High Court Of Delhi
CIT vs. Steel Authority Of India Ltd.
Section 4
Arijit Pasayat, C.J. & A.K. Sikri, J.
IT Ref. No. 176 of 1979
29th November, 2001
Counsel Appeared
R.C. Pandey & Ajay Jha, for the Petitioner
JUDGMENT
BY THE COURT :
The reference has been made by the 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 assessee-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 s. 651 of the Indian Companies Act. It received grants-in-aid from the Government on various dates i.e., Rs. 4 lacs on 28th Feb., 1973, Rs. 20 lacs on 10th Dec., 1973, and Rs. 7 lacs on 25th March ,1974. These grants-in-aid were utilised in the P&L a/c maintained by the said company in the said years which is as under : The year ending on 31-3-1973 Rs. 3,46,663 The year ending on 31-3-1974 Rs. 22,20,891 The year ending on 31-3-1975 Rs. 5.32,446 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 was not a capital receipt.
3. Having heard the 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 & Press Works Ltd. & Ors. vs. CIT (1997) 147 CTR (SC) 261 : (1997) 228 ITR 253 (SC) : TC S13.1361. In the said decision, the apex Court held that subsidies having been granted for production or bringing into existence any new assets and as such the same are of revenue in 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 favour of the Department and against the assessee.
[Citation : 257 ITR 241]
