2002 PLP 1095 (PTD)
COMMISSIONER OF INCOME-TAX Versus RAJARAM MAIZE PRODUCTS
| Citation | 2002 PLP 1095 (PTD) |
| Forum / Court | 251 I T R 427 |
| Bench Members | S.P. Bharucha, Y.K. Sabharwal and Ashok Bhan, JJ. |
| Parties | COMMISSIONER OF INCOME-TAX Versus RAJARAM MAIZE PRODUCTS |
| Primary Law | Income-tax |
Q1: What are the key laws and sections cited in 2002 PLP 1095 (PTD)?
This judgment primarily cites: Income-tax as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2002 PLP 1095 (PTD)?
The case was heard and decided by the 251 I T R 427 bench comprising: S.P. Bharucha, Y.K. Sabharwal and Ashok Bhan, JJ..
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2002 PLP 1095 (PTD) (COMMISSIONER OF INCOME-TAX Versus RAJARAM MAIZE PRODUCTS). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Representation
- Ajay Sharma, Ms. Neera Gupta, B.V.B. Das and Ms. Sushma Suri, Advocates for Appellant.
- Nemo for Respondent (in C.A. No.2006 of 1998).
Headnotes / Summary
(Civil Appeal No. 2006 of 1998 is by special leave from the judgment and order, dated October 1, 1997, of the Madhya Pradesh High Court in I.T.R. No.4 of 1995).
Power subsidy to new industries
Based on consumption per unit for small scale industry and percentage of electricity charges for medium and large industries' subject to specified limits
Is benefit arising out of business
Indian Income Tax Act, 1961, S.28(iv). [CIT v. Rajaram
Maize Products (1998) 234 ITR 667 reversed on this point]. The respondent-firm, which manufactured starch, liquid glucose and cattle feed, started a new unit for manufacture and sale of dextro mono hydrate. It received power subsidy from the State of M .P. under a scheme where under subsidy was granted for five years, for small scale industries at a rate per unit and for large and medium industries at a percentage of the electricity charges, both subject to certain maxima. The question was whether the power subsidy received by the respondent was a capital receipt and was not liable to tax under section 28(iv) of the Income Tax Act, 1961. The Appellate Tribunal held that the power subsidy received by the respondent was a capital receipt and, on a reference, the High Court affirmed the decision of the Tribunal (see (1998) 234 ITR 667). On appeal to the Supreme Court: Held, reversing the decision of the High Court, that the power subsidy received by the respondent was of revenue nature inasmuch as it went towards reduction of the electricity bills. . Sahney Steel and Press Works Ltd. v. CIT (1997) 228 ITR 253 (SC) fol. CIT v. Rajaram Maize Products (1998) 234 ITR 667 reversed on this point.
Judgment & Decree
Sahney Steel and Press Works Ltd. v. CIT (1997) 228 ITR 253 (SC) fol. CIT v. Rajaram Maize Products (1998) 234 ITR 667 reversed on this point. Ajay Sharma, Ms. Neera Gupta, B.V.B. Das and Ms. Sushma Suri, Advocates for Appellant. Nemo for Respondent (in C.A. No.2006 of 1998). Leave granted in the special leave petition. The question that requires our consideration reads thus (see (1998) 234 ITR 667, 669): "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the power subsidy received by the assessee was a capital receipt, not liable to be taxed within the meaning of section 28(iv) of the Income Tax Act, 1961?" This Court in Sahney Steel and Press Works Ltd. v. CIT (1997) 228 ITR 253, has held that power subsidies are of revenue nature and have to be taxed accordingly. We also find, that the terms under which the subsidy was given in the present cases clearly suggest that the subsidy was of a revenue nature inasmuch as it went towards reduction of the electricity bills. Accordingly, the appeals are allowed. The orders under challenge are set aside insofar as they relate to the question quoted above. That question is answered in the negative and in favour of the Revenue. No order as to costs. M.B.A./1081/FC Appeals allowed.