M/S. Sahney Steel & Press Works Ltd. ... vs Commissioner Of Income Tax.Andhra ... on 19 September, 1997
4. Smt. Ruby George, the Ld. Departmental Representative,
submitted that the assessee received VAT subsidy of Government
of Andhra Pradesh. According to the Ld. D.R., the assessee
received the subsidy after commencement of business operation
year after year. The incentive was a supplementary trading receipt.
After the receipt of subsidy, the assessee has discretion to use the
same in the way in which it desires. According to the Ld. D.R.,
when the assessee was receiving subsidy in the course of business
activity, the same has to be naturally treated as revenue receipt,
therefore, it has to be added to the total income. Placing reliance
on the judgment of Apex Court in Sahney Steel & Press Works
Limited v. CIT (1997) 94 Taxman 368, the Ld. D.R. submitted that
the subsidy was not granted for production or bringing into
existence any new asset. However, it was granted year after year
3 I.T.A. No.2050/Mds/17
after setting up of a new industry and commencement of production.
According to the Ld. D.R., such a subsidy has to be treated as
revenue receipt. Referring to the order of this Tribunal for
assessment year 2011-12 in the assessee's own case, the Ld. D.R.
pointed out that the Revenue has filed an appeal before the High
Court and the same is pending.