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| The Tax Publishers2020 TaxPub(DT) 4636 (Guj-HC) INCOME TAX ACT, 1961
Section 4
Where assessee had not received any grant during the year and the grants received originally from State Government were apportioned against the subsidiary companies appropriate basis, therefore, grants received cannot be treated as income of assessee company.
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Income - Additions towards capital grants and subsidies and Consumers' contribution - Capital grant being @ 15% of total grant -
Issue arose for consideration as to whether Tribunal had erred in law and on facts in upholding the order of CIT(A) in deleting the addition made by AO on account of capital grant being @ 15% of total grant of Rs. 25,000 lakhs.Held: Assessee had not received any grant during the year and the grants received originally from State Government were apportioned against the subsidiary companies appropriate basis. In financial year 2007-08, State Government various GRS decided to convert the grant given during the financial years 2005-06 to 2007-08 [2019 TaxPub(DT) 6150 (Ahd-Trib)] for implementation of Jyoti Gram Yojna (JGY) into equity share capital. Total grants received during the aforesaid financial years were allocated among the four distribution companies for implementation of scheme of State Government. Therefore, grants received cannot be treated as income of assessee company.
Followed:Pr. CIT v. Gujarat Urja Vikas Nigam Ltd. 2020 TaxPub(DT) 1447 (Guj-HC) and Dy.CIT v. Gujarat Energy Transmission Corporation Ltd. 2019 TaxPub(DT) 6150 (Ahd-Trib).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2007-08
IN THE GUJARAT HIGH COURT
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