MOOSA A M Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THIS arises out of a reference under Section 27(1) of the Wealth-tax Act, 1957, by the Tribunal of the following question for our answer :

(2.) THE question itself would unfold the limited character of controversy. THE assessee received the amount as industrial subsidy. THE factual matrix shows that this amount was Rs. 1,20,407. THE amount was received by the assessee as a subsidy in regard to the development of his industrial concern. THE condition in regard thereto was that in the event of the assessee not being able to have benefit in the process of development resulting into the closure of the industrial activity altogether, then and then only the amount was refundable and in default liable to be recovered from him.

(3.) BEFORE the Tribunal the submissions or arguments are summarised. It Was argued before the Tribunal that, according to the terms of the agreement, the assessee has to refund the subsidy to the Government if his unit goes out of production within a period of five years after the commencement and from the date of the receipt of the subsidy, whichever is later. It was further submitted that the subsidy would become the wealth of the assessee only after the completion of five years of production from the date of the subsidy or the commencement of the production of the unit, whichever is later. In other words, the position that the amount of subsidy has to be understood as wealth was not disturbed in any fashion and the only question that was argued was whether it became the wealth at the time of the receipt or it could be understood as wealth five years later. It is, in this context, the Tribunal proceeded to consider the nature of the grant of subsidy. Subsidy was not refundable at all and can be understood to be refundable only in the event of the unit going out of production within a period of five years as stated hereinbefore. In the above situation, the Tribunal brushed aside the contention because it was based on the solitary strength of the fact that this amount was shown as a liability in the balance-sheet as on March 31, 1978. It was rightly considered as not determinative of the situation only on the strength of its entry in the balance-sheet as stated above.