TMI Blog1995 (4) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... ground is accordingly treated as dismissed. 3. Ground No. 2, which is the only ground which survives for discussion in the instant appeal, is against the treatment of subsidy of Rs. 14,43,876 as a revenue receipt. During the course of assessment proceedings, the Assessing Officer noticed that the assessee had credited a sum of Rs. 14,43,876 under the head "Electrical tariff subsidy" which had been received in four instalments on 21-8-1984 (Rs. 37,936), on 21-8-1984 (Rs. 4, 70,792), on 15-10-1984 (Rs.4,36,286) and on 11-3-1985 (Rs. 4,98,862). The aforesaid amount was shown in the balance sheet on the liability side under the heading "Reserve and surplus". The assessee did not show it as a trading receipt nor was this amount reduced from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tariff, as may be fixed by the State Electricity Board, was admissible to the units in respect of power-based industries for a period of five years from the date of power connection. Inviting our attention to the letter dated 10-10-1984 issued by the Director of Industries, Punjab, it was submitted that the amount of subsidy was to be utilised for the "furtherance of industrial activities"in the existing factory and the disbursing authority was asked to send a utilisation report through proper channel. It was also submitted that with the help of subsidy, the assessee purchased a crane worth Rs. 11,64,986 and a K.V.S. Station for Rs. 3,12,283. Thus, according to the ld. counsel, the assessee spent a total amount of Rs. 14,77,269 out of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital subsidy. The Tribunal repelled the contention of the revenue that both the subsidies represented revenue receipts. The Tribunal, on the other hand, held that the subsidies represented capital receipts which could not be subjected to tax. The ld. counsel also referred to the Tribunal's decision (Hyd. Bench) in the case of Tirumalesa Bricks Tiles Factory v.ITO [1986] 15 ITD 703, and pointed out the subtle difference between the purpose for which a subsidy is given and the condition under which the subsidy would be given. It was submitted that the purpose for which the subsidy is given qualifies its nature whereas the conditions imposed could be safeguards to see that the subsidy is properly utilised. It was submitted that if a subsidy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenditure incurred for maintaining the rubber plantations and producing the rubber were held to be revenue receipts liable to be included in the assessable income. The ld. D.R. also placed reliance on the Andhra Pradesh High Court decision in Panyam Cements Mineral Industries Ltd. v. Addl. CIT [1979] 117 ITR 770 for the proposition that a subsidy in respect of power tariff, as a matter of well defined policy of the Government, arose as a receipt from business and was, therefore, exigible to tax as profits and gains of business. That was a case where concessional rate of tariff was given to the assessee and the rebate in power charges was held to be exigible to tax as profits and gains of business u/s 41(1) of the Income-tax Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has received is a subsidy for setting up new industries in certain areas. The aforesaid decision of the Punjab and Haryana High Court, therefore, is distinguishable on facts because in that case the subsidy was given to recoup certain managerial and rental expenses. The Supreme Court decision in the case of V.S.S. v. Meenakshi Achi is also distinguishable on facts because in that case, an expenditure had been incurred for maintaining the rubber plantations and producing the rubber and the amount received to recoup such expenses was held to be assessable to tax. 12. In the case of Panyam Cements Mineral Industries Ltd., the assessee got a concessional rate of tariff and, thus, the rebate received by the assessee was held to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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