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Subsidies are to be included in “profits and gains of business or profession

Supreme Court in Commissioner Of Income Tax vs. M/s. Meghalaya Steels, has clarified that subsidies allowed to assessee, has to be included under the head “profits and gains of business or profession”, and not under the head “income from other sources” for the purpose of Income Tax assessment. Dismissing the appeal preferred by the Revenue, the Apex Court Bench comprising of Justices Kurian Joseph and R.F. Nariman observed that so long as profits and gains emanate directly from the business itself, the fact that the immediate source of the subsidies is the Government would make no difference, as it cannot be disputed that the said subsidies are only in order to reimburse, wholly or partially, costs actually incurred by the assessee in the manufacturing and selling of its products.

 Article referred: http://www.livelaw.in/subsidies-included-profits-gains-business-profession-supreme-court/

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