hon’ble Supreme Court in case of Ponni Sugars (supra), if the object 'scheme, was to enable the assessec to set-up a new unit or to expand the unit then the receipt of subsidy was on capital account. The same is the case with the assessee as the U.P. Government subsidy scheme was for enabling the assessee to expand / modernize Grasim Industries Limited its existing unit. We hold that the sales tax subsidy received by the assessee being a capital receipt is not taxable. This ground is allowed.
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