ACIT, New Delhi V. M/s. Deutsche Post Bank Home Finance Ltd., New Delhi

ITA 1405/DEL/2010

• Counselvise Citation: 140520114 RSA 2010
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-08-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 31-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNA
• Assessee Lawyers: H P AGGARWAL
• Keywords: Gift; Depreciation; Bad and doubtful debts; Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH B DELHI ] BEFORE SHRI R. P. TOLANI, JM AND SHRI K. D. RANJ AN, AM I. T. APPEAL NO. 1405 (DEL) OF 2010. ASSESSMENT YEAR : 2005-06. ASSTT. COMMISSIONER OF INCOME-TAX, M/S. DEUTSCHE POST BANK HOME FINANCE LTD., C I R C L E : 10 (1), VS. [ FORMERELY KNOWN AS BHW HOME FIN. LTD. ] N E W D E L H I. 201, VIPUL AGO RA, M. G. ROAD, NEAR SAHARA MALL, GURGAON 122 0 02. P A N / G I R NO. AAB CB 0216 H. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI H. P. AGGARWAL, C. A.; DEPARTMENT BY : SHRI KRISHNA [CIT] D. R. O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 200 5-06 ARISES OUT OF ORDER OF THE LD. CIT (APPEALS)V, NEW DELHI. 2. DURING THE PENDENCY OF APPEAL BEFORE THIS TRIBUN AL, THE REVENUE HAD FILED REVISED GROUNDS OF APPEAL. THESE GROUNDS WERE SUBSTITUTED A FTER HEARING THE LD. AR OF THE ASSESSEE TO WHICH HE HAS NO OBJECTION. THE REVISED GROUNDS OF A PPEAL ARE REPRODUCED AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ORDER OF THE CIT (APPEALS) IS WRONG, PERVERSE, ILLEGAL AND AGAIN ST THE PROVISIONS OF LAW WHICH IS LIABLE TO BE SET ASIDE; 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE SUBVENTION RECEIPT OF R S.11,22,38,874/- BY TREATING IT AS CAPITAL RECEIPT INSTEAD OF REVENUE. 2 I. T. APPEAL NO. 1405 (DEL) OF 2010. 3. THE ONLY ISSUE FOR OUR CONSIDERATION RELATES TO DELETING THE ADDITION ON ACCOUNT SUBVENTION RECEIPT OF RS.11,22,38,874/- BY TREATING IT AS CAPITAL RECEIPT AS AGAINST REVENUE RECEIPT TREATED BY THE ASSESSING OFFICER. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSEE IS HUNDRED PER CENT SUBSIDIARY OF BHW HOLDING AG GERMA NY. THE ASSESSEE HAD RECEIVED AN AMOUNT OF RS.11,22,38,874/- AS SUBVENTION PAYMENT T OWARDS RESTORATION OF NET WORTH OF THE ASSESSEE, WHICH WAS ERODED DUE TO LOSSES SUFFERED B Y THE ASSESSEE. THIS PAYMENT WAS UN- CONDITIONAL WITHOUT ANY LEGAL OR CONTRACTUAL OBLIGA TION LIABILITY ON THE PART OF THE ASSESSEE. TO A QUERY FROM THE ASSESSING OFFICER AS TO WHY THE SUBV ENTION MONEY RECEIVED FROM HOLDING COMPANY SHOULD NOT BE TREATED AS REVENUE RECEIPT, I T WAS SUBMITTED BY THE ASSESSEE THAT THE MONEY WAS RECEIVED WITHOUT ANY CONTRACTUAL OR LEGAL OBLIGATION AND, THEREFORE, THE SAME WAS TO BE TREATED AS CAPITAL RECEIPT. IT WAS ALSO STATED THAT THE AMOUNT WAS PAID BY THE HOLDING COMPANY WITHOUT ANY CLAIM OF THE ASSESSEE COMPANY AND WAS E NTIRELY VOLUNTARILY PAYMENT MOTIVATED BY RELATIONSHIP AS A PARENT COMPANY. THE ASSESSING OF FICER, HOWEVER, OBSERVED THAT AS PER CONVENTIONAL THEORY THE SUBVENTION MONEY COMES INTO PLAY BETWEEN ANY TWO ENTITIES: (I) TO ENABLE THE HOLDING COMPANY TO PROVIDE SUBVENTION, T HE SUBSIDIARY COMPANY SHOULD SUBMIT THE CLAIM ON WHAT GROUND IT NEEDS SUCH SUPPORT; (II) TH E CLAIMS GENERALLY ARE ACCOMPANIED BY A STATUTORY AUDITORS CERTIFICATE CERTIFYING THAT THE CLAIM FOR SUBVENTION ARE TRUE AND CORRECT. FINAL SETTLEMENT OF THE CLAIM IS DONE ONLY ON RECEIPT OF THIS CERTIFICATE; (III) THERE IS A BASIS OF CALCULATION OF SUBVENTION MONEY ACCORDING TO WHICH SUBVENTION MONEY IS DISBURSED CONSIDERING THE QUANTUM OF LOSS SUFFERED BY THE ASSESSEE; & (IV ) ALSO THERE ARE CERTAIN SPECIFICATIONS AND THE MANNER IN WHICH SUCH SUM IS TO BE USED IN THE BUSIN ESS. HOWEVER, NONE OF THE ABOVE INCIDENT HAD TAKEN PLACE IN THE CASE OF THE ASSESSEE. THE A SSESSEE COMPANY HAD SIMPLY FURNISHED A COPY OF LETTER OF THE HOLDING COMPANY DATED 24 TH SEPTEMBER, 2004 AND 4 TH FEBRUARY, 2005. ACCORDING TO LETTER DATED 24 TH SEPTEMBER, 2004 A SUM OF EURO TWO MILLION WOULD BE PAID TO BHW AS SUBVENTION PAYMENT TOWARDS RESTORATION OF NET-WORK OF THE COMPANY EXPECTED TO BE PARTLY ERODED BY LOSSES SUFFERED / PROJECTED BY THE COMPAN Y FOR FINANCIAL YEAR 2004-05. IN LETTER DATED 4 TH FEBRUARY, 2005 IN RESPECT OF TRANSFER OF EURO FIVE LAKHS TO BE USED FOR RESTORATION OF NET-WORK OF THE COMPANY. THE ASSESSING OFFICER NOTED THAT T HE HOLDING COMPANY HAD TAKEN A DECISION FOR RENDERING FINANCIAL SUPPORT ONLY AFTER HAVING CONSI DERED THE LOSSES WHICH WERE EXPECTED BY THE 3 I. T. APPEAL NO. 1405 (DEL) OF 2010. ASSESSEE COMPANY AND AS HAS BEEN PROJECTED BY THE A SSESSEE. THE LD. ASSESSING OFFICER, HOWEVER, OBSERVED THAT SIMPLY TERMING A RECEIPT AS SUBVENTIO N MONEY WILL NOT EXPRESS THE CHARACTER OF REAL NATURE OF THE RECEIPT. IN THE ABSENCE OF ANY SUCH EVIDENCE FURNISHED BY THE ASSESSEE, THE FINANCIAL SUPPORT GRANTED BY THE HOLDING COMPANY COULD BE TRE ATED AS CASUAL RECEIPT. THE AR OF THE ASSESSEE RELIED ON THE DECISION OF HONBLE DELHI HI GH COURT IN THE CASE OF HANDICRAFTS & HANDLOOM EXPORT CORPORATION OF INDIA VS. CIT [1983] 140 ITR 532 (DEL). HOWEVER, THE AO RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SAHNI STEEL & PRESS WORK VS. CIT 228 ITR 253 (SC) WHEREIN IT WAS HELD THAT IF TH E MONEY WAS GRANTED FOR SUCCESSFUL RUNNING OF AN ALREADY ESTABLISHED UNIT THEN IT SHOULD BE RE GARDED AS REVENUE RECEIPT. THE ASSESSING OFFICER ACCORDINGLY TREATED THE AMOUNT OF RS.11,22, 38,874/- AS REVENUE RECEIPT. 5. ON APPEAL IT WAS SUBMITTED THAT THE AMOUNT OF RS .11,22,38,874/- WAS RECEIVED BY THE ASSESSEE AS SUBVENTION MONEY TOWARDS RESTORATION OF NET-WORK OF THE ASSESSEE WHICH WAS ERODED DUE TO LOSSES SUFFERED BY THE ASSESSEE. THE AMOUNT WAS RECEIVED BY THE ASSESSEE WITHOUT ANY CONDITION AND WITHOUT ANY CONTRACTUAL OR LEGAL OBLI GATION ON THE PART OF THE ASSESSEE. THE PAYMENT WAS ENTIRELY VOLUNTARILY PAYMENT MOTIVATED BY A RELATIONSHIP OF SUBSIDIARY AND PARENT COMPANY. THE PAYMENT WAS MADE FOR RESTORATION OF E RODED NET-WORTH. THE LD. AR OF THE ASSESSEE RELIED ON THE DECISION OF HONBLE DELHI HI GH COURT IN THE CASE OF HANDICRAFTS & HANDLOOM EXPORT CORPORATION OF INDIA VS. CIT (SUPRA ), DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF STEWARDS & LLOYDS OF INDIA LTD . 165 ITR 416 (CAL.); DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF INDIAN TEXTILE ENG G. PVT. LTD. 141 ITR 69 AND DECISION OF ITAT, DELHI BENCH IN THE CASE OF LURGI INDIA COMPAN Y LTD. 302 ITR (AT) 67 (DEL). THE LD. CIT (APPEALS) ON CONSIDERATION OF THE SUBMISSIONS MADE BY THE ASSESSEE RECORDED FINDING OF FACT THAT THE ASSESSEE WAS IN LOSSES, WHICH WAS EVIDENT FROM THE AUDITED ACCOUNTS 6. LD CIT (APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE AND ALLOWED THE APPEAL BY OBSERVING AS UNDER:- 3. I HAVE PERUSED THE ASSESSMENT ORDER, GROUNDS OF APP EAL, AND WRITTEN SUBMISSIONS OF THE AR AND DISCUSSED THE MAT TER AT LENGTH WITH THE 4 I. T. APPEAL NO. 1405 (DEL) OF 2010. ARS IN COURSE OF HEARING CAREFULLY. THE ONLY ISSUE OF THE ADDITION BY THE AO IS ON ACCOUNT OF RECEIPT OF SUBVENTION MONEY BY THE INDIAN SUBSIDIARY COMPANY FROM THE 100% MNC HOLDING COMPANY OF AG GER MANY TREATING IT AS CASUAL RECEIPT, HENCE REVENUE RECEIPT. THE AO HA S TREATED IT AS REVENUE RECEIPT WHEREAS THE ASSESSEE ADMITS THAT IT IS THE CAPITAL RECEIPT NOT TO BE TAXED IN INDIA. THE ASSESSEE'S CONTENTION IS THAT THE MONEY HAS BEEN RECEIVED BY T HE INDIAN COMPANY FROM THE PARENT HOLDING COMPANY AS A GRANT OF MONEY IN AID AND SUPP ORT TO TURN AROUND THE BUSINESS OF THE COMPANY SMOOTHLY IN INDIA. THE ASSESSEE HAS SHOWN O PERATIONAL INCOME OF RS.47,92,05,285/- AND OTHER INCOME OF RS.3,07,75,90 0/- IN THE RETURN FOR THIS ASSESSMENT YEAR 2005-06 AS ADMITTED BY THE AO IN PARA-2 OF THE ORDER. IN PARA-4 OF THE ASSTT. ORDER, THE AO REPORTS THAT THE ASSESSEE HAS RECEIVED RS.11 ,22,38,874/- ON ACCOUNT OF SUBVENTION RECEIPT TREATING IT AS CAPITAL RECEIPT. THE AR OF T HE APPELLANT COMPANY HAS CLEARLY EXPLAINED ALONG WITH THE CASE LAWS WHICH ARE REPROD UCED IN THE ABOVE PARAGRAPHS FOR UNDERSTANDING THE NATURE OF BUSINESS OF THE COMPANY . THERE IS NO DEFINITION OF REVENUE RECEIPT OR CAPITAL RECEIPT OF THE I. T. ACT, BUT WH ATEVER BE THE NATURE OF RECEIPT, ALL THE RECEIPTS BY COMPANY WILL FALL INTO THESE CATEGORIES ARE ADMITTED BY THE AO (PARA - 4.3). THE MNC PARENT COMPANY HAS HAD GIVEN THE MONEY TO THIS COMPANY FOR TURNING AROUND THE BUSINESS IN INDIA. SINCE THE INDIAN COMPANY HAS MAD E SOME LOSS IN COURSE OF BUSINESS, THE PARENT HAD GIVEN THE GRANT OF AROUND 2.5 MILLION EU RO $ TO RECOUP THE LOSSES OF THE COMPANY. THE PROFIT BEFORE TAX OF THE COMPANY AND TOTAL INCO ME HAS BEEN ERODED IN THE MANNER SHOWN IN THE ABOVE TABLES. 4. THE RECEIPT BY THE APPELLANT COMPANY FROM ITS PAREN T COMPANY IS LUMP SUM GRANT TO RECOUP THE LOSSES MADE BY THE COM PANY IN THE FINANCIAL YEAR 2004-05. THE RECENT DECISION OF THE ITAT, DELHI ON DCIT VS. LURGI INDIA CO. LTD. 320 ITR (AT) 67 CLEARLY FITS INTO AS SESSEES OWN CASE OF RECEIVING OF SUBVENTION MONEY AS CAPITAL RECEIPT. IN THE CASE OF BANKING COMPANY, THE INCOME ARISES FROM INTEREST ACCRUED TO THE COMPANY BY WAY OF GIVING LOAN AND FINANCING BUSINESS ASSETS OF OTHER BUSINESS COMPANIES AND LOA N GIVEN TO INDIVIDUALS, OTHER TRADERS. THE INCOME TO A FINANCE COMPANY GENERALLY COMES FROM MONEY LENDING. HOWEVER, WHEN THE COMPANY IS RECEIVING SOME ASSISTA NCE OR GRANTS TO RECUPERATE ITS LOSS FROM THE HOLDING COMPANY, THEN SUCH GRANT OR F INANCIAL HELP CANNOT BE TAXED AS 5 I. T. APPEAL NO. 1405 (DEL) OF 2010. REVENUE RECEIPT. FROM THE ABOVE SUBMISSIONS OF THE ASSESSEE IT IS FOUND THAT THE PARENT COMPANY IS HAVING MORE THAN 99% SHARES IN TH E INDIAN COMPANY. THEREFORE, THE MONEY GIVEN BY THE PARENT COMPANY AS ASSISTANCE TO RESTORE ITS FINANCIAL HEALTH CAN ONLY BE TREATED AS CAPITAL RECEIPT. THE ASSESSEE RELIED ON A DECISION OF LURGI INDIA LTD. WHERE HE HAS UNDERLINED THE DISCUSSION O N SUBVENTION PAYMENTS AS CAPITAL RECEIPT IN THE ABOVE MANNER. THE ASSESSEE H AD ALSO RELIED ON THE DECISION IN THE CASE OF INDIAN TEXTILE ENGRS. (P) LTD. [1983] 1 41 ITR 69 (BOM.), IN WHICH SUBVENTION PAYMENTS WERE MADE BY THE HOLDING COMPAN Y AND OTHER ASSOCIATE COMPANIES TO THE ASSESSEE COMPANY AGAINST LOSSES, W HICH WERE TREATED AS BAD AND DOUBTFUL DEBTS. THE HON'BLE BOMBAY HIGH COURT POINT ED OUT THAT SUBVENTION PAYMENT RELATED TO THE DEFICIT, EXPRESSLY MADE IN A N AGREEMENT BETWEEN THE PAYING COMPANY AND THE PAYEE COMPANY, GOVERNED BY SECTION 20 OF THE FINANCE ACT,1953 (UK). IT WAS FURTHER POINTED OUT THAT THERE WAS NO CORRESPONDING LEGISLATION IN INDIA. IT WAS ALSO POINTED OUT THAT IF THE DEBTS IN RESPECT OF WHICH PAYMENTS HAVE NOT BEEN MADE CANNOT BE CONSIDERED AS DEDUCTIBLE UN DER THE I. T. ACT, THEN, PAYMENT WHICH HAS BEEN MADE TO REIMBURSE THE COMPAN Y IN RESPECT OF NON-ALLOWABLE BAD DEBT, CAN ALSO NOT BE TREATED AS A TRADING RECEIPT. THEREFORE, THE RECEIPT WAS HELD TO BE DE-HORS THE TRADING ACTIVITY OF THE COMPANY, WHICH COULD NOT BE TAKEN AS INCOME. 7. BEFORE US THE LD. SR. DR SUBMITTED THAT THE ASSE SSEE IS 100 PER CENT SUBSIDIARY OF BHW HOLDING AG, GERMANY. THE SUBVENTION MONEY WAS RECEIVED BY THE ASSESSEE FROM PARENT COMPANY DURING THE COURSE OF BUSINESS AND, T HEREFORE, IT IS INCOME UNDER SECTION 2(24) OF THE ACT AND CHARGEABLE TO TAX AS REVENUE INCOME. HE PLACED RELIANCE ON THE DECISION OF CIT VS. G. R. KARTHIKEYAN [1993] 201 ITR 866 (SC); RATNA SUGAR MILLS CO. LTD. VS. CIT [1958] 33 ITR 644 (ALL.); V. S. SV. MEENAKSHI ACHI VS. CIT [1963] 50 ITR 206 (MAD.); V. S. S. V. MEENAKSHI ACHI & ANOTHER VS. CIT [1966] 60 ITR 253 (SC). ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE L D. CIT (APPEALS). HE SUBMITTED THAT THE MNC PARENT COMPANY HAD GIVEN THE MONEY TO THE ASSESSEE COMPANY FOR TURNING AROUND THE BUSINESS IN INDIA. SINCE THE INDIAN COMPANY HAD MADE SOME LOSS IN THE COURSE OF BUSINESS, THE PARENT 6 I. T. APPEAL NO. 1405 (DEL) OF 2010. COMPANY HAS GIVEN GRANT OF AROUND 2.5 MILLION EURO TO RECOUP THE LOSSES OF THE COMPANY. HE PLACED RELIANCE ON THE DECISION OF THE ITAT IN THE CASE OF DCIT VS. LURGI INDIA COMPANY LTD. 302 ITR (AT) 67. HE ALSO PLACED RELIANCE ON THE DE CISION OF HONBLE DELHI HIGH COURT IN THE CASE OF HANDICRAFTS & HANDLOOM EXPORT CORPORATION O F INDIA VS. CIT (SUPRA). 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT AS ON 31 ST MARCH, 2005. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HA D OPERATIONAL INCOME OF RS.47,92,05,285/- AND OTHER INCOME OF RS.3,07,75,900/- TOTALING TO RS .50,99,81,185/-. THE ASSESSEE HAS INCURRED EXPENDITURE OF RS.61,04,33,338/-, WHICH INCLUDES DE PRECIATION OF RS.1,34,50,656/-. THUS, THE LOSS SUFFERED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS RS.10,04,52,153/-. IF THE DEPRECIATION CLAIM OF RS.1,34,50,656/-(A NOTIONAL L OSS) IS EXCLUDED EVEN THEN THE LOSS SUFFERED BY THE ASSESSEE WILL BE ABOUT RS.8.7 CRORES. THE HO LDING COMPANY VIDE THEIR LETTER DATED 24 TH SEPTEMBER, 2004 HAD INFORMED THE ASSESSEE THAT A SU M OF EURO 2 MILLION WILL BE PAID TO BIRLA HOME FINANCE LTD. AS SUBVENTION PAYMENT TOWARDS RES TORATION OF THE NET WORTH OF THE COMPANY EXPECTED TO BE PARTLY ERODED BY THE LOSSES SUFFERED / PROJECTED BY THE ASSESSEE COMPANY FOR THE FINANCIAL YEAR 2004-05. THE HOLDING COMPANY REMITT ED A SUM OF EURO 14,99,980 AND THE BALANCE AMOUNT OF EURO 5,00,000 WAS REMITTED VIDE LETTER DA TED 4/02/2005. IN THIS LETTER ALSO IT HAS BEEN CLEARLY MENTIONED THAT THE AMOUNT WAS PAID FOR THE PURPOSE OF RESTORATION OF NET WORTH OF THE COMPANY EXPECTED TO BE PARTLY ERODED BY THE LOSSES SUFFERED BY THE COMPANY FOR FINANCIAL YEAR 2004-05. IN CERTIFICATE OF INWARD REMITTANCE ISSUE D BY UTI BANK LTD. THE PURPOSE OF REMITTANCE HAS BEEN MENTIONED AS SUBVENTION PAYMENT TOWARDS RESTORATION OF NET WORTH OF THE COMPANY ERODED BY THE SUFFERED COMPANY. FURTHER THE ASSESS EE HAD FILED COPY OF CONFIRMATION RECEIVED THROUGH EMAIL WHEREIN THE HOLDING COMPANY HAS CERTI FIED THAT THEY HAVE NOT CLAIMED THE SUBVENTION PAYMENT AS EXPENDITURE IN THEIR RETURN O F INCOME AND NO TAX BENEFIT HAS BEEN RECEIVED BY THEM IN RESPECT OF SUBVENTION PAYMENT. BHW HOLD ING AG HAS CAPITALIZED THE AMOUNT IN THEIR BOOKS OF ACCOUNTS. FROM THESE FACTS, IT IS C LEAR THAT THE AMOUNT OF SUBVENTION MONEY WAS RECEIVED BY THE ASSESSEE TO RECOUP THE LOSSES EXPEC TED TO BE SUFFERED BY THE ASSESSEE DURING FINANCIAL YEAR 2004-05. 7 I. T. APPEAL NO. 1405 (DEL) OF 2010. 9. IN THE CASE OF HANDICRAFT & HANDLOOM CORPORATIO N (SUPRA), THE ASSESSEE, A WHOLLY SUBSIDIARY COMPANY OF STC INCURRED LOSS IN ITS BUSI NESS OF EXPORT OF HANDLOOM, ETC. FOR ASSESSMENT YEAR 1970-71. THE STC RECOUPED THE LOSS ES AND GAVE CASH ASSISTANCE AT 6 PER CENT OF THE FOREIGN EARNINGS OF THE ASSESSEE. HONBLE HIGH COURT HAS HELD THAT THERE IS A BASIC DIFFERENCE BETWEEN THE GRANTS MADE BY A GOVERNMENT OR FROM PUB LIC FUNDS GENERALLY TO ASSESSEES IN A PARTICULAR LINE OF BUSINESS OR TRADE, WITH A VIEW T O HELP THEM IN THE TRADE OR TO SUPPLEMENT THEIR GENERAL REVENUES OR TRADING RECEIPTS AND NOT EAR-MA RKED FOR ANY SPECIFIC OR PARTICULAR PURPOSE AND A CASE OF A PRIVATE PARTY AGREEING TO MAKE GOOD THE LOSSES INCURRED BY AN ASSESSEE ON ACCOUNT OF A MUTUAL RELATIONSHIP THAT SUBSISTS BETWEEN THEM . THE FORMER ARE TREATED AS A TRADING RECEIPT BECAUSE THEY REACH THE TRADER IN HIS CAPACITY AS SU CH AND ARE MADE IN ORDER TO ASSIST HIM IN CARRYING ON OF THE TRADE. THE LATTER ARE IN THE NA TURE OF GIFTS OR VOLUNTARY PAYMENTS MOTIVATED BY PERSONAL RELATIONSHIP AND NOT STEMMING FROM ANY BUS INESS CONSIDERATIONS. THE AMOUNT RECEIVED FROM PARENT COMPANY WAS NOT GRANTS RECEIVED FROM AN OUTSIDER OR THE GOVT. ON SUCH GENERAL GROUNDS. THE AMOUNTS WERE PAID BY STC TO THE ASSES SEE IN ORDER TO ENABLE IT WHICH WAS ITS SUBSIDIARY AND WAS INCURRING LOSSES YEAR AFTER YEAR , TO RECOUP THOSE LOSSES AND TO ENABLE IT TO MEET ITS LIABILITIES. THE AMOUNTS RECEIVED BY THE A SSESSEE FROM STC COULD NOT BE TREATED AS PART OF THE TRADING RECEIPT. 9.1 IN LURGI INDIA COMPANY LTD. (SUPRA) THE ASSESSE E RECEIVED A SUM OF RS.13 CRORES FROM ITS PARENT COMPANY M/S. LURGI COMPANY AG, WHICH WAS CRE DITED TO PROFIT AND LOSS ACCOUNT BY WAY OF CAPITAL GRANT. HOWEVER, IN COMPUTATION, THIS AM OUNT WAS REDUCED FROM THE INCOME, AND A NOTE WAS ALSO APPENDED TO THE RETURN STATING, INTER ALIA , THAT IN THE RELEVANT PREVIOUS YEAR ASSESSEE RECEIVED RS.13 CRORES FROM LURGI AG FOR RE-COUPING OF ITS LOSSES. THE AMOUNT SO RECEIVED WAS HELD TO BE CAPITAL GRANT NOT CHARGEABLE TO TAX UNDE R THE ACT IN VIEW OF DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF HANDICRAFTS & HANDLOOM EX PORT CORPORATION OF INDIA VS. CIT (SUPRA). 8 I. T. APPEAL NO. 1405 (DEL) OF 2010. 10. IF THE FACTS OF THE CASE BEFORE US ARE EXAMINED IN THE LIGHT OF THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF HANDICRAFTS AND HAN DLOOM EXPORT CORPORATION OF INDIA LTD.(SUPRA), WE FIND THAT THE AMOUNT OF SUBVENTION MONEY WAS RECEIVED BY THE ASSESSEE FROM ITS HOLDING COMPANY NOT AS TRADER, BUT TO RECOUP TH E LOSSES LIKELY TO BE SUFFERED BY IT. THE AMOUNT WAS RECEIVED BY VIRTUE OF THEIR RELATIONSHIP OF PAR ENT AND SUBSIDIARY COMPANY. THESE ARE VOLUNTARY PAYMENTS ARISING OUT OF PERSONAL RELATION SHIP OF PARENT AND SUBSIDIARY COMPANY AND NOT STEMMING FROM ANY BUSINESS CONSIDERATIONS. THER EFORE, THE ASSESSEES CASE IS SQUARELY COVERED BY THE DECISIONS OF HONBLE DELHI HIGH COUR T IN THE CASE OF HANDICRAFT & HANDLOOM EXPORT CORPORATION (SUPRA) AND THE ITAT IN THE CASE OF LURGI INDIA (SUPRA). THE DECISIONS RELIED UPON BY THE REVENUE ARE DISTINGUISHABLE ON FACTS AN D HENCE NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. ACCORDINGLY, WE DO NOT FIND ANY I NFIRMITY IN THE ORDER OF THE LD. CIT (A) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER . 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 14 TH OCTOBER, 2011. SD/- SD/- [ R. P. TOLANI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 14 TH OCTOBER, 2011. *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.