Sh. Rajnish Ahuja, Ludhiana V. ACIT, Ludhiana

ITA 291/CHANDI/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9150 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 18-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHIL KUMAR CIT II
• Keywords: Capital asset; Depreciation; Capital receipt

Judgement Text

PAGE 1 OF 5 RAJNISH AHUJA V ACIT ITA NO 291/ CHD/2015 A Y 2008 - 09 INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 291 /CHD/20 15 ASSESSMENT YEAR : 2008 - 09 SH. RAJNISH AHUJA, PROPRIETOR. M/S. AHUJA INDUSTRIAL CORPORATION, E - 26, PHASE IV, FOCAL POINT, LUDHIANA PAN:ABKPA3060H VS. ACIT, CIRCLE - I, LUDHIANA (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE (WRITTEN SUBMISSION) REVENUE BY: SH. SUSHIL KUMAR CIT - II DATE OF HEARING 02 /0 8 /2016 DATE OF PRONOUNCEMENT 0 9 /0 8 /2016 O R D E R PER PRASHANT MAHARISHI , A . M . 1 . THIS IS AN APPEAL FILED BY THE A SSESSEE AGAINST THE ORDER OF THE LD CIT(A) - I, LUDHIANA DATED 16.02.2015 FOR THE ASSESSMENT YEAR 2008 - 09 RAISING SOLITARY GROUND OF APPEAL, WHEREIN THE LD CIT(A) HAS CONFIRMED THE RECEIPT OF SUBSIDY OF RS. 222400/ - AS REVENUE IN NATURE, WHEREAS THE APPELLA NT CONTENDS THAT THE SUM IS CAPITAL IN NATURE. 2 . BRIEF FACTS OF THE CASE IS THAT THE A SSESSEE IS AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME SHOWING INCOME OF RS. 1267190/ - AND IS ENGAGED IN MANUFACTURING THE FUEL INJECTION PARTS. DURING THE YEAR THE A SSESSEE HAS RECEIVED A SUBSIDY OF RS. 222400/ - FROM DEPT OF INDUSTRIES, GOVT. OF PUNJAB AND THIS SUM WAS CREDITED BY THE A SSESSEE TO THE CAPITAL ACCOUNT STATING THAT IT IS CAPITAL RECEIPT IN NATURE. THE LD AO WAS OF THE VIEW THAT THE P URPOSE OF THE GOVT. CANNOT DETERMINE THE CHARACTER OF THE SUBSIDY AND AS THIS SUBSIDY IS GIVEN TO LEND HELPING HAND TO THE A SSESSEE IN RUNNING HIS BUSINESS MORE PROFITABLY AND THEREFORE IT IS REVENUE IN NATURE. CONSEQUENTLY, HE CHARGED THIS AMOUNT TO TAX. THE A SSESSEE AGGRIE VED BY THE ORDER OF THE LD AO PREFERRED AN APPEAL BEFORE THE LD CIT(A) WHO IN TURN CONFIRM ED THE VIEWS OF THE LD AO HOLDING THAT AS THE SUBSIDY HAS BEEN GIVEN AFTER THE COMMENCEMENT OF THE PRODUCTION AND PAGE 2 OF 5 RAJNISH AHUJA V ACIT ITA NO 291/ CHD/2015 A Y 2008 - 09 IT S MAIN OBJECTIVE IS TO ENHANCE THE COMPETITIVENES S OF THE INDUSTRIAL UNITS , THEREFORE IT IS REVENUE IN NATURE. 3 . ON APPEAL BEFORE US THE ASSESSEE SUBMITTED A WRITTEN SUBMISSION WHEREIN HE HAS RELIED UPON THE INDUSTRIAL POLICY AND DISBURSEMENT INTIMATION LETTER OF THE ABOVE SUBSIDY. HE FURTHER RELIED ON THE DECISION OF THE COORDINATE BENCH IN ITA NO. 253/CHD/2013 DATED 29.05.2014 WHEREIN, THE ABOVE SUBSIDY WAS HELD TO BE IN THE NATURE OF CAPITAL RECEIPT. 4 . AGAINST THIS THE LD DR SUBMITTED THAT IT IS THE PURPOSE OF THE SUBSIDY WHICH SHALL DECIDE WHETHER THE SAME IS REVENUE OR CAPITAL IN NATURE. HE HEAVILY RELIED ON THE DECISION OF THE LOWER AUTHORITIES AND FURTHER THE DECISION OF THE HON'BLE SUPREME COURT IN CASE OF SAWHNEY STEEL AND PRESS WORKS LTD AND OTHERS VS. CIT (1997) 228 ITR 253. 5 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE NOTIFICATION DATED 1 ST JUNE 1996 UNDER WHICH THE ABOVE SUBSIDY WAS GRANTED. THE PURPOSE OF THE SUBSIDY WAS TO PROMOTE GROWTH OF INDUSTRIES I N THE STATE OF PUNJAB AND THEREFORE TO GRANT VARIOUS INCENTIVES FOR NEW INDUSTRIAL UNITS THAT COME INTO OPERATION OR UNDERTAKE EXPANSION OR AFTER 1 ST APRIL 1996. THIS SCHEME FURTHER PROVIDES THAT UNITS WOULD BE ENTITLE TO CAPITAL SUBSIDY BASED ON TWO CATEG ORIES I.E. CATEGORY (A) AND CATEGORY (B) AND THEY WOULD BE ENTITLE TO SUBSIDY SUBJECT TO MAXIMUM AMOUNT LAID DOWN AND BASED ON PERCENTAGE OF FIXED CAPITAL INVESTMENT MADE. IT WAS FURTHER PROVIDED THAT DISBURSEMENT OF SUBSIDY SHALL BE ON COMMENCEMENT OF COM MERCIAL PRODUCTION. SUBSEQUENTLY, THE A SSESSEE AFTER FULFILLING THE CONDITION UNDER THAT SCHEME VIDE LETTER DATED 28 TH APRIL 2007 WAS GRANTED SUBSIDY VIDE BY ORDER DATED 28.04.2007 BY STATE BANK OF PATIALA FOR RS. 222400/ - . REGARDING THE NATURE OF RECEIPT OF SUBSIDY H ONOURABLE S UPREME COURT IN CASE OF PONNI SUGAR MILLS LTD [306 ITR 292] HAS HELD THAT 9. THE KEY QUESTION WHICH ARISES FOR DETERMINATION IS : WHAT IS THE CHARACTER OF THE INCENTIVE SUBSIDY UNDER THE SAID SCHEMES? 10. AT THE OUTSET, IT MAY BE STATED THAT DURING THE RELEVANT YEAR IN QUESTION, ON ACCOUNT OF ECONOMIC FACTORS, NAMELY, HIGH COST, THE NEW SUGAR FACTORIES COULD NOT COME UP AS IT WAS NOT ECONOMICALLY VIABLE. DUE TO HIGH COST, THE FINANCIAL INSTITUTIONS DID NOT COME FORWARD TO ADVANCE LOANS TO THE ENTREPRENEURS OF NEW SUGAR FACTORIES. SECONDLY, THE TEMPO OF ESTABLISHING NEW SUGAR FACTORIES RECEIVED A SERIOUS SET BACK, THEREFORE, THE GOVERNMENT APPOINTED A COMMITTEE KNOWN AS SAMPAT COMMITTEE TO EXAMINE THE QUESTI ON RELATING TO ECONOMIC VIABILITY OF NEW SUGAR FACTORIES. ONE OF THE TERMS OF REFERENCE SUGGESTED WAS TO WORK OUT VARIOUS INCENTIVES FOR MAKING NEW SUGAR FACTORIES ECONOMICALLY VIABLE UNITS. THE INCREASE OF THE COST OF THE PROJECT DURING THE RELEVANT YEARS WAS ON ACCOUNT OF THE INCREASE IN THE COST OF PLANT AND MACHINERY. THE SAID COMMITTEE GAVE ITS REPORT IN WHICH THE COMMITTEE RECOMMENDED THAT THE ECONOMIC VIABILITY OF A FACTORY WOULD MEAN THAT THE PAGE 3 OF 5 RAJNISH AHUJA V ACIT ITA NO 291/ CHD/2015 A Y 2008 - 09 UNIT SHOULD NOT BREAK EVEN AFTER MEETING THE WORKING EXPE NSES, INTEREST ON BORROWINGS, DEPRECIATION ON PLANT AND MACHINERY, BUT IT SHOULD ALSO BE ABLE TO DECLARE A REASONABLE DIVIDEND ON THE EQUITY CAPITAL. ACCORDING TO THE COMMITTEE, THE FACTORY SHOULD BE ABLE TO GENERATE SUFFICIENT FUNDS TO REPAY THE INSTALMEN TS OF THE TERM LOANS. UNDER PARA 21.0 THE SAID COMMITTEE STATED THAT FIVE POSSIBLE INCENTIVES FOR MAKING A SUGAR PLANT ECONOMICALLY VIABLE UNIT COULD BE PROVIDED FOR, NAMELY, CAPITAL SUBSIDY, ALLOWING A LARGER PERCENTAGE OF FREE SALE SUGAR, HIGH LEVY SUGAR PRICE, ALLOWING REBATE ON EXCISE DUTY AND REMISSION OF PURCHASE TAX. IN THIS CASE, WE ARE CONCERNED WITH ALLOWABILITY OF A LARGER PERCENTAGE OF FREE SALE SUGAR AND REBATE ON EXCISE DUTY. FOLLOWING THE SAID REPORT OF THE SAMPAT COMMITTEE, THE ABOVE SCHEMES CAME TO BE FORMULATED. 11. WE HAVE EXAMINED IN THIS CASE THE 1980 AND 1987 SCHEMES. ESSENTIALLY ALL THE FOUR SCHEMES ARE SIMILAR EXCEPT IN THE MATTER OF DETAILS. FOUR FACTORS EXIST IN THE SAID SCHEMES, WHICH ARE AS FOLLOWS : ( I )BENEFIT OF THE INCENTIVE SU BSIDY WAS AVAILABLE ONLY TO NEW UNITS AND TO SUBSTANTIALLY EXPANDED UNITS, NOT TO SUPPLEMENT THE TRADE RECEIPTS. ( II )THE MINIMUM INVESTMENT SPECIFIED WAS RS. 4 CRORES FOR NEW UNITS AND RS. 2 CRORES FOR EXPANSION UNITS. ( III )INCREASE IN THE FREE SALE SUGAR QUOTA DEPENDED UPON INCREASE IN THE PRODUCTION CAPACITY. IN OTHER WORDS, THE EXTENT OF THE INCREASE OF FREE SALE SUGAR QUOTA DEPENDED UPON THE INCREASE IN THE PRODUCTION CAPACITY. ( IV )THE BENEFIT OF THE SCHEME HAD TO BE UTILIZED ONLY FOR REPAYMENT OF TERM LOANS. 12. ONE IMPORTANT ASPECT MAY ALSO BE NOTED THAT IN THE CASE OF SALEM CO - OPERATIVE SUGAR MILLS LTD. ( SUPRA ) WE ARE CONCERNED WITH NOTIFICATION DATED 15 - 11 - 1980. IT INDICATES THE ABOVE FACTORS OF THE SCHEME. THE IMPORTANT POINT TO BE NOTED IS THAT GOV ERNMENT OF INDIA, FINANCIAL INSTITUTIONS AS WELL AS THE SUGAR INDUSTRIES ARE PARTIES TO THE SCHEME IN THE SENSE THAT BUT FOR THE SCHEME THE FINANCIAL INSTITUTIONS WOULD NOT HAVE GIVEN TERM LOANS TO SET UP NEW UNITS/EXPANSION OF THE EXISTING UNITS. 13. THE MAIN CONTROVERSY ARISES IN THESE CASES BECAUSE OF THE REASON THAT THE INCENTIVES WERE GIVEN THROUGH THE MECHANISM OF PRICE DIFFERENTIAL AND THE DUTY DIFFERENTIAL. ACCORDING TO THE DEPARTMENT, PRICE AND COSTS ARE ESSENTIAL ITEMS THAT ARE BASIC TO THE PROFIT - MAKING PROCESS AND THAT ANY PRICE - RELATED MECHANISM WOULD NORMALLY BE PRESUMED TO BE REVENUE IN NATURE. IN OTHER WORDS, ACCORDING TO THE DEPARTMENT, SINCE INCENTIVES WERE GIVEN THROUGH PRICE AND DUTY DIFFERENTIALS, THE CHARACTER OF THE IMPUGNED INCENTIVE IN THIS CASE WAS REVENUE AND NOT CAPITAL IN NATURE. ON THE OTHER HAND, ACCORDING TO THE ASSESSEE, WHAT WAS RELEVANT TO DECIDE THE CHARACTER OF THE INCENTIVE IS THE PURPOSE TEST AND NOT THE MECHANISM OF PAYMENT. 14. IN OUR VIEW, THE CONTROVERSY IN HAND CAN BE RESOLVED IF WE APPLY THE TEST LAID DOWN IN THE JUDGMENT OF THIS COURT IN THE CASE OF SAHNEY STEEL & PRESS WORKS LTD. ( SUPRA ). IN THAT CASE, ON BEHALF OF THE ASSESSEE, IT WAS CONTENDED THAT THE SUBSIDY GIVEN WAS UP TO 10 PER CENT OF THE CAPITAL INVESTMEN T CALCULATED ON THE BASIS OF THE QUANTUM OF INVESTMENT IN CAPITAL AND, THEREFORE, RECEIPT OF SUCH SUBSIDY WAS ON CAPITAL ACCOUNT AND NOT ON REVENUE ACCOUNT. IT WAS ALSO URGED IN THAT CASE THAT SUBSIDY GRANTED ON THE BASIS OF REFUND OF SALES TAX ON RAW MATE RIALS, MACHINERY AND FINISHED GOODS WERE ALSO OF CAPITAL NATURE AS THE OBJECT OF GRANTING REFUND OF SALES TAX WAS THAT THE ASSESSEE COULD SET UP NEW BUSINESS OR EXPAND HIS EXISTING BUSINESS. THE CONTENTION OF THE ASSESSEE IN THAT CASE WAS DISMISSED BY THE TRIBUNAL AND, THEREFORE, THE ASSESSEE HAD COME TO THIS COURT BY WAY OF A SPECIAL LEAVE PETITION. IT WAS HELD BY THIS COURT ON THE FACTS OF THAT CASE AND ON THE BASIS OF THE ANALYSES OF THE SCHEME THEREIN THAT THE SUBSIDY GIVEN WAS ON REVENUE ACCOUNT BECAUS E IT WAS GIVEN BY WAY OF ASSISTANCE IN CARRYING ON OF TRADE OR BUSINESS. ON THE FACTS OF THAT CASE, IT WAS HELD THAT THE SUBSIDY GIVEN WAS TO MEET RECURRING EXPENSES. IT WAS NOT FOR ACQUIRING THE CAPITAL ASSET. IT WAS NOT TO MEET PART OF THE COST. IT WAS N OT GRANTED FOR PRODUCTION OF OR BRINGING INTO EXISTENCE ANY NEW ASSET. THE SUBSIDIES IN THAT CASE WERE GRANTED YEAR AFTER YEAR ONLY AFTER SETTING UP OF THE NEW INDUSTRY AND ONLY AFTER COMMENCEMENT OF PRODUCTION AND, THEREFORE, SUCH A SUBSIDY COULD ONLY BE TREATED AS ASSISTANCE GIVEN FOR THE PURPOSE OF CARRYING ON THE BUSINESS OF THE ASSESSEE. CONSEQUENTLY, THE CONTENTIONS RAISED ON BEHALF OF THE ASSESSEE ON THE FACTS OF THAT CASE STOOD REJECTED AND IT WAS HELD THAT THE SUBSIDY RECEIVED BY SAHNEY STEEL COULD NOT BE REGARDED AS ANYTHING BUT A REVENUE RECEIPT. ACCORDINGLY, THE MATTER WAS DECIDED AGAINST THE ASSESSEE. THE IMPORTANCE OF THE JUDGMENT OF THIS COURT IN SAHNEY STEEL & PRESS WORKS LTD.S CASE ( SUPRA ) LIES IN THE FACT THAT IT HAS DISCUSSED AND ANALYSE D THE ENTIRE CASE LAW AND IT HAS LAID DOWN THE BASIC TEST TO BE APPLIED IN JUDGING THE CHARACTER OF A SUBSIDY. THAT TEST IS THAT THE CHARACTER OF THE RECEIPT IN THE HANDS OF THE ASSESSEE HAS TO BE DETERMINED WITH RESPECT TO THE PURPOSE FOR WHICH THE SUBSID Y IS GIVEN. IN OTHER WORDS, IN SUCH CASES, ONE HAS TO APPLY THE PURPOSE TEST. THE POINT OF TIME AT WHICH THE SUBSIDY IS PAID IS NOT RELEVANT. THE SOURCE IS IMMATERIAL. THE FORM OF SUBSIDY IS IMMATERIAL. THE MAIN PAGE 4 OF 5 RAJNISH AHUJA V ACIT ITA NO 291/ CHD/2015 A Y 2008 - 09 ELIGIBILITY CONDITION IN THE SCHEME WITH WHI CH WE ARE CONCERNED IN THIS CASE IS THAT THE INCENTIVE MUST BE UTILIZED FOR REPAYMENT OF LOANS TAKEN BY THE ASSESSEE TO SET UP NEW UNITS OR FOR SUBSTANTIAL EXPANSION OF EXISTING UNITS. ON THIS ASPECT THERE IS NO DISPUTE. IF THE OBJECT OF THE SUBSIDY SCHEME WAS TO ENABLE THE ASSESSEE TO RUN THE BUSINESS MORE PROFITABLY THEN THE RECEIPT IS ON REVENUE ACCOUNT. ON THE OTHER HAND, IF THE OBJECT OF THE ASSISTANCE UNDER THE SUBSIDY SCHEME WAS TO ENABLE THE ASSESSEE TO SET UP A NEW UNIT OR TO EXPAND THE EXISTING UN IT THEN THE RECEIPT OF THE SUBSIDY WAS ON CAPITAL ACCOUNT. THEREFORE, IT IS THE OBJECT FOR WHICH THE SUBSIDY/ASSISTANCE IS GIVEN WHICH DETERMINES THE NATURE OF THE INCENTIVE SUBSIDY. THE FORM OF THE MECHANISM THROUGH WHICH THE SUBSIDY IS GIVEN IS IRRELEVAN T. 15. IN THE DECISION OF HOUSE OF LORDS IN THE CASE OF SEAHAM HARBOUR DOCK CO. V. CROOK [1931] 16 TC 333 THE HARBOUR DOCK CO. HAD APPLIED FOR GRANTS FROM THE UNEMPLOYMENT GRANTS COMMITTEE FROM FUNDS APPROPRIATED BY PARLIAMENT. THE SAID GRANTS WERE PAID AS THE WORK PROGRESSED THE PAYMENTS WERE MADE SEVERAL TIMES FOR SOME YEARS. THE DOCK CO. H AD UNDERTAKEN THE WORK OF EXTENSION OF ITS DOCKS. THE EXTENDED DOCK WAS FOR RELIEVING THE UNEMPLOYMENT. THE MAIN PURPOSE WAS RELIEF FROM UNEMPLOYMENT. THEREFORE, THE HOUSE OF LORDS HELD THAT THE FINANCIAL ASSISTANCE GIVEN TO THE COMPANY FOR DOCK EXTENSION CANNOT BE REGARDED AS A TRADE RECEIPT. IT WAS FOUND BY THE HOUSE OF LORDS THAT THE ASSISTANCE HAD NOTHING TO DO WITH THE TRADING OF THE COMPANY BECAUSE THE WORK UNDERTAKEN WAS DOCK EXTENSION. ACCORDING TO THE HOUSE OF LORDS, THE ASSISTANCE IN THE FORM OF A GRANT WAS MADE BY THE GOVERNMENT WITH THE OBJECT THAT BY ITS USE MEN MIGHT BE KEPT IN EMPLOYMENT AND, THEREFORE, ITS RECEIPT WAS CAPITAL IN NATURE. THE IMPORTANCE OF THE JUDGMENT LIES IN THE FACT THAT THE COMPANY HAD APPLIED FOR FINANCIAL ASSISTANCE TO TH E UNEMPLOYMENT GRANTS COMMITTEE. THE COMMITTEE GAVE FINANCIAL ASSISTANCE FROM TIME TO TIME AS THE WORK PROGRESSED AND THE PAYMENTS WERE EQUIVALENT TO HALF THE INTEREST FOR TWO YEARS ON APPROVED EXPENDITURE MET OUT OF LOANS. EVEN THOUGH THE PAYMENT WAS EQUI VALENT TO HALF THE INTEREST AMOUNT PAYABLE ON THE LOAN (INTEREST SUBSIDY) STILL THE HOUSE OF LORDS HELD THAT MONEY RECEIVED BY THE COMPANY WAS NOT IN THE COURSE OF TRADE BUT WAS OF CAPITAL NATURE. THE JUDGMENT OF HOUSE OF LORDS SHOWS THAT THE SOURCE OF PAY MENT OR THE FORM IN WHICH THE SUBSIDY IS PAID OR THE MECHANISM THROUGH WHICH IT IS PAID IS IMMATERIAL AND THAT WHAT IS RELEVANT IS THE PURPOSE FOR PAYMENT OF ASSISTANCE. ORDINARILY SUCH PAYMENTS WOULD HAVE BEEN ON REVENUE ACCOUNT BUT SINCE THE PURPOSE OF T HE PAYMENT WAS TO CURTAIL/OBLITERATE UNEMPLOYMENT AND SINCE THE PURPOSE WAS DOCK EXTENSION, THE HOUSE OF LORDS HELD THAT THE PAYMENT MADE WAS OF CAPITAL NATURE. 16. ONE MORE ASPECT NEEDS TO BE MENTIONED. IN SAHNEY STEEL & PRESS WORKS LTD.S CASE ( SUPRA ) TH IS COURT FOUND THAT THE ASSESSEE WAS FREE TO USE THE MONEY IN ITS BUSINESS ENTIRELY AS IT LIKED. IT WAS NOT OBLIGED TO SPEND THE MONEY FOR A PARTICULAR PURPOSE. IN THE CASE OF SEAHAM HARBOUR DOCK CO. ( SUPRA ) ASSESSEE WAS OBLIGED TO SPEND THE MONEY FOR EXTE NSION OF ITS DOCKS. THIS ASPECT IS VERY IMPORTANT. IN THE PRESENT CASE ALSO, RECEIPT OF THE SUBSIDY WAS CAPITAL IN NATURE AS THE ASSESSEE WAS OBLIGED TO UTILIZE THE SUBSIDY ONLY FOR REPAYMENT OF TERM LOANS UNDERTAKEN BY THE ASSESSEE FOR SETTING UP NEW UNIT S/EXPANSION OF EXISTING BUSINESS. 17. APPLYING THE ABOVE TESTS TO THE FACTS OF THE PRESENT CASE AND KEEPING IN MIND THE OBJECT BEHIND THE PAYMENT OF THE INCENTIVE SUBSIDY WE ARE SATISFIED THAT SUCH PAYMENT RECEIVED BY THE ASSESSEE UNDER THE SCHEME WAS NOT IN THE COURSE OF A TRADE BUT WAS OF C APITAL NATURE. ACCORDINGLY, THE FIRST QUESTION IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. [UNDERLINE AND BOLD SUPPLIED BY US] 6 . ABOVE DECISION HAS ALSO CONSIDERED THE DECISION RELIED UP ON BY THE REVENUE. THE P URPOSE OF THE SCHEME UNDER WHICH THE IMPUGNED SUBSIDY IS GRANTED IS TO PROMOTE INDUSTRIAL GROWTH IN THE STATE OF PUNJAB, AND FURTHER TO SET UP THE NEW INDUSTRIAL UNDERTAKING. THIS SUBSIDY IS NOT FOR THE PURPOSES OF RUNNING THE EXISTING BUSINESS OF THE ASSESSEE MORE PROFITABLY. T HEREFORE , IN VIEW OF THE ABOVE DECISION OF HON. SUPREME COURT , IT IS THE CAPITAL RECEIPT . THEREFORE WE ARE OF THE VIEW THAT THE SUBSIDY RECEIPT OF RS. 222400/ - BY THE APPELLANT IS CAPITAL IN NATURE. THE TIME OF PAGE 5 OF 5 RAJNISH AHUJA V ACIT ITA NO 291/ CHD/2015 A Y 2008 - 09 DISBURSEMENT ACCORDING TO THAT SUBSIDY SCHEME IS OF COMMENCEMENT OF COMMERCIAL PRODUCTION BY THE ASSESSEE IS JUST TO SPECIFY THE BASIC OBJECT OF THIS SCHEME FOR PROMOTION OF INDUSTRIAL GROWTH OF THE STATE. FURTHER THE RELIANCE IS PLACED BY THE A SSESSEE ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE SAWHNEY STEEL AND PRESS WORKS (SUPRA ) HAS ALSO BEEN CONSIDERED BY HON. SUPREME COURT WHILE DECIDING THE ISSUE IN PONNI SUGARS CASE. IN VIEW OF THIS WE REVERSE THE FINDING OF THE LD CIT ( A) HOLDING THAT THE SUM OF RS. 222400/ - RECEIVED BY THE A SSESSEE IS CAPITAL IN NATURE AND THEREFORE NOT CHARGEABLE TO TAX. 7 . IN THE RESULT THE APPEAL OF THE A SSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 9 / 08 /2016 . - S D / - - S D / - ( SANJAY GARG ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 9 / 08 / 2016 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, CHANDIGARH