Case Law Details
Issue Under Consideration
1. That on the facts and in the circumstances of the case, Ld. CIT(A) has erred in allowing assessee’s claim of interest subsidy as capital receipt and thereby deleting the addition of Rs.1,50,03,609/- without appreciating the fact that the amount is in the nature of revenue receipt.
Brief Facts of the Case
2. The Assessee is a company engaged in the business of manufacture, sale and export of jute. During the previous year the assessee received subsidy of Rs.1,50,03,609/- comprising of a sum of Rs.1,29,87,383/- received from West Bengal Industrial Development Corporation Ltd., on account of subsidy under the West Bengal Incentive Scheme 2000 (WBIS 2000)and Rs.20,16.,226/- received from IFCI Ltd on account of interest subsidy refund under the Technology Up-gradation Fund Scheme (TUFS). These amounts were credited in the profit and loss account under the head “Other income“. However, in the computation of total income the Assesee excluded the aforesaid subsidies on the ground that these were capital receipts not chargeable to tax.
3. The AO called upon the assessee to explain as to how the aforesaid subsidies were capital receipts not chargeable to tax. The assessee explained before the AO that the aforesaid subsidies were capital receipts not chargeable to tax for the following reasons:-
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