TMI Blog2015 (7) TMI 1026X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of receipt i.e. capital or revenue. The aforesaid decision was followed by this Court in ITA No.679 of 2010, The Commissioner of Income Tax v. Siya Ram Garg HUF [2010 (12) TMI 955 - Punjab and Haryana High Court]. Accordingly, the matter is remanded to the Tribunal to pass a fresh order after hearing the parties in view of the decision of the Apex Court in Ponni Sugars's case (supra) in accordance with law. - Decided in favour of assessee for statistical purposes. Disallowing the interest under section 36(1) (iii) on interest free loans granted to sister concern - Held that:- Hon’ble Apex Court in S.A.Builders’s case (2006 (12) TMI 82 - SUPREME COURT) held that the commercial expediency is to be seen for allowing or disallowin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived by the assessee can be considered to be a revenue receipt when the Hon ble Supreme Court has been pleased to entertain the Special Leave Petition No.21673 of 2006 and has also issued notice regarding stay against the operation of the judgment of this Hon ble Court reported in CIT vs. Abhishek Industries Limited, (2006) 286 ITR 1? 3. In ITA No.422 of 2007, besides the aforesaid substantial question of law, the following additional question has also been claimed:- Whether in the facts and circumstances of the case, the Hon ble ITAT was right in disallowing the interest under section 36(1) (iii) of the Income Tax Act on interest free loans granted to sister concern, contrary to the judgment of the Hon ble Supreme Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of interest free loans given to sister concern was also deleted. However, the action of the Assessing officer in treating the sale tax subsidy as revenue receipt was upheld. Not feeling satisfied, the assessee filed appeal before the Tribunal. The Tribunal vide order dated 27.10.2006, Annexure A.4, following the decision of this Court in Abhishek Industries's case (supra) held the sales tax subsidy to be revenue receipt. The interest under Section 36(1) (iii) of the Act on account of interest free loans granted to sister concern was disallowed in the appeal relating to assessment year 1996-97 out of which ITA No.422 of 2007 has arisen. Hence the instant appeals by the assesseeappellant. 5. We have heard learned counsel for the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned counsel for the parties, we find that the Apex Court in Ponni Sugars's case (supra) had laid down as under:- The character of the receipt of a subsidy in the hands of the assessee under a scheme has to be determined with respect to the purpose for which the subsidy is granted. In other words, one has to apply the purpose test. The point of time at which the subsidy is paid is not relevant. The source is immaterial. If the object of the subsidy is to enable the assessee to run the business more profitably then the receipt is on revenue account. On the other hand,if the object of the assistance under the subsidy scheme is to enable the assessee to set up a new unit or to expand an existing unit then the receipt of the subsidy woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with law. 10. As regards the second question in ITA No.422 of 2007, learned counsel for the appellant urged that the Hon ble Apex Court in S.A.Builders s case (supra) held that the commercial expediency is to be seen for allowing or disallowing the deduction under Section 36(1) (iii) of the Act where interest free loans had been advanced to sister concern. In the present case, since the Tribunal had not decided the issue by recording any finding whether there was commercial expediency or not, the matter requires to be remitted back to the Tribunal to decide this issue also afresh. 11. In view of the above, the impugned orders passed by the Tribunal dated 27.10.2006, Annexure A.4 in ITA Nos.420, 421, 422 of 2007 and dated 24.4.2007, A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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