Government Subsidy: Whether Of Revenue Or Capital In Nature?

Advocate Akhilesh Kumar Sah The Supreme Court, in Sahney Steel & Press Works Ltd. vs. CIT (1997) 141 Taxation 169, has laid down the basic principle to be applied for determining as to whether the subsidy payment is in the nature of capital or revenue. Hon’ble Supreme Court (at page 177) in the above case has held that if the purpose (of subsidy) is to help the assessee to set its business or complete a project the monies must be treated as to have been received for capital purpose. But if monies are given to the assessee for assisting him in carrying out the business operation and the m...