Commissioner Of Income-Tax vs Steel Authority Of India Ltd.
2001 Latest Caselaw 1865 Del

Citation : 2001 Latest Caselaw 1865 Del
Judgement Date : 29 November, 2001

Delhi High Court

Commissioner Of Income-Tax vs Steel Authority Of India Ltd. on 29 November, 2001

Equivalent citations: 2002 257 ITR 241 Delhi

Bench: S Sinha, A Sikri

JUDGMENT

1. The reference has been made by the Income-tax Appellate Tribunal to this court for its opinion on the following question :

"Whether, on the facts and in the circumstances of the case, the grants received from the Government by the assessed-company, which is a 100 per cent. Government company, to enable the company to function, was a capital or revenue receipt ?"

2. The Steel Authority of India Ltd. is a Government company within the meaning of Section 617 of the Indian Companies Act. It received grants-in-aid from the Government on various dates, i.e., Rs. 4 lakhs on February 28, 1973, Rs. 20 lakhs on December 10, 1973 and Rs. 7 lakhs on March 25, 1974. These grants-in-aid were utilised in the profit and loss account maintained by the said company in the said years which is as under :

Rs.

The year ending on 31-3-1973 3,46,663

The year ending on 31-3-1974 22,20,891

The year ending on 31-3-1975 5,32,446

3. The said amounts were assessed as the income of the company. Against the said assessment, appeals were preferred which were dismissed. On appeals having been filed before the Tribunal, the same were disposed of holding that the grants received by the company were a capital receipt.

4. Having heard learned counsel for the Department, we are of the opinion that the matter seems to be covered by a decision of the apex court in the case of Sahney Steel and Press Works Ltd. v. CIT [1997] 228 ITR 253. In the said decision, the apex court held that the subsidies not having been granted for production of or bringing into existence any new assets as such the same are of revenue character. As indicated hereinabove, even in the instant case, the grants-in-aid have been made by the Central Government for the purpose of functioning of the company and not for bringing into existence any new assets. In that view of the matter, the aforementioned reference is accordingly answered in favor of the Department and against the assessed.