Vispro Foundry Engineers (P.) Ltd. vs Income-Tax Officer on 3 April, 1982
3. The assessee cited a Special Bench decision of the Hyderabad Bench of the Tribunal in the case of Sahney Steel & Press Works Ltd. v. ITO [1982] 1 SOT 316 and argued that what was received was subsidy from the Government, capital in nature, given in the form of refund of current charges, which refund process was only a method of giving the subsidy and the concessional rate for current charges is only a formula to determine the quantum of subsidy available and that, therefore, the receipt was in pith and substance a contribution by the Government towards capital. It was also argued by the assessee that this is on a par with the subsidy covered by the Board's Circular No. 142, dated 1-8-1974, published in [1974] 95 ITR (St.) 151 where it is laid down that Central Outright Grant of Subsidy Scheme, 1971, is capital receipt and that the scheme under which concessional rate in electric current was given to the assessee was primarily given for helping the growth of industries and not for supplementing their profits and that the subsidy is intended to be a contribution towards capital outlay of the industrial unit.