JUDGMENT 1. This is an application under Section 256 of the Income-tax Act, 1961, for directing the Income-tax Appellate Tribunal to refer the following questions of law for the decision of this court: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the sales tax subsidy received by the assessee from the Madhya Pradesh Government is not taxable in the hands of the assessee ? 2. Whether the Tribunal was justified in following their own decision in ITA. Nos. 246 and 247 (Nag)/80 and ITA No. 1342/Hyd/1978-79 of Hyderabad Bench, when the rules regulating grant of subsidy to those rules prevalent in Maharashtra and Andhra Pradesh ? 3. Whether the sales tax subsidy granted by the Madhya Pradesh Government to the industries located in Madhya Pradesh is in consideration of the capital contribution to partake the character of capital receipt ?" In fact, what is required by this court to be decided is whether the sales tax subsidy received by the assessee from the Madhya Pradesh Government is a revenue receipt liable to be taxed in the hands of the assessee. This court, in CIT v. Dusad Industries [1986] 162 ITR 784, has answered this question in favour of the assessee and against the Department, holding that, as the subsidy was given on the basis of a particular scheme for a specified period in respect of industries situated only in backward areas, the same was given by way of an incentive for capital investment and not by way of addition to the profits of the assessee. In such a circumstance, the sales tax subsidy received by the assessee was not assessable to tax as a revenue receipt. That being so, it is not necessary to direct the Tribunal to make any reference of the questions as posed for decision of this court. 2. The application is, accordingly, rejected.