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TMI Blog2019 (3) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... bsidy received by the Assessee Company during the year in question was diverted by the Assessee company for any other purpose except for being invested in the share capital of the joint venture company. This money has not been utilised as subscribing the share capital of the UK Company, RSA itself though the Assessee Company SFL. There is no evidence on record brought by Revenue to establish that the insurance business of the joint venture company had already started and the said remittance of ₹ 2,11,75,000/- was made by the UK company RSA against any such services rendered by the Assessee Company SFL to the said UK based Company RSA. Therefore, we are unable to accept the contention of the Revenue that the said subsidy or remittance was received for any business link or services rendered by the Assessee to the UK based Company RSA. It is undoubtedly, a capital receipt in the hands of the Assessee Company and cannot be brought to tax as Revenue Receipt, particularly in the face of the finding of the Assessing Authority himself that the subsidy or remittance so received from RSA had been invested by the Assessee Company in the share capital of the joint venture Company M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taka High Court Division Bench held in the case of CIT Vs Siemens Public Communication Networks Limited., reported in (2014) 265 creditor (KAR) 0532 , wherein the Hon'ble Supreme Court has held following the Judgement in the earlier case of Sahney Steel Press Works Limited., Vs. CIT reported in (1997) 7 SCC 764 and CIT Vs. Ponni Sugaars and Chemicals Limited reported in (2008) 9 SCC 337 , that unless the grant-inaid received by the Assessee is utilised for acquisition of an asset, the same must be understood to be in the nature of a revenue receipt. The Court held that voluntary payments made by the parent company to its loss making Indian Company can also be understood to be payments made in order to protect the capital investment of the Assessee Company. If that is so, the payments made to the Assessee Company by the parent Company for the Assessment Years in question cannot be held to be revenue receipts. 4. The facts of the present case are that under the Letter of Intent, Royal and Sun Alliance Insurance Plc (RSA), a leading UK based Insurance Company entered into an Agreement with the present Assessee Company M/s. Sundaram Finance Limited., (SFL) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said receipt is really in pursuance of the said clause. While considering so, from the above background discussed, it can be easily inferred that the over-riding effect for making the payment is the business relationship which is mutually beneficial to both the parties and not only the specific clause pin-pointed by the assessee. What is needed to be considered here is that if the RSA of UK had made a alliance with any other Tom, Dick Harry (from India, of course) would they have made a similar payment to them. If one would search for the answer of this question, one would realise that it would not had been so in that case. 6. Similarly the learned Tribunal also negatived the claim of the Assessee with the following observations:- 6. We have considered the rival submission carefully in the light of the material on record. We are unable to agree with the submissions of the learned counsel for the Assessee because he has failed to impress us as to why a third party should pay any money when the Assessee Company was contributing to the capital of the joint venture in the pre determined ratio. The Assessing Officer has clearly noted that originally, initial capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained with the Assessee for a long period unclaimed by the trade parties. By lapse of time, the claim of the deposit became time-barred and the amount attained a totally different quality. It became a definite trade surplus. The Assessee itself had treated the money as its own money and taken the amount to its profit and loss account. The amounts were assessable in the hands of the Assessee. Similarly, the Hon'ble Delhi High Court in the conviction and sentence of CIT vs. State Trading Corporation of India Ltd., (247 ITR 114) has held that even receipt of forfeited Security Deposit was to be treated as revenue receipt. Similar view was taken by the Hon'ble jurisdictional High Court in the case of CIT v. Sundaram Industries Limited., (253 ITR 396) where when customers' sundry credit balance was written back the same was held to be revenue receipt. Therefore, we set aside the order of the CIT (Appeals) and restore that of the Assessing Officer on this issue. 7. The learned counsel for the Assessee therefore submitted that the authorities below have erred in treating the said capital subsidy received by the Assessee for investing in the share capital ..... X X X X Extracts X X X X X X X X Extracts X X X X
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