COMMISSIONER OF INCOME TAX Vs. AJANTA TALKIES

JUDGEMENT

(1.) THIS is an application under Section 256 (2) of the IT Act of Revenue with a request to this Court to answer the following question of law referred by Tribunal. The same is reproduced herein :

(2.) LEARNED counsel for the applicant/revenue submitted that this question has been answered by the judgment of the Supreme Court in CIT v. Rajaram Maize Products, (2001) 251 ITR 427 (SC ). In fact, the aforesaid judgment is based on earlier judgment of the Supreme Court in Sahney Steel and Press Works Ltd. and Anr. v. CTT, (1997) 228 ITR 253 (SC) in which it has been held that subsidies are revenue receipts and have to be taxed, accordingly.

(3.) IN the present case, the assessee had received entertainment tax subsidy. Thus, on applying aforesaid ratio of the Supreme Court as mentioned above in two cases, we hold that it will be a revenue receipt and not capital in the hands of the assessee. Thus, we answer the question in favour of the Revenue and against the assessee. Accordingly, this matter is finally disposed of but with no order as to costs.