2013 (7) TMI 522

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....s components. The assessee filed a returned income for the assessment year 1989-1990 on 29.11.1989. A revised return was filed on 22.2.1991. The Assessing Officer has completed the assessment under Section 143(3) of the Act on 29.10.1991. The Commissioner of Income-Tax invoked the jurisdiction under Section 263 of the Income-Tax Act, 1961(for short hereinabove referred as "the Act" for short) proposing to tax a sum of Rs.37,67,365/- grant-in-aid received from the Government and a sum of Rs.38,02,801/- further grand-in-aid among other item to tax. The Commissioner partly allowed the revision and levied tax under Section 41 of the Act on the grant-in-aid received. Aggrieved by the same, the assessee preferred appeal to the Tribunal. The Tribu....

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....c research of Rs.13,06,84,081/- does not include expenditure out of grant-in-aid from Government of India. The reasoning for invoking the provision of Section 263 was assumed on wrong assumption of facts. It is not found from the record that the grant-in-aid is in respect of trading activities carried on by the assessee. The grant is specifically for carrying out certain research and the Government of India is the ultimate owner of any asset acquired out of such research carried on by the assessee. Therefore, the grant-in-aid cannot be considered as revenue receipt, but is to be treated as capital receipt not liable to tax. In this context, it is necessary to notice the judgment of the Apex Court in the case of Commissioner of Income-Tax Vs....

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.... is given is irrelevant." 4. It is in the back ground of the aforementioned judgment when we look to the facts of this case, it is clear that the object of the grant-in-aid is for the specific purpose of conducting research in the field of telecommunications, so that the benefit thereof would enure to the Nation. May be on account of said research, the assessee is able to manufacture a better or more sophisticated product, they may be able to earn more. But the object with which this grant-in-aid is given to the assessee is for conducting research and improving existing telecommunication systems. In other words, the grant-in-aid is not given to the assessee for carrying on its day-to-day business. Infact, if after research if the assesse....