Law: Income Tax Act, 1922

Section: 4,6,23

Income tax Act (XI of 1922)--Ss. 4, 6 & 23 Income Assessment Grant by Government Whether taxable amount Assessee company owned by Government Government giving grant to company for specific purpose and not to assist it in its business Such receipt not arising from any business conducted by company Such amount, held, was capital receipt in hands of company and not liable to tax. Raghuvanshi Mills Ltd. v. Commissioner, Income tax (1952) 22 I T R 484 distinguished. Seaham Harbour Dock Company v. Crook (1931) 16 T C 333; Commissioner of Income tax v. Habib Bank Executors and Trustees Company Limited, Karachi 1967 P T D 217 and K . . . . . v. Central Board of Revenue and 3 others P L D 1975 Kar. 128 ref. ORDER SIKANDAR HAYAT KHAN (MEMBER These three appeals at the instance of the department are directed against the impugned orders of the learned AAC and CIT (A) contained in Appeal Nos.267 and 738, dated 24 6 1980 and 224, dated 21 10 1982 respectively. The common ground in respect of these appeals is that there was no justification with the learned AAC and the CIT (A) in deleting a sum of Rs.55,00,000; Rs.90,00,000 and Rs.80,00,000 for the charge years 1976 77,1977 78 and 1978 79 respectively. It has accordingly been prayed that the orders of the learned AAC the CIT (A) may be vacated and that of the I.T.O. be restored. 2. Briefly speaking the facts of this case are that the respondent received a sum of Rs.55,00,000, Rs.90,00,000 and Rs.80,00,000 from Federal Government during the charge years 1976 77, 1977 78 and 1978 79 respectively. This amount was charged to tax by the I.T.O. In appeal both the learned AAC and the CIT (A) deleted the impugned additions. In this connection relevant part of the appellate order is set out below: "The money advanced by the Government to a company which is actually owned by it could not be treated as income of the recipient of grant. I, therefore, delete the additions ....made by the I.T.O. from the income of the company" 3. The learned DR in support of the fact that the grant received by the respondent was a revenue receipt in its hand and consequently liable to income tax relied on a Supreme Court decision cited as Ragnuvanshi…

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