TMI Blog1998 (4) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... ration, at the instance of the assessee who had received subsidy from the Government of Andhra Pradesh for the assessee's film entitled "Muddala Kodukku" which was produced in the year ending December 31, 1979, is as to whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal has rightly held that the subsidy of Rs. 1 lakh received by the assessee from the Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have to be taxed accordingly. The apex court in that judgment referred to the decision rendered by the Andhra Pradesh High Court in the case of CIT v. Chitra Kalpa [1989] 177 ITR 540 wherein it was held that the subsidy was for making a film and was to be treated as a capital receipt because the film was a capital asset in the hands of the producer; to the judgment of the Kerala High Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so observed that the decision of the Bombay High Court was based on the vital distinction that the subsidy was released to the producer during the course of production and, therefore, was not a subsidy which could be regarded as a revenue receipt. The court did not approve the view of the Andhra Pradesh High Court which had held that the subsidy amount paid to the film producer is a capital receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... movie. The subsidy amount was paid only to encourage people like the assessee to choose Andhra Pradesh as the locale for their movies and nothing more. The Tribunal was, therefore, right in holding that the amount of subsidy received by the assessee from the Government of Andhra Pradesh was a revenue receipt and taxable as such. The question referred to us is, therefore, answered in the affirmat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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