DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 7(1), KOLKATA, AAYAKAR BHAWAN, KOLKATA vs. WEST BENGAL INDUSTRIAL DEVELOPMENT CORPORATION LIMITED, KOLKATA

ITA 623/KOL/2025Status: DisposedITAT Kolkata12 February 2026AY 2015-2016Bench: Shri Rajesh Kumar (Accountant Member), Shri Pradip Kumar Choubey (Judicial Member)1 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the grant was in the nature of a capital receipt, as its purpose was to increase the capital of the assessee company to enable it to repay a loan. This conclusion was based on the 'purpose test' derived from Supreme Court decisions, which determines the character of a grant by its objective. The Tribunal noted that the grant was for repayment of a long-term loan, a capital item, and thus not taxable revenue income.

What were the facts?

The assessee, a government company, received a grant of Rs. 7,81,40,620/- from the West Bengal Government. This grant was intended for the repayment of a loan taken for the purchase of shares in Haldia Petrochemicals Ltd. The Assessing Officer treated this grant as income and added it to the assessee's total income.

What were the issues?

Whether the grant received by the assessee for repayment of a loan is a capital receipt or revenue income and thus taxable.

Which sections of the Income-tax Act were involved?

Section 36(1)(viia),Section 36(1)(vii),Section 145B(3)

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Income Tax Appellate Tribunal, “D” BENCH KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey

Per Pradip Kumar Choubey, Judicial Member:

Both the present appeals have been preferred by the assessee against an order dated 09.08.2024 of the NFAC, Delhi [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). Since both the appeals relate to the same assessee and arise from same appellate order, therefore, these appeals were heard together and we are going to dispose of these appeals by passing a consolidated order.

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