Revenue receipts from operational grants remain taxable where funds support functioning, not acquisition of capital assets.

Grants received by a company to meet its operational and functioning requirements were treated as revenue receipts, not capital receipts, because they were not shown to be directed toward acquisition of a capital asset. The company's status as a 100% Government company did not take the receipts outside the charging provisions of the Income-tax Act, and lifting the corporate veil was held inapplicable on these facts. The Court also found no basis to recall the earlier order, so the review application was not entertained.

---

---

Issues: Whether grants received by a 100% Government company to enable it to function were capital receipts or revenue receipts taxable as income, and whether the review application warranted recall of the earlier answer.

Analysis: The grants were received to meet the company's functioning requirements and were not shown to be assistance for acquiring a capital asset. The Court held that the question of taxable income had to be examined under the Income-tax Act, and the fact that the assessee was a Government company did not take the receipts outside the charging provisions. The doctrine of lifting the corporate veil was held inapplicable in this context. The Court also relied on the distinction between assistance for setting up or acquiring assets and assistance for trading or operational purposes, holding the latter to be revenue in character.

Conclusion: The grants were revenue receipts and constituted taxable income; the assessee's challenge failed.

Final Conclusion: No ground was made out to recall the earlier order, and the review application was not entertained.

Ratio Decidendi: Grants received by a company to meet its operational requirements, where they are not directed towards acquisition of a capital asset, are revenue receipts assessable to tax notwithstanding that the recipient is a 100% Government company.

---