2015 (4) TMI 443

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....mstances of the case, the Tribunal was right in holding that the special investment subsidy of Rs. 3,49,750/received by the assessee from the state govt. for employing persons belonging to scheduled caste and scheduled tribe categories of M.P. State at its industrial unit, established in the selected backward districts of Madhya Pradesh, was not in the nature of capital receipt in view of the judgment of the Apex Court in the case of Sahney Steels and Press Works Ltd. vs. CIT 228 ITR 253 (SC)." 2. Facts of the case in a nutshell are that the previous year the assessee had received a special investment subsidy of Rs. 3,49,750/- from the state government to the extent of 5% of the fixed capital investment made by it of Rs. 67,95,000/- as on ....

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....ssee's submissions based on CBDT Circular and the decision of MP High Court are not acceptable. In any case the amount of Rs. 3,49,750/- received by the assessee for employing SC/ST candidates is not of a capital nature. Penalty proceedings u/s 271 (1)(c) are initiated separately. I would, therefore, treat the said subsidy as a revenue receipt in the hands of the assessee and it will be included in the total income of the assessee for tax purposes as the same is neither a capital receipt nor a exempted receipt under any provisions of law." 3. And hence, the appellant has filed an appeal before the CIT (A) who considered the case of CTT vs. Dusad Industries 162 ITR 784 whereby the Court had held thus: "Held, that as the subsidy was giv....

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....ss, they are trade receipts. The character of the subsidy in the hands of the recipient and whether revenue or capital will have to be determined, having regard to the purpose for which the subsidy is given. The source of the fund is quite immaterial. However, if the purpose is to help the assessee to set up its business or complete a project the monies must be treated as having been received for capital purposes. But if monies are given to the assessee for assisting him in carrying out the business operations and the money is given only after and conditional upon commencement of production, such subsidies must be treated as assistance for the purpose of the trade." It further held that: "Held, dismissing the appeal, that, under the notif....