Apex Court held ‘Purpose test’ is crucial factor to determine whether subsidy is capital or revenue in nature

CIT vs. Chaphalkar Brothers Pune (Supreme Court)

Brief Facts of the Case

• The Assessee, Chaphalkar Brothers Pune, one of the appellant from batch of appeals from Maharashtra and West Bengal, was engaged in the business of Multiplex Theatre in Pune, Maharashtra.
• The Govt. of Maharashtra, by way of ordinance before 4^th December, 2001, introduced subsidy scheme in the form of exemption of entertainment duty in Multiplex Theatre Complexes newly set up, for a period of three years, and thereafter payment of entertainment duty @25% for the subsequent two years.

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