INCOME TAX ACT, 1961

Section 263 Section 4

Revision under section 263 - Erroneous and prejudicial order - CIT rejected treatment of financial assistance from NRDA as capital receipt -

CIT invoked jurisdiction under section 263 and held that financial assistance from NRDA was of revenue in nature and should have been taxed as income of assessee and in not doing so assessment order had become erroneous and prejudicial to the interest of revenue.Held: A thorough enquiry was made by AO and specific queries were raised during the course of assessment proceedings itself to which specific replies were given by assessee as regards nature of financial assistance from NRDA and since, financial assistance was received for set up of facilities for extraction of raw water, production of treated water and supply and storage in water storage reservoir by installing plant and equipment, the financial assistance was a capital receipt and had been rightly accepted by AO, therefore, assessment order as neither erroneous nor prejudicial to the interest of the revenue.

Relied:V.S.S.V. Meenakshi Achi (1966) 60 ITR 253 (SC) : 1966 TaxPub(DT) 0307 (SC) ; Sahni Steel & Press Works Ltd. (1997) 228 ITR 253 (SC) : 1997 TaxPub(DT) 1342 (SC) ; Ponni Sugars & Chemicals (2008) 306 ITR 392 (SC) : 2008 TaxPub(DT) 2302 (SC)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14 & 2014-15

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