COMMISSIONER OF INCOME TAX Vs. ANAND AND CO

JUDGEMENT

(1.) In this reference application, the following question has been referred for our opinion :

(2.) The Appellate Assistant Commissioner has taken the view that the payment of Rs. 2,85,923 to the assessee is purely a voluntary act by the Federation for no services rendered by the assessee to the Federation. Subsidy is nothing but donations or gifts and the same cannot be said to be income taxable under Section 28 of the Act. Therefore, the addition made by the Income-tax Officer was deleted.

(3.) In appeal before the Tribunal, the Tribunal also found the fact that the amount of Rs. 2,85,923 was received by the assessee from the Indian Cotton Mills Federation, Bombay, without rendering any service to the Federation. The aforesaid Federation is also not a body corporate estab-lished by any law for the time being in force and it is purely a private organisation. There is no material on record to show that there was any nexus or connection or relationship which would give rise to a right, claim or expectation of cash assistance from the said Federation to the assessee. The cash assistance from the Federation purely depends on the discretion of the cash assistance panel and that would depend on the particular item and destination selected by the panel. Therefore, such voluntary assistance of gift payment by the Federation cannot be regarded as income liable to tax under the Act.