2002 PTD 1095

Case Laws / Head Notes / Paras

The respondent-firm, which manufactured starch, liquid glucose and cattle feed, started a new unit for manufacture and sale of dextro mono hydrate. It received power subsidy from the State of M.P. under a scheme whereunder subsidy was granted for five years, for small scale industries at a rate per unit and for large and medium industries at a percentage of the electricity charges, both subject to certain maxima. The question was whether the power subsidy received by the respondent was a capital receipt and was not liable to tax under section 28(iv) of the Income Tax Act, 1961. The Appellate Tribunal held that the power subsidy received by the respondent was a capital receipt and, on a reference, the High Court affirmed the decision of the Tribunal (see (1998) 234 ITR 667). On appeal to th...