9911796707
TMI Blog2002 (12) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment of Tamil Nadu and in the assessment proceedings for the assessment year 1985-86, the assessee claimed that the amount received as subsidy from the Government of Tamil Nadu was a capital receipt and not liable to tax. The assessee received the subsidy amount in the following circumstances. The Government of Tamil Nadu, taking into account the welfare of Adi Dravidas and their poor representation in the assessee's firm, sanctioned certain financial assistance amounting to a sum of Rs. 10.50 lakhs under a special component plan to the assessee to recruit 70 Adi Dravidas and the assessee received the same. The assessee is a co-operative society and the total number of workers belonging to Adi Dravida community in the assessee-mill were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Castes. In order to fill up the shortfall and to strengthen the equity base, the mills has proposed to recruit 70 additional workers from Adi Dravidar community and to avail the financial assistance of Rs. 10.50 lakhs at the rate of Rs. 15,000 per head, under the "Special Component Plan". The Director of Handlooms and Textiles has, therefore, requested the Government's permission to recruit 70 Adi Dravidar workers under the Special Component Plan and to sanction Rs. 10.50 lakhs at the rate of Rs. 15,000 per worker. 2. The above proposal was placed before the secretaries' committee under the Chairmanship of Chief Secretary to Government on 22-8-1983. The committee approved the scheme. 3. In pursuance of the decision of the secretaries co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, on appeal, took a different view and held that the amount was granted and paid for a benevolent and beneficial purpose to provide employment to 70 workers belonging to Adi Dravida community and it was paid to promote weaker sections of the society and the subsidy amount received by the assessee was not the income of the assessee and not assessable to income-tax. The Revenue filed an application before the Appellate Tribunal to state a case and refer a question of law, and the Appellate Tribunal has stated a case and referred the following question of law for our consideration: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the amount of subsidy received by the assessee from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are adequately represented in the services in the assessee's mill as the executives are supposed to know the existing condition in the society and make adequate provision. From that, it cannot be said that the amount received was towards the payment of salary the persons to be employed ignoring the public and social purpose behind it. The second submission of Mrs. Pushya Sitharaman, learned senior standing counsel for the Revenue, is that what was granted by subsidy was reimbursement of the salary payable to the employees and since the assessee had ready commenced its business, the subsidy amount received for running the business would be revenue in nature. Mr. V. Ramachandran, learned senior counsel for the assessee, on the other hand, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to some extent. As earlier observed by us, the object of the grant of subsidy is to uplift the socially oppressed people and by providing employment opportunity, it will not only provide job opportunity, but also just sustenance to the persons so employed so that they can maintain themselves and their families just above the poverty line, and they can also come out of the backwardness and lead a life with dignity. We therefore hold that the object of the grant of subsidy is not to benefit the assessee, but it has a social object behind it to uplift the Adi Dravida community people and, hence, the submission of learned senior standing counsel for the Revenue that the amount was given for the benefit to run the mill by the assessee is untena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticular part of their property, either capital or revenue, and was simply to enable them to carry out the work upon which they were engaged, with the idea that by so doing people might be employed. I find myself quite unable to see that it was a trade receipt, or that it bore any resemblance to a trade receipt. It appears to me to have been simply a grant made by the Government for the purposes which I have mentioned, and in those circumstances cannot be included in revenue for the purposes of tax." In CIT v. Ruby Rubber Works Ltd. [1989] 178 ITR 181, a Full Bench of the Kerala High Court, presided over by K. S. Paripoornan J. (as his Lordship then was) held as under : "There cannot be any dispute that if any amount is paid by the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X
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