September 2008
S. 80JJA — Subsidy received from State Government qualifies for deduction.
By Ashok Dhere, Jagdish D. Shah, Chartered Accountants
Reading Time 2 mins
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25 Arvind Gupta v. ITO
ITAT ‘B’ Bench, Jaipur
Before I. C. Sudhir (JM) and
B. P. Jain (AM)
ITA No. 799/JP/07
A.Y. : 2003-04. Decided on : 31-3-2008
Counsel for assessee/revenue : Mahendra Gargieya & Sharvan
Gupta/D. P. Gupta
S. 80JJA of the Income-tax Act, 1961 –– Whether subsidy
amount received from the State Government qualifies for deduction u/s.80JJA —
Held, Yes.
Facts :
During the previous year relevant to A.Y. 2003-04, the
assessee was granted subsidy aggregating to Rs.26.16 lacs by the Government of
Rajasthan. The assessee’s claim for deduction u/s.80JJA of the Act, included the
said amount of subsidy. The AO was of the view that the subsidy is not derived
from the specified business and therefore he disallowed the claim of deduction
u/s.80JJA. The CIT(A) upheld the action of the AO.
Held :
The Tribunal noted that the certificate of the Additional
Director of Agriculture made it evident that subsidy was not given to the
manufacturer, but it was a subsidy to the cultivators. As per the procedure laid
down by the Government, the assessee had to receive a part of the sale price
from the Government. Thus, the subsidy was only a part of the selling price and
hence was a trading receipts. The Tribunal agreed with the contentions of the
assessee that the subsidy granted was nothing but a part of the sale price of
the product, which was realised. The Tribunal further observed that u/s.80JJA,
the subjected profit is not confined merely to the undertaking, but profit and
gains should be derived from any business of an undertaking, thus giving it a
wider meaning.
