https://www.taxtmi.com/caselaws?id=783989 Whether Government assistance received under a rehabilitation scheme constituted a revenue receipt or capital receipt turned on the "purpose test." The HC held that the dominant object of the grant was to rehabilitate a loss-making assessee by alleviating financial stringency and mandating primary utilisation of funds for discharging loan liabilities. Performance-related conditions in the sanction were treated as monitoring mechanisms to ensure proper application of rehabilitation funds, not as consideration for operational performance. Even assuming an ancillary purpose of improving performance, the dominant rehabilitation purpose governed the character of the receipt. Accordingly, the assistance was held to be a capital receipt not chargeable as revenue income, and the decision was rendered against the revenue. en-us Wed, 17 Dec 2025 00:00:00 +0530 Fri, 26 Dec 2025 07:18:36 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=783989 Whether Government assistance received under a rehabilitation scheme constituted a revenue receipt or capital receipt turned on the "purpose test." The HC held that the dominant object of the grant was to rehabilitate a loss-making assessee by alleviating financial stringency and mandating primary utilisation of funds for discharging loan liabilities. Performance-related conditions in the sanction were treated as monitoring mechanisms to ensure proper application of rehabilitation funds, not as consideration for operational performance. Even assuming an ancillary purpose of improving performance, the dominant rehabilitation purpose governed the character of the receipt. Accordingly, the assistance was held to be a capital receipt not chargeable as revenue income, and the decision was rendered against the revenue. Case-Laws Income Tax Wed, 17 Dec 2025 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=783989