Siemens Public Communication Networks Pvt. Ltd. v. CIT, Bangalore & Anr
[Citation -2016-LL-1207]
| Citation | 2016-LL-1207 |
|---|---|
| Appellant Name | Siemens Public Communication Networks Pvt. Ltd. |
| Respondent Name | CIT, Bangalore & Anr. |
| Court | SUPREME COURT |
| Relevant Act | Income-tax |
| Date of Order | 07/12/2016 |
| Assessment Year | 1999-00 |
| Judgment | View Judgment |
| Keyword Tags | capital or revenue receipt • acquisition of an asset • voluntary contribution • capital investment • indian company • grant-in-aid |
| Bot Summary: | The subvention received by the Assessee - Company from its parent 2 Company in Germany in a situation where the Assessee Company was making losses has been treated to be a revenue receipt by the Assessing Officer. Though the First Appellate Authority Commissioner of Income Tax and the learned Income Tax Appellate Tribunal has reversed the said finding, the High Court, by the orders under challenge, has restored the view taken by the Assessing Officer. The question of law that was presented before the High Court, namely, whether subvention was capital or revenue receipt, was sought to be answered by the High Court by making a reference to two decisions of this Court in Sahney Steel Press Works Ltd., Hyderabad versus Commissioner of Income Tax, A.P.-I, Hyderabad1 and Commissioner of Income Tax, Madras versus Ponni Sugars and Chemicals 1 7 SCC 764 3 Limited2. The view expressed by this Court that unless the grant-in-aid received by an Assessee is utilized for acquisition of an asset, the same must be understood to be in the nature of a revenue receipt was held by the High Court to be a principle of law applicable to all situations. The aforesaid view tends to overlook the fact that in both Ponni Sugars and Sahney Steel the subsidies received were in the nature of grant-in-aid from public funds and not by way of voluntary contribution by the parent Company as in the present cases. The above apart, the voluntary payments made by the parent Company to its loss making Indian company can also be understood to be payments made in order to protect the capital investment of the Assessee Company. For the aforesaid reasons, we allow the present appeals; set aside the order of the High Court and answer the liability of the Assessee for the Assessment Years in question in the above manner. |