M/S. Mepco Industries Ltd vs Commissioner Of Income Tax Company ...

M/S. Mepco Industries Ltd vs Commissioner Of Income Tax Company ... on 7 October, 2026 Author: Prashant Kumar Mishra Bench: Prashant Kumar Mishra 2026 INSC 1090 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 8694 OF 2012 M/S. MEPCO INDUSTRIES LTD. … APPELLANT(S) VERSUS COMMISSIONER OF INCOME TAX, MADURAI ... RESPONDENT(S) JUDGMENT PRASHANT KUMAR MISHRA, J. 1. The present Appeal concerns the nature of the electricity subsidy of Rs. 16,20,745/- received by the appellant-assessee, M/s. Mepco Industries Ltd., from the Government of Pondicherry for the Assessment Year 1997-98, and the question whether the said subsidy constituted a capital receipt, as claimed by the appellant, or a revenue receipt liable to tax under the Income- tax Act, 19611, as held by the Courts below. The appellant is a limited company engaged in the manufacture of potassium chlorate. For the relevant assessment year, it received the aforesaid amount as electricity subsidy and treated the same as a capital receipt. 2. The subsidy was granted under the Scheme of Power Subsidy2 of the Government of Pondicherry, which had been in operation since 27.11.1975. The scheme was framed with the object of fostering industrial growth in the Signature Not Verified Digitally signed by NISHA KHULBEY Date: 2026.10.07 17:13:00 IST Reason: 1 For short ‘IT Act’ 2 Hereinafter referred as ‘Scheme’ CIVIL APPEAL NO. 8694 OF 2012 Page 1 of 12 Union Territory and, under the relevant pattern, provided subsidy on power charges for a specified period after commencement of production. The rate of subsidy was 33⅓% of the power charges for the first three years, 20% for the f…