COMMISSIONER OF INCOME TAX Vs. CHHINDWARA FUELS

JUDGEMENT

(1.) On an application under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following question for our opinion along with the statement of case :

(2.) During the course of assessment, the Assessing Officer (North-East) wrote a letter to the assessee dated February 20, 1989 (sic). In that letter, he claimed that the sales tax subsidy received by the firm amounting to Rs. 2,06,400 from the Directorate of Industries, Madhya Pradesh Government, is exempt from income-tax, as it is not a revenue receipt. The Assessing Officer negatived the claim of the assessee and treated it as a revenue receipt. In appeal before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals) has followed the decisions of the Madhya Pradesh High Court in the case of CIT v. Dusad Industries [1986] 162 ITR 784 and CIT v. Plastichem [1988] 174 ITR 546 and held that subsidy is a capital receipt and not liable to tax. The Tribunal has also followed the same decision and upheld the view taken by the Commissioner of Income-tax (Appeals).

(3.) None appears for the assessee, though the matter was listed 2/3 times. Heard learned counsel for the Revenue.