SUBSIDY
This query is : Resolved
20 August 2010
The asssessee has been granted a loan from SIDBI of Rs. 4500000 for purchasing Plant & Machinery for the production process. Out of the said amount Rs. 750000 has been granted by SIDBI as a SUBSIDY. What are the tax implications for the said subsidy? Is it taxable? Can any one give me a case law or provide me with the relevant hyperlink.
20 August 2010
The scheme of the subsidy has to be carefully studied.
In a nut shell, if it is a capital based subsidy, the subsidy amount has to be reduced from the respective cost of the capital asset. On the other hand if it is revenue subsidy, it is an income and has to be taxed.
Citation :- CIT Vs. Ponni Sugars & Chemicals ltd & ors (2008) 219 CTR 105 (Sc)
In a nut shell, if it is a capital based subsidy, the subsidy amount has to be reduced from the respective cost of the capital asset. On the other hand if it is revenue subsidy, it is an income and has to be taxed.
Citation :- CIT Vs. Ponni Sugars & Chemicals ltd & ors (2008) 219 CTR 105 (Sc)
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