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3. The brief facts of the case as emanating from records are : The assessee is engaged in the business of collecting milk from local farmers and selling the same to M/s. Parag Milk Products Ltd. The assessee is also processing the milk for sale in retail. The assessee filed its return of income for the impugned assessment year on 21-09-2009 declaring loss of Rs.29,17,325/-. A survey action u/s. 133A was carried out in the case of assessee on 04-02-2011. During the course of scrutiny assessment proceedings, the Assessing Officer observed that the assessee has received subsidy from NABARD amounting to Rs.28,06,200/- in the period relevant to the assessment year under appeal. The assessee treated the subsidy as capital receipt. The Assessing Officer held the subsidy as revenue in nature and added the same in the income returned by the assessee.