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of <h1>High Court upholds subsidy as capital, promotes industrial growth in backward areas</h1> <h3>Commissioner Of Income Tax Versus M/s. Lincon polymers pvt. Ltd.</h3> Commissioner Of Income Tax Versus M/s. Lincon polymers pvt. Ltd. - TMI Issues involved: Determination of the nature of subsidy received by the assessee and whether it should be considered as capital in nature.The High Court of Gujarat considered an appeal regarding the nature of a subsidy amounting to Rs. 10,00,000 received by the assessee. The Appellate Tribunal had held that the subsidy was capital in nature and deleted the addition made by the Assessing Officer. The Tribunal analyzed the scheme under which the subsidy was granted, which aimed to provide capital investment subsidy and sales tax incentives to attract investments for generating employment in less industrially developed areas. The subsidy was given to encourage pollution-free and employment-intensive industries in certain backward areas. Referring to the decision of Sahney Steel & Press Works Ltd., the Tribunal concluded that since the subsidy was given to set up the industry in a backward area, it should be treated as capital in nature. The High Court upheld the Tribunal's decision, stating that the subsidy was not given to run the business, and hence, no infirmity was found in the Tribunal's order. As no substantial question of law arose, the appeal was dismissed.In conclusion, the High Court of Gujarat affirmed the Appellate Tribunal's decision regarding the nature of the subsidy received by the assessee, holding it to be capital in nature based on the purpose for which it was granted. The Court emphasized that the subsidy was intended to assist in setting up the industry in a backward area, aligning with the principles established in the Sahney Steel & Press Works Ltd. case. Consequently, the addition made by the Assessing Officer was directed to be deleted, and the appeal was dismissed as no substantial question of law was found to arise in the matter.
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