( 1 ) ON an application under Section 256 (1) of the Income-tax Act, 1961, the Tribunal has referred the following question for our opinion along with the statement of case :"whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding the view that the sales tax subsidy of Rs. 2,06,400 received by the assessee was a capital receipt not liable to income-tax ?"

( 2 ) DURING the course of assessment, the Assessing Officer (North-East) wrote a letter to the assessee dated February 20, 1989 (sic ). In that letter, he claimed that the sales tax subsidy received by the firm amounting to Rs. 2,06,400 from the Directorate of Industries, Madhya Pradesh Government, is exempt from income-tax, as it is not a revenue receipt. The Assessing Officer negatived the claim of the assessee and treated it as a revenue receipt. In appeal before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals) has followed the decisions of the Madhya Pradesh High Court in the case of CIT v. Dusad Industries [1986] 162 ITR 784 and CIT v. Plastichem [1988] 174 ITR 546 and held that subsidy is a capital receipt and not liable to tax. The Tribunal

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