Y.R.Meena, J. - (1.) In this reference application, the following question has been referred for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the subsidy of Rs. 2,85,923 received from the Indian Cotton Mills Federation was in the nature of voluntary and gratuitous payment and not liable to tax ?" The assessee is a registered firm carrying on the business of manufacture and export of hosiery goods and also commission business in several commodities. The assessee-company received Rs. 2,85,923 from the Indian Cotton Textile Mills Federation, Bombay, and claimed that it is not taxable as it was a casual receipt in the form of reward. The Income-tax Officer has rejected the assessee's contention on the ground that it arose out of their export business, and that it is not a case of casual receipt since the subsidy or cash incentive is allowed by the Government of India to all similar business concerns whoever is carrying on business of export in India. It cannot be said to be non-recurring in nature since the assessee's letter dated December 15, 1976, itself described that subsidy is declared by the Federation from time to time.
(2.) The Appellate Assistant Commissioner has taken the view that the payment of Rs. 2,85,923 to the assessee is purely a voluntary act by the Federation for no services rendered by the assessee to the Federation. Subsidy is nothing but donations or gifts and the same cannot be said to be income taxable under Section 28 of the Act. Therefore, the addition made by the Income-tax Officer was deleted.
(3.) In appeal before the Tribunal, the Tribunal also found the fact that the amount of Rs. 2,85,923 was received by the assessee from the Indian Cotton Mills Federation, Bombay, without rendering any service to the Federation. The aforesaid Federation is also not a body corporate estab-lished by any law for the time being in force and it is purely a private organisation. There is no material on record to show that there was any nexus or connection or relationship which would give rise to a right, claim or expectation of cash assistance from the said Federation to the assessee. The cash assistance from the Federation purely depends on the discretion of the cash assistance panel and that would depend on the particular item and destination selected by the panel. Therefore, such voluntary assistance of gift payment by the Federation cannot be regarded as income liable to tax under the Act.;