https://www.taxtmi.com/caselaws?id=14082 The dominant issue was whether a purchase-tax subsidy received from the State Government was a capital receipt excludable from total income or a taxable revenue receipt. Applying the purpose test, the HC held that the subsidy scheme imposed no restriction requiring use for capital outlay, and the entitlement for five years from commencement of production, with quantification linked to sugarcane purchases, showed it was production-oriented and intended to support continuous business operations and meet initial operational difficulties, not to establish the factory. Although the CIT's reasoning treating it as purchase-tax reimbursement under s. 41(1) was inaccurate, the conclusion that the subsidy constituted a revenue receipt was legally sustainable; the writ petitions were dismissed. en-us Tue, 10 Oct 2000 00:00:00 +0530 Sun, 04 Jan 2026 21:13:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=14082 The dominant issue was whether a purchase-tax subsidy received from the State Government was a capital receipt excludable from total income or a taxable revenue receipt. Applying the purpose test, the HC held that the subsidy scheme imposed no restriction requiring use for capital outlay, and the entitlement for five years from commencement of production, with quantification linked to sugarcane purchases, showed it was production-oriented and intended to support continuous business operations and meet initial operational difficulties, not to establish the factory. Although the CIT's reasoning treating it as purchase-tax reimbursement under s. 41(1) was inaccurate, the conclusion that the subsidy constituted a revenue receipt was legally sustainable; the writ petitions were dismissed. Case-Laws Income Tax Tue, 10 Oct 2000 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=14082