ANIRUDDHA BOSE,J. - (1.) We admit the appeal on the following point, which in our opinion, involves substantial question of law:- Whether the amount of Rs.4,60,00,000/- received in the assessment year 2006-07 by the Assessee from the State Government in the form of grant-in-aid ought to be treated as revenue receipt, on the basis of application of funds so received, which was utilized for clearing salary, Provident Fund dues and flood relief? 22. The Assessee in this case is a government company wholly owned by the Government of West Bengal. The assesse is engaged in business of pisciculture. The assessment year involved in this appeal is 2006-07. The assessee in the relevant previous year received Rs.4,60,00,000/- as grants- in-aid. Out of that sum Rs.3,00,00,000/- was received for payment of salary to its employees, Rs.60,00,000/- for payment of Provident Fund dues and Rs.1,00,00,000/- for the purpose of flood relief.
(2.) The Assessing Officer found the same to be revenue receipt, rejecting the assessees claim for deduction of the said sum from its income on the plea that the same constituted capital receipt. The Assessing Officer found that the fund was being applied for items which were revenue in nature. The Assessing Officer recorded in his order that such receipts were consistently treated in the past by the assesse as revenue receipt. The assessees contention on that count, however, is that in the preceding assessment year, i.e. 2005-06 also similar claim was made by the assessee, and assessment of that year is also subject of another appeal before this Court.
(3.) For the subject-assessment year, the assessee failed in its appeal before the Commissioner of Appeals on this point. The assessee thereafter preferred an appeal before the Tribunal. The Tribunal, however, did not solely rely on the nature of application of the funds received through grant- in-aid and the accounting treatment which formed the basis of the finding of the Assessing Officer and the first Appellate Authority. The Tribunal 3examined the character of the assessee as a Government company as well as the character of grantor, being the State Government itself, the financial status of the assessee and certain other factors. Relying on a judgment of the Delhi High Court in the case of CIT vs- Handicrafts and Handlooms Export Corporation of India Ltd. [(2014) 360 ITR 130 (Delhi)]. The Tribunal declined to isolate the grant received as well as its accounting treatment for the purpose of Income Tax assessment from the factual perspective in which the grant in aid was given and allowed the appeal of the assessee. The assessee, before the decision was delivered Tribunal in respect of the subject-assessment year on 16th September 2016 was successful before the Tribunal on near-identical claim for deduction in respect of the earlier assessment year. The Tribunal, in its decision in ITA 1281/Kol/2009 delivered on 19th April, 2016 had sustained the assessees claim that grant-in-aid in that year towards provident fund dues constituted capital receipts. In the decision against which this appeal has been preferred, the Tribunal followed its earlier decision in ITA 1281/Kol/2009. We are informed that the said decision is also under appeal before a coordinate Bench of this Court. Learned counsel appearing for the parties, however, agreed to disposal of this appeal independently on merit and this appeal has been argued on the points involved at length before us. Hence, we are also addressing the point of law involved in this appeal independently.;