Subsidy classification turns on purpose, and the absence of a clear factual finding required remand for fresh disposal.

Subsidy classification depends on its purpose: if the grant is intended to enable an assessee to set up or complete a project, it is capital in nature, while a subsidy meant to support business operations after commencement of production is revenue in nature. The record lacked a clear finding on whether the Government subsidy was given for establishing a new unit or for assisting ongoing operations, so the factual basis needed to answer the reference was absent. The question was therefore returned unanswered and the matter was remitted to the Appellate Tribunal for a specific finding on the subsidy's purpose and fresh disposal of the appeal.

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Issues: Whether the subsidy granted by the Government was a capital receipt not liable to tax, and whether the purpose of the subsidy could be determined on the existing record.

Analysis: The applicable test for distinguishing capital subsidy from revenue subsidy is the purpose for which the subsidy is granted. If the object is to enable the assessee to set up or complete a project, the receipt is capital in nature; if the object is to assist business operations after commencement of production, it is revenue in nature. The record did not contain a clear finding on whether the subsidy was intended for setting up a new unit or for assisting ongoing operations, so the factual basis necessary to answer the reference was absent.

Outcome: The question was returned unanswered and the matter was remitted to the Appellate Tribunal for a clear finding on the purpose of the subsidy and for fresh disposal of the appeal.

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