Case Law Details
M/s. Alkoplus Producers Pvt. Ltd. Vs DCIT (ITAT Pune)
Conclusion: The object of the Grain Distillery Scheme is setting of new unit and hence the subsidy is capital receipt.
Facts: Assessee is manufacturing extra neutral alcohol from grain (jawar) and received financial assistance from Maharashtra Government under Grain Distillery Scheme, 2007. AO contended the subsidy to be revenue in nature.
The CIT(A) held the amount to be in the nature of capital receipt but also applied Explanation 10 to section 43(1) and accordingly CIT(A) directed the amount of subsidy to be reduced from the cost of assets.
Held: The main purpose of providing financial assistance under the scheme was :’to encourage investment in grain based distilleries in the backward regions of the Maharashtra State’. Once the object of the scheme is to encourage setting up of new units, the grant has to be held as a capital receipt.
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