TMI Blog1979 (8) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... from the Government constituted a revenue receipt to be taxed as such (assessment year 1965-66) ? (b) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the subsidy of Rs. 12,815 received by the assessee from the Government constituted a revenue receipt to be taxed as such (assessment year 1967-68) ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the amount of Rs. 6,104 representing admission fee charged by the assessee-co-operative society from its members constituted a taxable receipt ? " The facts giving rise to these questions of law are : The assessee is a co-operative society registered under the Co-operative S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses relied upon by both the parties, we are of the view that the AAC did not correctly apply his mind to the issue before him. The subsidy or the grant given by the Govt. was an incentive, as the assessee calls it, so that the assessee may pass through its initial stages of struggle. The receipt was a revenue receipt not to be returned to the Government at any future date. When an assessee receives an amount of such a nature, it can neither be casual nor non-recurring in nature but is positively revenue receipt which is taxable. After all, keeping in view the concern of the Government to encourage co-operatives, such subsidies are given so that the co-operatives may be in a position to carry on their business very effectively and more succe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents in the nature of a gift and the Govt. was under no legally binding obligation to pay the same. It was given voluntarily depending on the whims of the Govt. The payment was made without any consideration, and, therefore, the same falls under the exemption of s. 10(3) being receipts of a casual and non-recurring nature. In support of his contention, he relied upon H. H. Maharani Shri Vijaykuverba Saheb of Morvi v. CIT [1963] 49 ITR 594 (Bom) and H. H. Maharaja Rana Hemant Singhji v. CIT [1971] 79 ITR 83 (Raj) and tried to distinguish the authorities referred to in the order of the Tribunal, such as, Meenakshi Achi v. CIT [1966] 60 ITR 253 (SC), Bengal Textiles Association v. CIT [1960] 39 ITR 723 (SC) and Ratna Sugar Mills Co. Ltd. v. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment issued an order directing that concession be granted on power tariff in respect of certain industries, including that of the assessee and, therefore, the assessee received Rs. 1,54,561 and Rs. 51,821 for two assessment years but still it was observed thus (p. 776) : " Though there was no contractual obligation on the part of the Government, the assessee could reasonably expect the grant of the amount for a period for which the Government passed the orders. We are unable to see that how it could be called a windfall or casual receipt. " It was further held therein thus (p. 776) : " Having regard to the facts of the present case, we are clearly of the opinion that the receipt in the instant case can be included in the total inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Govt., though as an incentive to the co-operative movement, will be a revenue receipt and will be liable to tax. In this case, we have to see the character of the receipt. If it is coming to recoup the revenue expenditure, it will take the same colour and will be deemed to be a revenue receipt in the hands of the assessee. It is the purpose for which it is given which is material and that is the determining factor. Having found that the said subsidy was given to meet the managerial and rental expenses in order to reduce the cost of the expenses on that account, the subsidy receipt would be due to the actual expenses of the assessee and this amount would constitute income for the relevant assessment year. In this view of the matter, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofits and gains of business or profession ". His argument is that since no specific services are rendered by the assessee, i.e., the co-operative society, to its members paying admission fee of Re. 1 per member, the same will not be covered by the said provision and thus could not be taxed as such. On the other hand, the learned counsel for the revenue, submitted that the element of mutuality was lacking and since the assessee is a trading concern and doing business, the nature of the receipt in question was decisive of its taxability. In this connection, he relied upon Delhi Stock Exchange Association Ltd. v. CIT [1961] 41 ITR 495 (SC), wherein it has been held that, as the body of trading members who paid the entrance fee, and the shar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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