N.V Balasubramanian, J.:— The only question of law that has been referred to us relating to the assessment of income of the assessee for the assessment year 1981-82 for the opinion of this court is as to whether, on the facts and circumstances of the case, the Tribunal was right in holding that the subsidy received by the assessee should be treated as taxable revenue receipt. The Income-tax Officer, for the assessment year 1980-81 brought to tax a sum of Rs. 22,500 being the subsidy received by the assessee from the State Industries Promotion Corporation of Tamil Nadu (SIPCOT) as taxable revenue receipt. The amount received by the assessee was in respect of the revenue expenses claimed and allowed in the assessment of its income. The Commissioner of Income-tax (Appeals) confirmed the order of the Income-tax Officer on the ground that the subsidy amount received by the assessee was on account of modernisation of business expenditure incurred by the assessee. The Appellate Tribunal, on appeal considered the scheme of the subsidy granted by the SIPCOT and found that the subsidy was received by the assessee on account of reimbursement of the expenditure incurred by the assessee and it was not disputed that such expenditure was also allowed in computing the business income of the assessee for the assessment year in question. The finding of the Tribunal, in our opinion, is clear that the assessee received the amount by way of reimbursement of the expenditure incurred by the assessee and the expenditure was also allowed as a deduction as revenue expenditure in computing the business income of the assessee for the assessment year in question.
2. We hold that the subsidy was not received as some ex-gratia payment but it was received by the assessee exclusively for carrying on its business and after the commencement of the business by the assessee. Therefore, we are of the opinion that the subsidy so received by the assessee was liable to be and rightly, was treated as the financial assistance rendered by the SIPCOT for the purpose of running its business and we are therefore of the opinion that the Tribunal was correct in holding that the subsidy amount received by the assessee should be treated as revenue receipt.
3. This court in Saroja Mills Ltd. v. CIT, [1996] 220 ITR 626, has taken the view that the subsidy amount given to the assessee to meet the revenue expenditure should be assessable as revenue receipt. The apex court in Sahney Steel and Press Works Ltd. v. CIT, [1997] 228 ITR 253, has taken a similar view and held that the subsidy granted to the assessee for the purpose of carrying on the business should be treated as revenue receipt.
4. Following the decision of the apex court in Sahney Steel and Press Works Ltd. v. CIT, [1997] 228 ITR 253, and the decision of this court in Saroja Mills Ltd. v. CIT, [1996] 220 ITR 626, we hold that the subsidy received by the assessee in the instant case by way of reimbursement of revenue expenditure is a revenue receipt and it was rightly taxed as such.
5. Accordingly, we answer the question of law referred to us in the affirmative and against the assessee. But, however, in the circumstances of the case, there will be no order as to costs.