Grant-in-aid for Assamese film industry not taxable under Income-tax Act

The High Court held that the grant-in-aid received by the assessee-firm from the Government of Assam was not a revenue receipt under the Income-tax Act. The court considered the grant as discretionary aid to support the Assamese film industry, not a result of normal business activities. As the Income-tax Act did not specifically include such grants as income or revenue receipts, the court ruled in favor of the assessee, stating that the grant-in-aid did not form part of the firm's total income.

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Issues involved: Interpretation of grant-in-aid received by assessee-firm from Government of Assam as a revenue receipt under section 256(1) of the Income-tax Act, 1961.

Facts: The assessee-firm, a producer of Assamese films, received a grant-in-aid of Rs. 37,488 from the Government of Assam during the assessment year for a film titled "Sanatan". The grant was equivalent to the first 12 months' collection of amusement tax from the film's release date. The firm argued that the grant was not a revenue receipt but financial aid to support the Assamese film industry.

Judgment: The High Court considered the nature of the grant-in-aid, stating that it was given by the government to encourage the Assamese film industry. Section 2(24) of the Income-tax Act defines "income" but does not specifically include such grants as income or revenue receipts. The court interpreted that since the section uses the word "include," income should be understood broadly. As the grant was not a result of normal business activities but discretionary aid, it was not considered a revenue receipt forming part of total income. The court ruled in favor of the assessee firm, holding that the grant-in-aid was not a revenue receipt.

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