Law: Income Tax Act, 1961

Section: 139,246(1)

(a) Income-tax----Capital or revenue receipt---Subsidy---Granted by State Government to film producers to produce feature film---Is in nature of a cash grant to induce film producers to produce feature films in the, State---Expectation that if producers are tempted to make feature films in State, film production in State will reap benefits of organized flourishing film industry shifting to State from elsewhere---Subsidy not granted to assist producer in film making and to increase his profits---Subsidy not assessable as revenue receipt. (b) Income-tax--- ----Appeal---Appeal to A.A.C. or C.I.T. (Appeals)---Maintainability of appeal---Question of maintainability arises only when appeal relates to levy of interest alone---Assessee denying his liability to pay tax on subsidy---Appeal lies to A.A.C. or C.I.T. (Appeals) regarding interest when appeal raises other grounds---Indian Income Tax Act, 1961, S. 246(1). The Income-tax Officer assessed the film subsidy, of Rs.2 lakhs received by the assessee, a Cine Studio, as revenue receipt for the assessment years 1980-81 and 1981-82. The Commissioner of Income-tax upheld the view of the Assessing Officer. The Tribunal also held that the film subsidy received was a revenue receipt. The assessee also objected to the levy of interest under section 217 of the Income Tax Act, and contended that it was not justified. The Revenue contended that in the assessment year 1980-81, the Inspecting Assistant Commissioner had waived the interest levied under section 217 of the Act and in the assessment year 1981-82 the interest levied under section 217of the Act was reduced to Rs.15,000, that since the assessee had filed an application for waiver of interest it was not a case where the levy of interest under section 217 was challenged and hence no appeal lay against the levy of interest under section 217. The Tribunal held that the assessee had filed an application for waiver of interest and, therefore, it was not a case of total denial of levy of interest under section 217. and consequently an appeal was not maintainable against the levy of interest under section 217. The Tribunal also took into account the waiver of interest for the…

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