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Issues:
1. Deletion of addition of Rs. 30 lakhs on account of capital subsidy treated as revenue receipt by the AO. Analysis: The Revenue appealed against the CIT(A)'s order for the assessment year 1995-96, challenging the deletion of the addition of Rs. 30 lakhs, considered as a revenue receipt by the Assessing Officer (AO). The AO based the treatment on the Supreme Court's decision in Sahney Steel & Press Works Ltd. & Ors. vs. CIT. The subsidy was granted from the date of commercial production, leading to its classification as a revenue receipt. However, the CIT(A) referred to the decision in the case of G.K. Textiles Ltd. and deleted the addition, emphasizing the nature of the subsidy received. Upon reviewing the scheme of the Haryana Government, it was found that the subsidy of Rs. 30 lakhs received by the assessee was under a scheme aimed at promoting agro-based industries and food processing units. The scheme clearly outlined that the subsidy was a capital investment subsidy, provided for setting up industries and meeting capital expenditure. Despite the condition of receiving the subsidy after 60 days of commencing business, the nature of the subsidy remained capital in essence. The Tribunal concluded that the subsidy was not granted to assist in carrying on trade but for capital purposes, aligning with the decision in CIT vs. P.J. Chemicals Ltd. The Tribunal upheld the CIT(A)'s order and dismissed the Revenue's appeal, emphasizing that the subsidy received by the assessee was capital in nature, intended for setting up the industry and covering capital expenditure. The decision in Sahney Steel & Press Works Ltd. & Ors. vs. CIT was deemed inapplicable, and the judgment in CIT vs. P.J. Chemicals Ltd. was considered relevant in determining the nature of the subsidy. Consequently, the appeal of the Revenue was dismissed, affirming the capital nature of the subsidy received by the assessee.
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