2014 (5) TMI 586

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....te Tribunal was not justified in holding that the special capital incentive amounting to Rs.20 lacs received by the predecessor in title of the Assessee from the Government of Maharashtra through the State Industrial Corporation of Maharashtra (for short SICOM) was capital receipt in the hands of the Assessee. 3. It is urged that the Assessee is a company engaged in the business of manufacturing of internal combustion engines of 3 horsepower. The Assessee filed the return of income for the Assessment on 30.11.1997 declaring the total income of Rs.41,93,64,490/. The assessment was undertaken and the Assessing Officer made an order on 31.12.1999 under Section 143(3) of the Income Tax Act, 1961. He assessed the income at Rs.61,74,05,557/. Agg....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Income Tax Appellate Tribunal, we find that the only question raised in this Appeal is covered by the judgment of the Honourable Supreme Court and equally that of the Division Bench of this Court. Undisputedly, the capital incentive was given to the Assessee. That was to enable the Assessee's predecessor in title to set up a new unit. This was under the incentive package offered by the State Government for setting up new industries in the State. The predecessor in title of Assessee applied for such special capital incentive from the SICOM. That was in the form of loan of Rs.20 lacs in the year 1992. Since actual disbursement was to take place from the receipt of funds from the Government of Maharashtra, the predecessor in title of Asse....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....er which such incentives are offered is not in issue and under which the assistance was given to the Assessee. We are unable to accept this stand. In the case of in Sahney Steel and Press Works Limited v/s Commissioner of Income Tax reported in (1997) 228 ITR 253 (SC) and in Ponni Sugars (supra), the Honourable Supreme Court has emphasized that the character of receipt in the hands of the Assessee has to be determined with respect to the purpose for which the subsidy is given. The purpose test has to be applied. The point of time at which the subsidy is given is not relevant. The source is immaterial. The form of subsidy is immaterial. The main condition and with which the Court should be concerned is that the incentive must be utilized by ....