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2. The assessed is the Handicrafts and Handloom Export Corporation of India Ltd. (hereinafter referred to as "the assessed"). It is a cent. per cent. subsidiary of the State Trading Corporation of Indian (hereinafter referred to as "the STC"). The assessed is carrying on business in the export of handlooms, handicrafts and antiques and this export business is its only business activity. We are concerned in this reference with the assessment year 1970-71 for which the relevant previous year was the financial year 1969-70.

6. It may now be convenient to take up question No. 1 in relation to the sum of Rs. 11,70,000. We do not propose to set out the facts relating to this question at length because a similar questions had arisen in connection with the assessment of the same assessed for the assessment year 1965-66 and 1966-67 and the relevant facts have been set out in our judgment dated July 14, 1981, in I.T. Rs. Nos. 17 & 94/74 (Addl. CIT v. Handicrafts and Handloom Export Corps. [1982] 133 ITR 590). We shall, therefore, state only a few facts which well be necessary to take up the issue from the point where it was left in our previous judgment.

7. It has been mentioned that the assessed is a cent per cent. subsidiary of the STC. Its business activity of exert is wholly financed by the STC of India. In this export business the assessed suffered losses year after year. In the previous year relevant to the assessment year 1965-66, an amount of Rs. 6,05,000 was received by the assessed from the STC in order to make good that losses suffered by the assessed. Similarly, in the accounting year relevant to the assessment year 1966-67, the assessed received a sum of Rs. 4,52,000 from the STC. The question arose in those assessment whether the sums these received by the assessed from the STC were liable to be treated as part of the assessed income. It was held by this court that the amounts had been given by the STC to the assessed to enable it to recoup the losses incurred by its and that they were only in nature of contribution of capital. On behalf of the Department, it was pointed out that the assessed had also received during those years, a subsidy from the Government by way of a grant-in-aid towards exports and that the Tribunal had accepted the Department case that the grants received from the Government were taxable and i was urged that the same principles were applicable also to the amounts received from the STC. This contention was negatived by the Tribunal which observed that the nature of the amounts received from the STC was very much different from the nature of the amount received by the assessed as grant-in-aid from the government. The STC, though in law a separate entity, was the holding company of the assessed and it was only recouping the losses incurred by the assessed and the amounts so give could not be treated as income. By out judgment in I.T.Rs. Nos. 17 & 94/74 (Addl. CIT v. Handicrafts & Handloom Export Corps [1982] 133 ITR 590), referred to earlier, we have confirmed that finding of the Tribunal.

10. We have heard learned counsel on both sides in regard to this matter and we agree with the conclusion of the Tribunal that the sum of Rs. 11,70,000 stands on no different footing from the amounts received from the STC in earlier years. We have pointed out that what happened in earlier years was that the assessed, having incurred certain losses in its export business, approached the STC for assistance to enable it to meet its liabilities consequent on such losses and the STC agreed to do so by reimbursing the losses incurred by the assessed. There was, therefore, even in those years an agreement on the part of the STC to recoup the losses made by the assessed. The circumstances, therefore that in the present year, there was an agreement during the previous year by which the STC agreed to give financial assistance to the assessed will not, therefore, make any difference in principles. We are also of opinion that the other distinguished feature pointed out by the Department does not also make a difference. As pointed out by the Tribunal the nature and purposes of the payments by the STC to the assessed is the same in e earlier years as well as this years. In all the years the STC has only provided monies to the assessed-corporation with the object of enabling it to offset the losses which it has incurred into course of its business. The fact that the contribution which the STC was prepared to make to enable the assessed to do this was measured in terms of a percentage of its export earning and was not a flat or round sum of money as in the prior years does not, it seems to us, make any difference. In all the years it is only a case of a cent. per cent, holding company coming to the rescue of its subsidiary which has incurred losses and enabling it to recoup those losses and continue to carry on the business in spite of such losses. In the circumstances, what we have said in our earlier judgment in ITR Nos. 17 and 94/74 (Addl. CIT v. Handicrafts & Handloom Export Corpn. [1982] 133 ITR 590) will equally apply in regard to the assistance e received by the assessed from the STC during the current year.