Law: Income Tax Act, 1922

Section:

Income tax-----Income or capital receipt Replantation subsidy scheme framed by a statutory Board Subsidy received for replanting rubber trees Assistance offered under stringent conditions Subsidy not given for budding immature unselected plants ¬Restricted to replanting only of old and uneconomic plantations Subsidy not given for upkeep or maintenance of mature or immature' rubber plants Scheme designed to achieve development of rubber plantation industry on efficient and economic lines Subsidy given for beneficial purposes to promote public interest ¬Subsidy received used to acquire an asset by replanting thigh yield variety of rubber trees is not revenue receipt [C.I.T. v. Malayalam Plantation Ltd. (1987) 1681 T R 63'(Ker.) overruled]. There cannot be any dispute that if any amount is paid by the Government with an express purpose, benevolent and beneficial in the public interest, and the same is received by the appropriate body and it has nothing to do with their trade in the sense of acquiring profits or gains of the trade, certainly it is not income in the hands of the recipient. Similarly, if 'a subsidy or any amount is paid for a beneficial purpose, such as keeping men in employment or starting an industry in a backward area or electrifying a remote area, which could not be undertaken but for the grant, such payment, being of a beneficial character, cannot be taxed as income. The subsidy scheme framed by the Rubber Board in 1967 was for payment of subsidy to growers of rubber plants for replanting rubber plants. The subsidy was not given for budding immature unselected plants but was restricted to replanting only of old and uneconomic plantations and not for the purpose of upkeep or maintenance of mature or immature rubber plants. Therefore, the object of the scheme was "replanting" and the subsidy was being paid for replanting high yielding variety of rubber plants which the Rubber Board and the Government thought was necessary for the development of the rubber industry, a public purpose of vital public interest. The scheme was intended to encourage growers to plant good variety of rubber plants, which would ultimately result in the augmentation of a…

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