TMI Blog2015 (4) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly. The Apex Court decision was passed in the year 1997 still holds the field and there is no valid reason urged to deviate from the ratio laid down by the Apex Court. - Decided in favour of assessee. - ITR No. 7/2005 - - - Dated:- 25-2-2015 - S. R. Waghmare And Jarat Kumar Jain,JJ. For the Appellant : None For the Respondent : Shri R L Jain, Learned Sr. Counsel Ku Veena Mandlik, Learned Counsel ORDER Per Mrs. S R Waghmare,J. This reference has been received from the Income Tax Appellate Tribunal, Indore in pursuance to the directions issued by this Court in I.T.R. No. 60/2000 dated 04/11/2000 dated 04/11/2004. The Reference is admitted for hearing on the following question referred by the Tribunal: Wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsidy agreement of January, 1987 (enclosed and marked as Annexure1, AnnexureII and AnnexureIII respectively) which give in detail the conditions for grant of the said subsidy. However, the appellant company filed its return of income on 27/6/1988 declaring a loss of ₹ 12,06,393/-. The depreciation amount was ₹ 10,93,511/-. The company had received subsidy of ₹ 3,49,750/- for employing scheduled caste and scheduled tribes candidates, which was not offered as income for assessment, but the Assessment Officer treated the same as a revenue receipt. The assessment order has been enclosed and marked as AnnexureIV. The A. O. held thus: The decision of the Dusad Industries is in respect of Salestax subsidy and not the subsidy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rade receipt. It appears to me to have been simply a grant made by the Government for the purpose which I have mentioned, and in those circumstances cannot be included in revenue for the purpose of tax. 5. We find that in the matter of Dusad Industries (supra) as well as Bhandari Capacitors Pvt. Ltd.(July 15, 1987 ITR 647) the nature of the subsidy was directed to be considered for the purpose of levying tax in the cases decided in the year 1985 and 1987, whereas the question has been set at rest by the Apex Court itself in the year 1997 in the matter of Sahney Steel and Press Works Ltd. and others vs. Commissioner of Income Tax: 1997 ITR Vol 228 254 and the Apex Court held thus:- If payments in the nature of subsidy from public fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy could only be treated as assistance given for the purpose of carrying on of the business of the assessee. The subsidies were of revenue nature and would have to be taxed accordingly. 6. And the case pertains to grant of subsidy given in each case to industries for expansion if they were located in a city or town of the panchayat area. And the case of Dusad Industries (Supra) was also considered by the Apex Court and it distinguished the case thus: The Madhya Pradesh High Court, however, failed to notice the significant fact that under the scheme framed by the Government, no subsidy was given until the time production was actually commenced. Mere setting up of the industry did not qualify an industrialist for getting any subsidy. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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