M/S. Sahney Steel & Press Works Ltd. ... vs Commissioner Of Income Tax.Andhra ... on 19 September, 1997
9. Learned counsel for the Revenue submitted that in any event the amount would represent the subsidy and, therefore, it is an income for the purpose of the Act. Learned counsel for the Revenue relied upon a decision of the Supreme Court in the case of Sahney Steel and Press Works Ltd. v. CIT [1997] 228 ITR 253 and the decision of the Andhra Pradesh High Court in Panyam Cements and Mineral Industries Ltd. v. CIT (Addl.) . In our view, the decisions relied upon by learned counsel for the Revenue are not applicable to the facts of the case. It is seen that in the two cases relied on by learned counsel, the subsidy was granted by way of grant given by the Government, and in that context, the question arose whether the amount received was liable to be treated as income of the assessee for the purpose of the Act. However, on the facts of the case, the amount received by the assessee was only a refund of the electricity charges paid by the assessee by way of concessional tariff extended by the Tamil Nadu Government. When the Government desired to extend concessional tariff to a small scale industrial undertaking, it cannot be said that there was a grant or subsidy given by the Government. We are of the view that the amount received by the assessee represented the refund of the electricity charges already paid by it and the amount received cannot be regarded as subsidy at all. The subsidy, in our opinion, is granted by the Government in many forms. At times, it may be an outright grant ; sometimes, it may be by way of concession. The question whether the subsidy is taxable or not would depend on the facts of the case. In the decisions decided by the apex court as well as by the Andhra Pradesh High Court, there was an outright grant of subsidy. The Government may grant subsidy in the form of subsidised price and in those cases, it cannot be held that the difference between the market value of the commodity and subsidised price would represent the assessee's income. Applying the principle, the Government provided the concessional rate of electricity to the small scale industries in the State with a view to promote the industrialisation in the State and on that account, it cannot be held that the difference in the amount between the normal value and the subsidised rate of electricity was the amount received by the assessee as subsidy and is liable to be taxed as income under the provisions of the Act. Further, the amount received was not given as deduction in the computation of income of the assessee and the provisions of Section 41(1) of the Act are not applicable and the sum of Rs. 67,379 is not liable to be treated as income of the assessee. We, therefore, hold that in so far as the sum of Rs. 67,379 is concerned, it cannot be treated as the income of the assessee for the purpose of the Income-tax Act.