TMI Blog1992 (12) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... paper book containing 28 pages and submitted that the amount received as subsidy from the Govt. of India under the Transport Subsidy Scheme of 1971 is not a revenue receipt and, therefore, not taxable. The grant of subsidy is given to the assessee for the growth of industries in various regions as mentioned in the Subsidy Scheme of 1971 and he took us to the various clauses of the copy of the Transport Subsidy Scheme which is in the paper book from pages 1 to 5. The receipt of subsidy by the assessee, contended counsel for the assessee Sri Salarpuria, is a grant and gift for the growth and development of industries and cannot be assessed to tax. The assessee's counsel has relied upon the decisions of various courts citations of which are g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Income-tax law unless expressly exempted. The receipt of amount by the assessee from the Central Government under the Transport Subsidy Scheme of 1971 is for transport of raw materials and finished goods to and from certain selected areas with a view to promoting growth of industries in those various regions specified in the said Scheme. From the reading of the Transport Subsidy Scheme which is at p.1 to 5 of the paper book we do not find that the subsidy is given to the assessee to assist it in its trade and business or to swell or augment its profits and gains. We are not inclined to agree with the lower authorities that the subsidy received by the assessee is a trading receipt and, therefore, taxable. The Government can grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins or as sum which went to make up the profits or gains of their trade. It is a receipt which is given for the express purposes which is named, and it has nothing to do with their trade in the sense in which you are considering the profits or gains of the trade. It appears to me, with respect, to be quite irrelevant whether the money when received, is applied for capital purposes or is applied for revenue purposes, in neither case is the company properly said to be brought into a computation of the profits or gains of the trade. " The Guwahati High Court was recently confronted with similar controversy in the case of Lachit Films whether the amount of subsidy paid by the Government to the assessee was a revenue receipt liable to tax and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see utilised this subsidy it means that the amount went as a contribution to the growth of an industry and an industry is a capital asset. Any amount which goes for the building up a capital asset which brings enduring and long lasting benefit cannot be considered as a revenue receipt to be brought into tax net. It is not the intention of the State to grant subsidy by right hand for utilising the same for the growth of industries and development of the State as a whole and again by left hand take away a major chunk of the subsidy by way of taxes. This has been emphasised and found favour of their Lordships of the Andhra Pradesh High Court in the case of Chitra Kalpa. The other decisions of various other Courts relied upon by the assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxed in the previous year ie. for the assessment year 1988-89 and not in the year under appeal. In support of his submissions he has relied upon the decisions of the Calcutta High Court in the case of CIT v. Burlop Commercial (P.) Ltd. [1988] 173 ITR 522. The departmental representative, on the other hand, relied upon the order of the Appellate Commissioner. 7. After hearing the arguments advanced and perusing the aforesaid judgment of the Hon'ble Calcutta High Court we are of the opinion that this sum of Rs. 46,695 is not taxable in the year under appeal. We find much force in the argument of the assessee's counsel that by mere preferring a claim it cannot be said that the income has accrued or arisen to the assessee until the final ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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