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2016 (5) TMI 251 - ITAT CHENNAITreatment of income from trial run receipts - revenue receipt OR capital receipt - Held that:- The source need not be continuously productive and it is sufficient if the income is flowing from some exercise or operation by the appellant and in ordinary parlance which can be considered as income. To constitute income, the receipt need not necessarily have their origin in business activity or investment or under an enforceable obligation. The conclusion in construing the word ‘income’ one has to ask whether having regard to all the circumstances surrounding the particular payment and receipt in question, what is relevant is of the character of income according to the ordinary meaning of that word in the common language or whether it is merely a casual receipt. The word ‘income’ is of elastic import and it is extended meaning are not controlled or limited by the use of the words ‘profit and gains’. The diverse forms which income may assume cannot exhaustively be enumerated and so in each case the decision of the question as to whether any number of receipt is income or not must depend upon the nature of the receipt and the scope of relevant taxing provision. In the present case, the income earned by the assessee by operation of plant and machinery for treating the effluent water and collected the income from the customer on commercial basis and it cannot be considered as a capital receipt as the assessee operated the plant and machinery without the requisite permission and it is to be revenue receipt to be considered for levying the tax after giving necessary deduction for earning that income. - Decided against revenue Treatment of subsidy received from Government of India as a deduction from cost of fixed asset - Held that:- The subsidy was sanctioned by the Government of India for setting up of common effluent treatment water at Tripur and thus, it amounts to bearing the part of the cost of plant and machinery by Government of India through subsidy and it is not for carrying on the business of the assessee rather than setting up of the industry. Hence, in our opinion the cost of fixed asset to be reduced to that extent of subsidy received bythe assessee.Since the subsidy received for setting up of industries by installing plant and machinery would definitely reduce the cost of the plant and machinery from the side of the assessee and it is to be reduced from the cost of plant and machinery in terms of above Explanation to Sec.43(1) of the Act. Being so, we do not find any infirmity in the order of the lower authorities. The same is confirmed. - Decided against revenue Levy of penalty u/s.271(1)(c) - Held that:- We find force in the argument of the ld.A.R, though the assessee treated the trial run receipt and subsidy received as a capital receipt, the AO treated the Trial run receipt as revenue receipt, thereby increasing the income of assessee and also deduct the subsidy receipt from the cost of fixed asset. Thereafter, he recomputed the depreciation, finally resulted increase in loss, then returned loss by the assessee. There is no any revenue loss to the Department and this is only a technical breach, which cannot be reason to levy penalty. Accordingly, placing reliance in the judgment of Apex Court in the case of M/s.Reliance Petro Products Pvt Ltd in [2010 (3) TMI 80 - SUPREME COURT ](SC), we are inclined to delete the penalty - Decided in favour of assessee
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