Income-tax---

----Capital or revenue receipt---Sales tax subsidy---Is capital receipt---Not liable to income-tax.

An amount of Rs.38,631 received by the assessee as sales tax subsidy was treated by the Assessing Officer as a revenue receipt. On appeal, the Commissioner of Income-tax deleted the same, treating it as a capital receipt. On second appeal, the Tribunal upheld the order of the Commissioner of Income-tax. On an application by the Revenue to direct reference:

Held, dismissing the application, that the Tribunal was justified in holding that the sales tax subsidy received-by the assessee was a capital receipt.

CIT v. Dusad industries (1986) 162 ITR 784 (MP) fol.

D.D. Vyas for the Commissioner.

Nemo for the Assessee.

JUDGMENT

A.R. TIWARI, J.---The applicant (Commissioner of Income-tax, Bhopal), has filed this application under section 256(2) of the Income-tax Act, 1961 (for short, "the Act"), seeking direction to the Tribunal to state the case and refer the proposed questions of law, as extracted below, arising out of the order dated June 28, 1991, passed by it in Income-tax Appeals, No.367/(Ind) of 1989 after rejection of its application registered as Revision Application, No.253/(Ind) of 1991 on December 12, 1991, for the assessment year 1987-88, for our opinion: .

"(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in dismissing the appeal holding that there was no finding to the effect that sales tax subsidy could be treated as a revenue receipt ?

(2) Whether, on the facts and in the circumstances of the case, the sales tax subsidy received by the assessee was not liable to be included in the total income of the assessee ?

(3) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in dismissing the appeal without looking into the merits of the case before it?"

Briefly stated, the facts of the case are that the Assessing Officer found that the assessee received sales tax subsidy of Rs.38,631 which was treated by him as a revenue receipt. In appeal, the Commissioner of Income tax (Appeals) held that the same was a capital receipt and accordingly deleted the addition. The applicant then filed an appeal before the Tribunal. Following the decision reported in CIT v. Dusad Industries (1986) 162 ITR 784 (MP), the Tribunal dismissed the appeal and upheld the order of the Commissioner of Income-tax (Appeals). The applicant then filed application under section 256(1) of the Act, which was rejected. Thereafter, the applicant has filed this application.

We have heard Shri D.D. Vyas, learned counsel for the applicant/Department. None appeared for the non-applicant/assessee.

The appeal, Income-tax Appeal No.367/(Ind) of 1989, was dismissed by the Tribunal as under:

"Finding of the Income-tax Officer as to the amount of sales tax subsidy being a revenue receipt has been reversed by theCommissioner of Income-tax (Appeals) holding it as a capital receipt The Department is, therefore, in appeal.

2. The point in issue is covered by CIT v. Dusad Industries (1986) 162 ITR 784 (MP) against the Department. We, therefore, find no merit in the appeal.

3. In the result the appeal is dismissed."

As the order was based on the decision rendered by this Court, the application seeking reference was also rejected.

The point stands concluded by the aforesaid decision. Nothing substantial is urged to take a different view in the matter. We are, thus, satisfied about the correctness of the order passed by the Tribunal and hold that there are no referable questions of law, as noted above.

The application is accordingly rejected.

Counsel fee for the applicant is, however, fixed at Rs.750, if certified.

M.B.A./1383/FGApplication rejected.