2004 (1) TMI 299

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..... e grant received from the Central Government for setting up the business." "2. On the facts and in the circumstances of the case as immediately aforesaid, the learned CIT(A) erred in holding that the ruling of the Supreme Court in Sahney Steel Press Works Ltd vs. CIT (1997) 142 CTR (SC) 261 : (1997) 228 ITR 253 (SC) the subsidy for carrying on the business was a revenue receipt—was not applicable in the facts of the case." 3. The assessee is an exporter of agro-based products, mainly grapes. It established cold storage in a backward area at Gat No. 126/2B, Kadwa Mahalungi, Taluka Dindhori, Distt. Nashik. The location of the undertaking is in a backward area which enables the assessee to avail of the package of incentives [1998 Schem .....

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..... its are in the process of being set up, since the quantum of the subsidy is based on the capital cost involved. Moreover, the appellant's case is fully covered by the Supreme Court's decision in the case of Elys Plastic (1994) 210 ITR 177 (SC) [sic—CIT vs. P.J. Chemicals Ltd. Etc. (1994) 121 CTR (SC) 201 : (1994) 210 ITR 830 (SC)]. Accordingly, this ground is decided in favour of the appellant." 4. The learned Departmental Representative contended that subsidy was received by the assessee after setting up of its business. Therefore, it was received for production and thus, was operational subsidy. It was not a capital subsidy. Therefore, the said subsidy was in the nature of revenue. The AO was right in considering the same as taxable in .....

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..... after completion of all effective steps both initial and final. Therefore, the learned Departmental Representative is not right in contending that as subsidy was received after setting up of an industry the same should be treated as revenue receipt. Therefore, the learned Authorised Representative of the assessee contended that CIT(A) has rightly given the relief to the assessee. 6. We have carefully considered the rival submissions in the light of material placed before us. We have also perused the Scheme. As per para 7.3 of the said Scheme the amount received by the assessee was capital incentive. It was not in the nature of supplementary receipt. It was not subsidy granted year after year. Therefore, it was not an assistance given for .....

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