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TMI Blog1982 (7) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... carried on by it. The ITO in the income-tax proceedings has taxed the amount of Rs. 1,34,971, being the aggregate of cash assistance and the customs drawback. About this there is no dispute. Even the sale proceeds of import entitlements of Rs. 1,41,218 were initially offered by the assessee for the assessment as taxable profits and they were taxed accordingly. Only during the pendency of the appeal by the assessee before the Commissioner (Appeals), the assessee objected to the taxing of this amount. For the reasons recorded by him in his order, the Commissioner (Appeals) allowed the assessee's appeal on this ground and deleted the addition of Rs. 1,41,218 from the assessment. 3. Being aggrieved by the order of the Commissioner (Appeals), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustries Cotton Mills Ltd. v. CIT [1978] 115 ITR 143 (Cal.) and CIT v. Swadeshi Cotton Mills Co. Ltd. [1980] 121 ITR 747 (All.). On a careful perusal of the first-mentioned three decisions which have mainly been relied upon by the Tribunal Bombay Bench 'C' in deciding IT Appeal No. 593 (Bom.) of 1979, the learned judges of the Madras and the Calcutta High Courts were considering the question whether the capital gains arising on the sale of import entitlements were liable for taxation. In these three cases the revenue authorities had proceeded on the basis that the import entitlements were capital assets and questions were accordingly posed before the High Courts. Since the import entitlements admittedly, not having cost anything to the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he balance of profits or gains...." "The second proposition constitutes an exception. If the undertaker is a rating authority and the subsidy is the proceeds of rates imposed by it or comes from a fund belonging to the authority, the identity of the source with the recipient prevents any question of profit arising..." After referring to the aforesaid quotation, the learned judges have observed that normally it is well settled that where subsidies or grants are given by the Government to assist a trader in his business they are, generally speaking, payments of a revenue nature. They are supplementary trade receipts and not capital payments, although they might be called advances or might be subject to contingency of repayment. In fact, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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