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TMI Blog2013 (11) TMI 1249X X X X Extracts X X X X X X X X Extracts X X X X ..... Aditya Nath Mittal,JJ. For the Petitioner : S. C. ,A.Kumar,A.N. Mahajan,B.J.Agarwal,D. Awasthi,G. Krishna,R.K. Upadhyay,S.Chopra For the Respondent : R. S. Agarwal ORDER 1. We have heard Shri Shambhu Chopra, learned counsel appearing for the Income-tax department. Shri R.S. Agarwal appears for the respondent-assessee. 2. This Income Tax Reference arises out of order passed by Income Tax Appellate Tribunal, Delhi Bench 'C', New Delhi dated 21.8.1996 in ITA No. 616/Del/92 for the assessment year 1988-89. The Tribunal has referred the following question of law to be considered by the Court:- "Whether on the facts and in the circumstances of the case, the Ld. ITAT was legally correct to hold that incentive/subsidy in the for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not applicable to the facts of the present case. Since we have already held that the facts of the present case are identical to the facts discussed in the Tribunal order of the Madras Bench and Allahabad Bench. Therefore, respectfully following these orders we are of the opinion that the incentive received by the assessee from the Central Govt. under Sampath Scheme was capital in nature is not liable to be taxed. We, therefore, allow the assessee's ground." 5. The question is no longer res integra. In Commissioner of Income Tax Vs. Ponni Sugars and Chemicals Ltd (2008) 306 ITR 392 (SC) the Supreme Court, in the matter of sugar mills and in case of receipt of subsidy under a scheme, held that for determining whether the receipt of subsid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. In the present case, we find that there was no case set up by the respondent-assessee, that the subsidy is to be utilised for the purpose of expansion of the unit or for setting up new unit. The AO, while considering the incentive and sale of sugar, held in paragraph-14 as follows:- "14. Incentive on sale of sugar: The assessee has claimed deduction towards incentive received, out of its business income. This deduction is claimed on the ground that the incentive or subsidy cannot form part of business profit. In support of his claim, the assessee has cited various court's decisions. It is explained that this incentive is in the form of additional quota of sugar to be sold as free for a specified period and the difference in sale pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ampath Scheme may have provided for incentive for expansion or for setting up new unit but where no such expansion or new unit was in contemplation and the subsidy under the scheme was given for repayment of the term loans as the incentive to carry on business in the essential commodity, the receipt was revenue receipt. 10. We also find that the respondent-assessee itself treated the receipt as revenue receipt as it had shown the amount as income in the profit and loss account, instead of showing the amount in the balance sheet as capital receipt. 11. The orders of the AO and CIT (A) and the Tribunal do not reflect that there was any case set up by the respondent assessee that the subsidy was given and there was any plan of expansion or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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