The receipt of a subsidy in the form of refund of octroi is a capital receipt and not a revenue receipt in the hands of the assessee if the subsidy goes to reduce the cost of assets being material/purchases and the receipt of such a subsidy will be on capital account. Applied CIT Chaphalkar Brothers (2018) 400 ITR 279 (SC) (AY. 2012-2013)
Dy. CIT v. Mas India P. Ltd. (2019) 74 ITR 72 (SN) (Pune)(Trib.)
S. 4 : Charge of income-tax – Subsidy – Refund of octori-Capital receipt – Not chargeable to tax. [S. 2(24)(xviii) 43(1), 56]