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TMI Blog2013 (7) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... ations, so that the benefit thereof would ensure to the Nation - the grant-in-aid is not given to the assessee for carrying on its day-to-day business - if the assessee is able to acquire new ideas or new knowledge and use the same in its manufacturing activity it would be a case of acquisition of such new idea which in itself would constitute an intellectual property - It is to acquire such capital asset the grant-in-aid is given - It also helps in the growth of the assessee generally in public interest as the said grant-in-aid is given to the assessee so as to assist the assessee to acquire the new capital asset and the said benefit may be incidental to the business of the assessee – appeal decided against revenue - ITA No.731 of 2009 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for our consideration in this appeal is as under:- Whether the Tribunal was correct in holding that the grant-in-aid of Rs.38,02,801/- received by the assessee from the Government of India should be treated as 'capital receipt' and cannot be treated as 'revenue receipt'? 3. The Revisional authority held that the amount was received as grant-in-aid from the Government and the relevant expenditure relating to grant-in-aid was debited to the profit and loss account and was allowed as expenditure in the assessment. The assessee in their account treated the grant-in-aid of Rs.38,02,801/- as revenue account. Normally, such receipt is in the nature of income or it has to be brought to tax under Section 41 of the Act. In the instant cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the various provisions of the scheme, under which said subsidy was given, it was held as under:- The context is that the character of the receipt in the hands of the assessee has to be determined with respect to the purpose for which the subsidy is given. In other words, in such cases, one has to apply the purpose test. The point of time on which the subsidy is paid is not relevant. The source is immaterial. The form of subsidy is immaterial. The main liability condition that the scheme with which we are concerned in this case is that the incentive must be utilized for repayment of loan taken by the assessee to set up new units or for substantial expansion of existing units. On this aspect there is no dispute. If the object to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in-aid is given. It also helps in the growth of the assessee generally in public interest, as the said grant-in-aid is given to the assessee, so as to assist the assessee to acquire the new capital asset and the said benefit may be incidental to the business of the assessee. It is in the nature of capital asset. Once it is to be held as capital asset, even if in the records maintained by the assessee, they show as revenue expenditure, it would not make any difference in law, as the liability to tax is depending on the object with which the grant-in-aid is given to the assessee. In that view of the matter, in the facts of this case, when the grant-in-aid is given to the assessee for research in the field of telecommunications, which in-turn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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