2005 (1) TMI 87

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.... SAPRE J.- This is an income-tax reference made at the instance of the Revenue under section 256(1) of the Income-tax Act, 1961 by the Tribunal (the ITAT) in R. A. No. 11/Ind./98, dated April 3O, 1998, which arises out of an order dated October 17, 1997, passed by the Tribunal in I.T.A. No. 1164/Ind./93 to answer the following question of law said to arise out of the aforementioned order: "Whet....

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....Court in Hind Syntex; MCC No. 314/92 in which their Lordships have held that the power subsidy was given as an incentive for establishing industry in backward area. It was thus a capital investment and not supplements the profit of the assessee. It was a receipt of capital nature and, therefore, not liable to tax. 3. We have carefully perused the order of the hon'ble Madhya Pradesh High Court a....

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....words, in order to decide as to whether a particular subsidy given to the assessee is capital or revenue, the same cannot be decided by its nomenclature but it requires an analytical examination of the entire scheme. Before one is able to come to its conclusion, it is necessary to find out as to what is the object of the scheme, its nature, manner, mode of payment, its reimbursement, benefit confe....

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....fore coming to a conclusion as to what is the true nature of the amount for holding it to be capital or revenue it is necessary to examine the scheme of subsidy. When we peruse the order of the Tribunal and the statement of case drawn to this court for answering the question, we regretfully note that the Tribunal neither discussed the scheme of power subsidy applicable to the case of the assess....