1998 (3) TMI 103

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....en referred for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the subsidy of Rs. 2,85,923 received from the Indian Cotton Mills Federation was in the nature of voluntary and gratuitous payment and not liable to tax?" The assessee is a registered firm carrying on the business of manufacture and export of hosiery goods and....

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....t the payment of Rs. 2,85,923 to the assessee is purely a voluntary act by the Federation for no services rendered by the assessee to the Federation. Subsidy is nothing but donations or gifts and the same cannot be said to be income taxable under section 28 of the Act. Therefore, the addition made by the Income-tax Officer was deleted. In appeal before the Tribunal, the Tribunal also found the ....

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....ncome liable to tax under the Act. Counsel for the Revenue, Mr. Mitra, submits that the amount received by the assessee from the Federation is a subsidy which is taxable under the Act. He further submits that the amount distributed by the Federation is money received from the Government of India. Learned counsel for the assessee, Dr. Pal, submits that after the insertion of clause (iiib) in sec....

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....ate body, where no service was rendered by the assessee, can be taxed as income, and he failed to show us any provision in the Act nor has he been able to show any authority where any such type of receipt has been shown liable to tax as income. Considering the submissions of learned counsel for the parties, the undisputed facts remain that the amount of Rs. 2,95,923 was received by the assessee....