CIT v. Ponni Sugars & Chemicals Ltd.

306 ITR 392Supreme Court of India2008#107 most cited

What is CIT v. Ponni Sugars & Chemicals Ltd. authority for?

The "Purpose Test" determines whether an incentive or subsidy is a capital or revenue receipt for income tax purposes. If the incentive's purpose is to enable an assessee to set up a new industry or make investments in capital assets, it is a capital receipt and not taxable.

577

judgments rely on this decision, according to BharatTax’s citation analysis of 367,154 Indian tax judgments — from 2007 to 2026.

Also referred to as

CIT v. Ponni Sugars & Chemicals Ltd. · 306 ITR 392 · capital receipt vs revenue receipt · subsidy taxability · incentive scheme purpose test · sales tax incentive capital receipt · excise duty exemption capital receipt · section 2(24)(xviii) · section 43(1) · investment incentive taxability · purpose test subsidy · nature of receipt

Also reported as

174 Taxmann 87219 CTR 105

Sections most often in play

Section 115JB Section 143(3)Section 14A Section 2(24)(xviii)Section 37(1)Section 80P(2)(d)Section 80P(4)Section 43(1)

Read the full judgment

Issues it is cited on

section 2(24)(xviii)section 43(1)initial assessment year section 80hhc section 80hh section 2(24)additional depreciation book profits written down value block of assets section 32(1)liable to tax

Judgments citing CIT v. Ponni Sugars & Chemicals Ltd.

Nirma Limited, Ahmedabad vs. The Dcti, Circle-3(1)(1), Ahmedabad

ITA 1412/AHD/2019[2015-16]Status: DisposedITAT Ahmedabad28 Aug 2025AY 2015-16

Bench: Shri Sanjay Garg & Shri Makarand V. Mahadeokarआयकर अपील सं/Ita Nos.1412 & 1413/Ahd/2019 निर्धारण वर्ष / Assessment Years: (2015-2016 & 2016-17) Nirma Limited, Nirma House, Ashram Road, Ahmedabad-380009. (Gujarat) The Deputy Commissioner बनाम / Of Income Tax, V/S. Circle 3(1)(1), Ahmedabad. स्थायी लेखा सं./Pan : Aaacn5350K आयकर अपील सं/Ita Nos.1436-1437/Ahd/2019 निर्धारण वर्ष / Assessment Years : (2015-16 & 2016-17) The Assistant Commissioner Of Income Tax, Circle 3(1)(1), Ahmedabad. Nirma Limited, बनाम / Nirma House, V/S. Ashram Road, Ahmedabad-380009. (Gujarat) स्थायी लेखा सं./ Pan: Aaacn5350K & C.O Nos.11-12/Ahd/2020 In आयकर अपील सं/Ita Nos.1436-1437/Ahd/2019 निर्धारण वर्ष / Assessment Years : (2015-16 & 2016-17) Nirma Limited, Nirma House, Ashram Road, Ahmedabad-380009. (Gujarat) The Deputy Commissioner Of बनाम/ V/S. Income Tax/The Assistant Commissioner Of Income Tax, Circle 3(1)(1), Ahmedabad. स्थायी लेखा सं./ Pan: Aaacn5350K अपीलार्थी/ (Appellant) प्रत्यर्थी / (Respondent)

For Appellant: Shri Bandish Soparkar, withFor Respondent: Shri Alpesh Parmar, CIT-DR

Section 115JSection 143(3)Section 14ASection 80I

…heme under which the assessee received sales tax subsidy was a Backward Area Development Scheme of the Government of Gujarat, aimed at encouraging setting up of industries in backward regions. The Hon'ble Supreme Court in CIT v. Ponni Sugars & Chemicals Ltd. (306 ITR 392) has laid down the purpose test to determine the character of subsidy. If the object of subsidy is to promote capital investment, the receipt is capital in nature, irrespective of the form or manner of quantification. Conversely, if the object is to supplement trade receipts, it would be revenue. Applying this test, we find that the object of the…

Leshark Global LLP, Mumbai vs. DCIT CC 4(1), Mumbai

In the result, all the appeals for A

ITA 3183/MUM/2025[2018-19]Status: DisposedITAT Mumbai31 Jul 2025AY 2018-19

Section 143(3)Section 153ASection 153CSection 153DSection 56Section 69

…of the assessee had to be determined with respect to the purpose for which subsidy is given by applying the purpose test, as held in Sahney Steel & Press Works Ltd. itself and reiterated in later judgment in CIT v. Ponni Sugars & Chemicals Ltd. & Ors. (2008) 306 ITR 392, referred to in the impugned order of the Tribunal." 6. This Court notices that the Punjab and Haryana High Court took into account the previous binding ruling of the Supreme Court in CIT v. Ponni Sugars & Chemicals Ltd. [2008] 174 Тахтап 87/306 ITR 392 and Sahney Steel & Press Works Ltd. v. CIT [1997] 94 Taxman 368/228 ITR 253. In these circums…

Leshark Global LLP, Mumbai vs. DCIT CC 4(1), Mumbai

In the result, all the appeals for A

ITA 3182/MUM/2025[2017-18]Status: DisposedITAT Mumbai31 Jul 2025AY 2017-18

Section 143(3)Section 153ASection 153CSection 153DSection 56Section 69

…of the assessee had to be determined with respect to the purpose for which subsidy is given by applying the purpose test, as held in Sahney Steel & Press Works Ltd. itself and reiterated in later judgment in CIT v. Ponni Sugars & Chemicals Ltd. & Ors. (2008) 306 ITR 392, referred to in the impugned order of the Tribunal." 6. This Court notices that the Punjab and Haryana High Court took into account the previous binding ruling of the Supreme Court in CIT v. Ponni Sugars & Chemicals Ltd. [2008] 174 Тахтап 87/306 ITR 392 and Sahney Steel & Press Works Ltd. υ. CIT [1997] 94 Taxman 368/228 ITR 253. In these circums…

Leshark Global LLP, Mumbai vs. DCIT CC 4(1), Mumbai

In the result, all the appeals for A

ITA 3181/MUM/2025[2016-17]Status: DisposedITAT Mumbai31 Jul 2025AY 2016-17

Section 143(3)Section 153ASection 153CSection 153DSection 56Section 69

…of the assessee had to be determined with respect to the purpose for which subsidy is given by applying the purpose test, as held in Sahney Steel & Press Works Ltd. itself and reiterated in later judgment in CIT v. Ponni Sugars & Chemicals Ltd. & Ors. (2008) 306 ITR 392, referred to in the impugned order of the Tribunal." 6. This Court notices that the Punjab and Haryana High Court took into account the previous binding ruling of the Supreme Court in CIT v. Ponni Sugars & Chemicals Ltd. [2008] 174 Тахтап 87/306 ITR 392 and Sahney Steel & Press Works Ltd. υ. CIT [1997] 94 Taxman 368/228 ITR 253. In these circumst…

Leshark Global LLP, Mumbai vs. DCIT CC 4(1), Mumbai

In the result, all the appeals for A

ITA 3180/MUM/2025[2015-16]Status: DisposedITAT Mumbai31 Jul 2025AY 2015-16

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 143(3)Section 153ASection 153CSection 153DSection 56Section 69

…of the assessee had to be determined with respect to the purpose for which subsidy is given by applying the purpose test, as held in Sahney Steel & Press Works Ltd. itself and reiterated in later judgment in CIT v. Ponni Sugars & Chemicals Ltd. & Ors. (2008) 306 ITR 392, referred to in the impugned order of the Tribunal." 6. This Court notices that the Punjab and Haryana High Court took into account the previous binding ruling of the Supreme Court in CIT v. Ponni Sugars & Chemicals Ltd. [2008] 174 Taxman 87/306 ITR 392 and Sahney Steel & Press Works Ltd. v. CIT [1997] 94 Taxman 368/228 ITR 253. In these circumst…

Leshark Global LLP, Mumbai vs. DCIT CC 4(1), Mumbai

In the result, all the appeals for A

ITA 3179/MUM/2025[2014-15]Status: DisposedITAT Mumbai31 Jul 2025AY 2014-15

Section 143(3)Section 153ASection 153CSection 153DSection 56Section 69

…of the assessee had to be determined with respect to the purpose for which subsidy is given by applying the purpose test, as held in Sahney Steel & Press Works Ltd. itself and reiterated in later judgment in CIT v. Ponni Sugars & Chemicals Ltd. & Ors. (2008) 306 ITR 392, referred to in the impugned order of the Tribunal." 6. This Court notices that the Punjab and Haryana High Court took into account the previous binding ruling of the Supreme Court in CIT v. Ponni Sugars & Chemicals Ltd. [2008] 174 Тахтап 87/306 ITR 392 and Sahney Steel & Press Works Ltd. v. CIT [1997] 94 Taxman 368/228 ITR 253. In these circums…

Leshark Global LLP, Mumbai vs. DCIT CC 4(1), Mumbai

In the result, all the appeals for A

ITA 3178/MUM/2025[2013-14]Status: DisposedITAT Mumbai31 Jul 2025AY 2013-14

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 143(3)Section 153ASection 153CSection 153DSection 56Section 69

…of the assessee had to be determined with respect to the purpose for which subsidy is given by applying the purpose test, as held in Sahney Steel & Press Works Ltd. itself and reiterated in later judgment in CIT v. Ponni Sugars & Chemicals Ltd. & Ors. (2008) 306 ITR 392, referred to in the impugned order of the Tribunal." 6. This Court notices that the Punjab and Haryana High Court took into account the previous binding ruling of the Supreme Court in CIT v. Ponni Sugars & Chemicals Ltd. [2008] 174 Taxman 87/306 ITR 392 and Sahney Steel & Press Works Ltd. v. CIT [1997] 94 Taxman 368/228 ITR 253. In these circumst…

Leshark Global LLP, Mumbai vs. DCIT CC 4(1), Mumbai

In the result, all the appeals for A

ITA 3177/MUM/2025[2012-13]Status: DisposedITAT Mumbai31 Jul 2025AY 2012-13

Section 143(3)Section 153ASection 153CSection 153DSection 56Section 69

…of the assessee had to be determined with respect to the purpose for which subsidy is given by applying the purpose test, as held in Sahney Steel & Press Works Ltd. itself and reiterated in later judgment in CIT v. Ponni Sugars & Chemicals Ltd. & Ors. (2008) 306 ITR 392, referred to in the impugned order of the Tribunal." 6. This Court notices that the Punjab and Haryana High Court took into account the previous binding ruling of the Supreme Court in CIT v. Ponni Sugars & Chemicals Ltd. [2008] 174 Тахтап 87/306 ITR 392 and Sahney Steel & Press Works Ltd. υ. CIT [1997] 94 Taxman 368/228 ITR 253. In these circumst…

Mahindra & Mahindra Limited, Mumbai vs. Assistant Commissioner of Income Tax, Circle 2(2)(1), Mumbai

In the result, appeal of the assessee is allowed for statistical purposes

ITA 2113/MUM/2024[2016-17]Status: DisposedITAT Mumbai31 Jul 2025AY 2016-17

Bench: Shri Amit Shukla & Shri Girish Agrawalassessment Year: 2016-17

For Appellant: Shri. H. P. Mahajani, CAFor Respondent: Shri. Satyaprakash R. Singh, CIT DR

Section 115JSection 143(3)Section 2(24)(viii)Section 2(24)(xviii)Section 250

…s adjudication. 4.2. While dealing with the merits on the issue, ld. CIT(A) after capturing the facts relating to the claim u/s. 2(24)(viii), placed strong reliance on the decision of Hon'ble Supreme Court in the case of Ponni Sugar and Chemicals Ltd. [2008] 306 ITR 392 (SC) and in the case of Sahney Steel and Press Works Ltd. [2008] 228 ITR 253 (SC) to dislodge the claim of the assessee and held to treat it as the revenue receipt chargeable to tax. Ld. CIT(A) in its deliberation took note of certain factual details and documents which assessee did not furnish to justify the claim as to details about where the u…

Hudco Ltd. (Housing & Urban Development Corporation Ltd), New Delhi vs. Addl. CIT, Special Range-4, New Delhi

The appeal of the assessee is partly allowed for statistical

ITA 7218/DEL/2018[2015-16]Status: DisposedITAT Delhi31 Jul 2025AY 2015-16

Bench: Shri Challa Nagendra Prasad & Shri Naveen Chandra

For Appellant: Shri Gagan Kumar, AdvFor Respondent: Shri Dayainder Singh Sidhu, CIT-DR

…[A.Y. 2015-16] M/s Housing & Urban Dev. Corpn Ltd Vs.The Dy. C.I.T Circle – 11(2) Officer relying upon the judgment of the Hon'ble Supreme Court in the case of Sawhnay Steel and Press Works Ltd 228 ITR 253 and in the case of Ponni Sugar and Chemical Limited 306 ITR 392, held the premium as revenue in and nature and added back the same to the income of the assessee. Upon appeal by the assessee, the ld. CIT(A) upheld the addition made by the Assessing Officer. Now the Assessee is in appeal before us. 29. We have heard the rival submissions and have perused the relevant material on record. We find that the CIT(…

Addl. CIT, Special Range-4, New Delhi vs. Hudco Ltd. (Housing & Urban Development Corporation Ltd), New Delhi

The appeal of the assessee is partly allowed for statistical

ITA 6829/DEL/2018[2015-16]Status: DisposedITAT Delhi31 Jul 2025AY 2015-16

Bench: Shri Challa Nagendra Prasad & Shri Naveen Chandra

For Appellant: Shri Gagan Kumar, AdvFor Respondent: Shri Dayainder Singh Sidhu, CIT-DR

…[A.Y. 2015-16] M/s Housing & Urban Dev. Corpn Ltd Vs.The Dy. C.I.T Circle – 11(2) Officer relying upon the judgment of the Hon'ble Supreme Court in the case of Sawhnay Steel and Press Works Ltd 228 ITR 253 and in the case of Ponni Sugar and Chemical Limited 306 ITR 392, held the premium as revenue in and nature and added back the same to the income of the assessee. Upon appeal by the assessee, the ld. CIT(A) upheld the addition made by the Assessing Officer. Now the Assessee is in appeal before us. 29. We have heard the rival submissions and have perused the relevant material on record. We find that the CIT(…

Addl. CIT, Special Range- 4, New Delhi vs. Hudco Ltd., New Delhi

The appeal of the assessee is partly allowed for statistical

ITA 2063/DEL/2018[2014-15]Status: DisposedITAT Delhi31 Jul 2025AY 2014-15

Bench: Shri Challa Nagendra Prasad & Shri Naveen Chandra

For Appellant: Shri Gagan Kumar, AdvFor Respondent: Shri Dayainder Singh Sidhu, CIT-DR

…[A.Y. 2015-16] M/s Housing & Urban Dev. Corpn Ltd Vs.The Dy. C.I.T Circle – 11(2) Officer relying upon the judgment of the Hon'ble Supreme Court in the case of Sawhnay Steel and Press Works Ltd 228 ITR 253 and in the case of Ponni Sugar and Chemical Limited 306 ITR 392, held the premium as revenue in and nature and added back the same to the income of the assessee. Upon appeal by the assessee, the ld. CIT(A) upheld the addition made by the Assessing Officer. Now the Assessee is in appeal before us. 29. We have heard the rival submissions and have perused the relevant material on record. We find that the CIT(…

Housing & Urban Development Corporation Ltd, New Delhi vs. Addl. CIT, Range-4, New Delhi

The appeal of the assessee is partly allowed for statistical

ITA 1954/DEL/2018[2014-15]Status: DisposedITAT Delhi31 Jul 2025AY 2014-15

Bench: Shri Challa Nagendra Prasad & Shri Naveen Chandra

For Appellant: Shri Gagan Kumar, AdvFor Respondent: Shri Dayainder Singh Sidhu, CIT-DR

…[A.Y. 2015-16] M/s Housing & Urban Dev. Corpn Ltd Vs.The Dy. C.I.T Circle – 11(2) Officer relying upon the judgment of the Hon'ble Supreme Court in the case of Sawhnay Steel and Press Works Ltd 228 ITR 253 and in the case of Ponni Sugar and Chemical Limited 306 ITR 392, held the premium as revenue in and nature and added back the same to the income of the assessee. Upon appeal by the assessee, the ld. CIT(A) upheld the addition made by the Assessing Officer. Now the Assessee is in appeal before us. 29. We have heard the rival submissions and have perused the relevant material on record. We find that the CIT(…

Addl. CIT, New Delhi vs. M/S. Hudco Ltd., New Delhi

The appeal of the assessee is partly allowed for statistical

ITA 3704/DEL/2017[2012-13]Status: DisposedITAT Delhi31 Jul 2025AY 2012-13

Bench: Shri Challa Nagendra Prasad & Shri Naveen Chandra

For Appellant: Shri Gagan Kumar, AdvFor Respondent: Shri Dayainder Singh Sidhu, CIT-DR

…[A.Y. 2015-16] M/s Housing & Urban Dev. Corpn Ltd Vs.The Dy. C.I.T Circle – 11(2) Officer relying upon the judgment of the Hon'ble Supreme Court in the case of Sawhnay Steel and Press Works Ltd 228 ITR 253 and in the case of Ponni Sugar and Chemical Limited 306 ITR 392, held the premium as revenue in and nature and added back the same to the income of the assessee. Upon appeal by the assessee, the ld. CIT(A) upheld the addition made by the Assessing Officer. Now the Assessee is in appeal before us. 29. We have heard the rival submissions and have perused the relevant material on record. We find that the CIT(…

M/S. Housing & Urban Development Corporation Ltd., New Delhi vs. DCIT, New Delhi

The appeal of the assessee is partly allowed for statistical

ITA 3305/DEL/2017[2012-13]Status: DisposedITAT Delhi31 Jul 2025AY 2012-13

Bench: Shri Challa Nagendra Prasad & Shri Naveen Chandra

For Appellant: Shri Gagan Kumar, AdvFor Respondent: Shri Dayainder Singh Sidhu, CIT-DR

…[A.Y. 2015-16] M/s Housing & Urban Dev. Corpn Ltd Vs.The Dy. C.I.T Circle – 11(2) Officer relying upon the judgment of the Hon'ble Supreme Court in the case of Sawhnay Steel and Press Works Ltd 228 ITR 253 and in the case of Ponni Sugar and Chemical Limited 306 ITR 392, held the premium as revenue in and nature and added back the same to the income of the assessee. Upon appeal by the assessee, the ld. CIT(A) upheld the addition made by the Assessing Officer. Now the Assessee is in appeal before us. 29. We have heard the rival submissions and have perused the relevant material on record. We find that the CIT(…

Sylvan Greens Private Limited, Jaipur vs. Deputy Commissioner of Income Tax Circle 6, Jaipur

In the result, the appeal of the assessee is allowed

ITA 414/JPR/2025[2015-16]Status: DisposedITAT Jaipur25 Jul 2025AY 2015-16

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Smt. Neelam Bhala, AdvocateFor Respondent: Shri Gorav Avasthi, JCIT-DR

Section 142(1)Section 143(3)Section 147Section 148Section 250Section 801C

…2008) 306 ITR 392, referred to in the impugned order of the Tribunal." 6. This Court notices that the Punjab and Haryana High Court took into account the previous binding ruling of the Supreme Court in CIT v. Ponni Sugars & Chemicals Ltd. [2008] 174 Taxman 87/306 ITR 392 and Sahney Steel & Press Works Ltd. v. CIT [1997] 94 Taxman 368/228 ITR 253. In these circumstances, the Court is of the opinion that the amount was received as capital stream and therefore, not taxable. 7. A similar view was taken by the Calcutta High Court in CIT v. Gloster Jute Mills Ltd . [2018] 96 taxmann.com 303/257 Taxman 512/[2019] 416 IT…

Shri Mahaveer Co-Operative Credit Society Ltd, Alagur vs. Income Tax Officer, Alagur

ITA 6/BANG/2025[2016-17]Status: DisposedITAT Bangalore25 Jul 2025AY 2016-17

Bench: Shri Prashant Maharishi

Section 143(2)Section 143(3)Section 18Section 40Section 80PSection 80P(2)(a)Section 80P(2)(d)

…IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" BENCH : BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT ITA No. 6/Bang/2025 Assessment year : 2016-17 Shri Mahaveer Co-operative Credit Society Ltd., Main Road, Alagur, Jamakhandi – 587 301. PAN: AABAM 6275F APPELLANT Vs. The Income Tax Officer, Ward 1, Bagalkot. RESPONDENT Appellant by Respondent by Date of hearing Date of Pronouncement Shri Sanjay D. Shriguppe, CA Shri Ganesh R. Ghale, Standing Counsel for Revenue. 02.06.2025 25.07.2025 ORDER 1. This appeal is filed by Shri Mahaveer Co-operative Credit Society Ltd. (the assessee/appellant) for the assessment…

M/S Gujarat Guardian Ltd., New Delhi vs. DCIT, New Delhi

ITA 2539/DEL/2017[2005-06]Status: DisposedITAT Delhi16 Jul 2025AY 2005-06

Bench: Shri Prakash Chand Yadav & Shri Brajesh Kumar Singh

For Appellant: Shri Ajay Vohra, Sr. A.RFor Respondent: Shri Bhopal Singh, Sr. D.R

…mation issued u/s 143(1) of the Act | 27.02.2003 | | Date of issuance of notice u/s 148 of the Act | 23.01.2004 | | Date of passing of order u/s 147 of the Act | 30.03.2005 | | Date of Supreme Court order in the case of CIT vs. Ponni Sugars and Chemicals Ltd: 306 ITR 392 | 16.09.2008 | | Date of application filed before CIT(A) raising additional ground of appeal qua treatment of sales/ purchase tax subsidy as capital receipts | 05.11.2008 | 26.1 Perusal of the above chart would show that the assessee has originally filed the return of income on 30.10.2002. This return of income filed by the assessee was processe…

Gujarat Guardian Ltd., New Delhi vs. DCIT, New Delhi

ITA 5358/DEL/2010[2006-07]Status: DisposedITAT Delhi16 Jul 2025AY 2006-07

Bench: Shri Prakash Chand Yadav & Shri Brajesh Kumar Singh

…e return of income on 30.10.2002. This return of income filed by the assessee was processed and thereafter selected for scrutiny u/s 148 of the Act. Thereafter, relying upon the judgement of Hon'ble Supreme Court in the case of CIT Vs. Ponni Sugar reported in 306 ITR 392. The assessee has filed an additional ground before the ld. CIT(A) and claimed that the assessee is entitled for the sales tax incentives and the receipts of sales tax incentives are capital receipts not liable to be taxed under the Income Tax Act. The assessee further argued that these incentives were provided for making investment in the state…

Gujrat Guardian Ltd., New Delhi vs. DCIT, New Delhi

ITA 4856/DEL/2010[2004-05]Status: DisposedITAT Delhi16 Jul 2025AY 2004-05

Bench: Shri Prakash Chand Yadav & Shri Brajesh Kumar Singhsl.No. Ita No. Filed By Assessee/Revenue Assessment Year Authority Passing The Order

For Appellant: Shri Ajay Vohra, Sr. A.RFor Respondent: Shri Bhopal Singh, Sr. D.R

…e return of income on 30.10.2002. This return of income filed by the assessee was processed and thereafter selected for scrutiny u/s 148 of the Act. Thereafter, relying upon the judgement of Hon'ble Supreme Court in the case of CIT Vs. Ponni Sugar reported in 306 ITR 392. The assessee has filed an additional ground before the ld. CIT(A) and claimed that the assessee is entitled for the sales tax incentives and the receipts of sales tax incentives are capital receipts not liable to be taxed under the Income Tax Act. The assessee further argued that these incentives were provided for making investment in the state…

CIT v. Ponni Sugars & Chemicals Ltd. (306 ITR 392) — Cited in 577 Judgments | BharatTax