1. Facts leading to this petition under Article 226 of the Constitution of India, in brief, are as fallows. The petitioner, Udayachal Weaving, Cooperative Society at Silpukhuri, Guwahati, is a registered cooperative society under the Assam Cooperative Societies Act, 1949 (''Act''for short) with the object to encouraging manufacturing of Assam Silk, Muga, Endi, etc with indegenOus expert hands. The Government of Assam, by a letter dated 12.12.90'' made reimbursement of Rs. 6,58,183.00 to the petitioner society under the ''General Rebate Scheme" for the rebate made by the society oft sale of handloom products. Under the said letter, there was a further direction of the Government that a sum of Rs 5,51,591. 83 was to be adjusted towards the loan granted by the Government to the society under the NGDC Scheme. Details of loan and interest are given in that letter. The petitioner society being aggrieved by the direction for adjustment of loan has filed this writ petition.
2. Mr. P. Prasad, learned counsel for the petitioner, has contended that, under section 43 of the Act, the Government cannot recover any part of the loan or financial assistance from the society out of the reimbursement.
3. Section 43 of the Act provides that the State Government may grant loan, or give financial assistance in any form, to any registered society. Section 43 further provides that the State Government may recover from the society out of its ''net profit* in any year all or any part of the financial assistance.
4. The question which, therefore, arises for consideration is whether the reimbursement is within the meaning of ''net profit. Profits consist of a sum arrived at by adding up the receipts of a business and by deducting all the expenses and losses including depreciation and the like incurred in carrying on the business. See Rushden Heel Co Ltd vs. Inland Revenue Commissioner, (1946) 2 All ER 1417. Subsidy is the money by the Government to help the industry to make the price lower at the desired level. Rebate is discount, that is to say.deduction from an original price. Therefore, the reimbursement is a sort of subsidy or financial assistance under the Scheme. In Lachit Films vs. CIT, (1992) 1 GLR 142 [1992 (1) GLJ 23] this Court (to which I was a party) has held that the giving financial aid and subsidy is not product of normal working of the undertakings in relation to business undertakings. Therefore the reimbursement is not revenue receipt, viz business or trading receipt, so as to form a part of the total income or profit. That apart, the reimbursement made by the Government was compassionate payment under the Scheme, probably to save the industry from becoming sick. In Padmaraje vs. ITC, AIR 1992 SC 1495, it has been held that compassionate payment received by the assessee is capital receipt and not income. For these reasons, the reimbursement would not come within the meaning of profit and, therefore, the question of ''net profit does not arise. Even assuming that the reimbursement was an income, the net profit was to be calculated after adding up all business or trading receipts and by deducting all expenses and losses incurred in carrying on the business, and, as such, without determining the profit or loss the loan cannot be recovered from the society.
5. For the foregoing reasons, the Government has no jurisdiction to recover from the society out of the reimbursement all or any part of loan. Accordingly, the petition is allowed with a direction that the Government of Assam shall not recover loan out of the reimbursement. No costs.
