2011 (1) TMI 409

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.... justified in law in holding that the subsidy received by the assessee amounting to Rs. 60,90,000 under the Technology Up-gradation Fund Scheme (TUFS) of Ministry of Textiles, Government of India is capital in nature whereas the Assessing Officer has rightly held the receipt of subsidy as revenue in nature applying the ratio of the decision of Hon'ble Supreme Court in the case of Sawhney Steels & Press Works Ltd. v. CIT 228 ITR 253." 2. The assessee is engaged in manufacture and sale of woollen garments. It received subsidy for repayment of loan taken for building, plant and machinery under the Credit Linked Capital Subsidy Scheme under Technology Upgradation Fund Scheme (TUFS) of Ministry of Textiles, Government of India. The assessee c....

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....e of Sawhney Steels & Press Works Ltd. (supra), it was found as a fact that the subsidy was given to meet recurring expenditure and was not for acquiring a capital asset. Whereas in the instant case, admittedly, there is no provision in the scheme to grant subsidy to meet any recurring expenditure and neither such a case has been set up by the Department. The only objections of the Department are that the subsidy has been given after commencement of production and, secondly that it was for repayment of loans. Both these factors do not distract from the nature of the subsidy being treated as capital, as explained by the Hon'ble Supreme Court in the case of Ponni Sugars Chemicals Ltd. (supra)." 3. We have heard learned counsel for the appe....