Per R.V. Easwar, J.M. - The following question has been referred to the Special Bench by the Hon’ble President, Income Tax Appellate Tribunal, for decision :—

"Whether, on the facts and in the circumstances of the case and in law the assessee-company is justified in its claim that the Sales Tax incentive allowed to it during the previous year in terms of the relevant Government Order constitutes capital receipt and is not to be taken into account in computation of total income?"

2. The question came to be referred to the Special Bench in the following circumstances. One of the grounds of appeal in the appeal filed by the assessee in ITA No. 3890/Bom./91 for the assessment year 1986-87 is that the CIT(A) erred in "not directing the learned Dy.CIT to consider the appellant’s claim for an amount of Rs. 14,70,40,220 being the amount exempted from payment to the Government of Maharashtra as part of subsidy quantified for setting up a new Industrial Unit in the Specified Backward Area, being Patalganga at Raigad District pursuant to the eligibility certificate issued under the 1979 Scheme. The appellant submits that the said subsidy is of capital nature and is a grant which is not act