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TMI Blog2000 (2) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,173, a sum of Rs. 2,32,794 related to the earlier accounting years and the balance of Rs. 67,379 related to the accounting year ending on December 31, 1977, relevant to the assessment year 1978-79. The assessee got the refund as a concessional rate of levy was extended to the industrial undertaking of the assessee on the ground that it was a small scale industry. In the statement filed by the assessee along with its return of income for the assessment year 1978-79, the assessee offered the sum of Rs. 2,32,794 being the refund of electricity charges relating to the earlier assessment years. As regards the balance of Rs. 67,379, it was found that the normal charges towards the consumption of electricity payable at the ordinary tariff rate w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etain a certain portion of the money with it which represented the difference between the amount payable under the normal rate of electricity and the concessional tariff rates. The Tribunal, therefore, held that the assessee paid the normal tariff during the relevant period and the Government had to pay the subsidy in cash and instead of paying the amount directly, it routed the same through the Electricity Board which adopted the form and language of refund of a portion of the normal tariff. The Tribunal held that there was no cessation of liability because of the receipt of the money from the Electricity Board and that the payment received represented cash subsidy and it cannot be regarded as a payment under section 41(1) of the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Press Works Ltd. v. CIT [1997] 228 ITR 253 and the decision of the Andhra Pradesh High Court in the case of Panyam Cements and Mineral Industries Ltd. v. CIT (Addl.) [1979] 117 ITR 770 submitted that the amount received was a revenue receipt and he also submitted that the amounts received are taxable as income under section 41(1) of the Act. Notice was served on the assessee and there is no representation on behalf of the assessee before us. We have carefully considered the submissions of learned counsel for the Revenue. In our opinion, the amount received by the assessee consists of two portions. As far as the sum of Rs. 2,32,794 representing the remission of electricity charges relating to earlier accounting years is concerned, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our opinion, there was, to that extent, a cessation or remission of its trading liability. Therefore, the amount received by the assessee, even assuming that it was a capital receipt, is liable to be taxed under the provisions of section 41(1) of the Act. The view of the Appellate Tribunal that there was no cessation of the liability and the amount received by the assessee cannot be regarded as payment under section 41(1) of the Act is not legally sustainable as the mere nomenclature given for the payment, though styled subsidy, is not conclusive and the real nature of the transaction has to be seen. In our view, by this process, there is a cessation of the assessee's liability towards the Tamil Nadu Electricity Board and the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 41(1) of the Act. We, therefore, hold the assessment of the sum of Rs. 2,32,794 as income of the assessee by the Income-tax Officer invoking the provisions of section 41(1) of the Act is quite justified and calls for no interference. In so far as the remaining amount representing the remission of the electricity charges for the current year, namely, the sum of Rs. 67,379 is concerned, a doubt has arisen whether the sum was allowed as a deduction in the computation of income of the assessee for the assessment year in question. It is seen from the statement of the case that the assessee had adjusted the refund of Rs. 67,379 and debited the balance of Rs. 2,50,773 as electricity charges for the current year which means that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the Government. We are of the view that the amount received by the assessee represented the refund of the electricity charges already paid by it and the amount received cannot be regarded as subsidy at all. The subsidy, in our opinion, is granted by the Government in many forms. At times, it may be an outright grant ; sometimes, it may be by way of concession. The question whether the subsidy is taxable or not would depend on the facts of the case. In the decisions decided by the apex court as well as by the Andhra Pradesh High Court, there was an outright grant of subsidy. The Government may grant subsidy in the form of subsidised price and in those cases, it cannot be held that the difference between the market value of the commodit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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