JUDGMENT : K.S. Jhaveri, J. 1. Being aggrieved and dissatisfied with the impugned order passed by the Income Tax Appellate Tribunal, Mumbai Bench, "E" (hereinafter referred to as the Tribunal) dated 31.01.2007 in ITA No. 3918/Mum/2003 for the Assessment Year 1998-99, the revenue has preferred the present Tax Appeal. 2. The following substantial questions of law were framed while admitting this appeal on 14.12.2007: (1) Whether the Appellate Tribunal is right in law and on facts in directing the Assessing Officer not to deduct the amount of subsidy given by the government to the farmers, for the purpose of allowing deduction u/s. 80IA of the Act?" 3. The facts of the case in brief are that assessee is a Trust mainly engaged in the business of manufacturing of detergents, SSP fertilizers and packing items. During the course of assessment proceedings, it was noticed that the assessee had claimed deduction u/s. 80IA of the IT. Act in respect of subsidy received from the Government amounting to Rs. 2,85,10,727/-. The claim of the assessee was rejected by the assessing officer on the ground that the subsidy had no direct nexus with the profit derived from business of an industry or an enterprise referred to in sub-section (4) of 80IA. The assessee being aggrieved by the order of Assessing Officer filed an appeal before the CIT(A) and order of Assessing Officer was confirmed by the CIT (A) by holding that amount of subsidy has no relation with the profits of any industrial undertaking and the appeal filed by the assessee came to be dismissed. 3.1. On appeal before the Tribunal by the assessee, by impugned order, Tribunal reversed the findings of the CIT(A) and allowed the appeal filed by the assessee by directing the Assessing Officer not to deduct the amount of subsidy given by the government to the farmers, for the purpose of allowing deduction u/s. 80IA of the Act and held that the assessee-trust is entitled for deduction u/s. 80IA of the Income Tax Act, 1961. Being aggrieved and dissatisfied with the impugned order passed by the Tribunal, the revenue has preferred the present Tax Appeal for consideration of the aforesaid substantial question of law. 4. Learned advocate appearing for the revenue submitted that the Tribunal erred in allowing the subsequent deduction inspite of concurrent findings given by the Assessing Officer as well as the CIT (Appeals). 5. 4. Learned advocate appearing for the revenue submitted that the Tribunal erred in allowing the subsequent deduction inspite of concurrent findings given by the Assessing Officer as well as the CIT (Appeals). 5. It is further contended by learned advocate appearing for the revenue that any amount received by way of subsidy was an amount whose source was the Government and not the business of the assessee. According to him, subsidy is paid to the seller and hence the same could not be considered for the benefits given to the manufacturers under the scheme. It is further submitted that subsidy has no direct nexus with the profit of an industrial undertaking and therefore, the assessee is not entitled or qualified for deduction under Section 80IA of the Income Tax Act. 6. Mr. Soparkar, learned advocate appearing for the assessee supported the impugned order passed by the Tribunal and submitted that the same having been passed in accordance with law does not call for any interference. He relied upon the decision of the Hon'ble Supreme Court in case of Commissioner of Income Tax versus Meghalaya Steels Ltd., [2016] 67 taxmn.com 158 (SC). 7. We have heard learned advocates for both the sides. The Tribunal has found that the subsidy is in fact part of the sale proceeds realized on sale of fertilizers. It has a direct and immediate nexus with the activities of the industrial undertaking. The Government had decided to compensate the farmers and bearing the burden of the farmers partially to help them. The Government fixes the market price of fertilizers to the farmer and for the same a part of the sale consideration is paid by it by way of subsidy by the Government. Therefore, it cannot be said that the subsidy amount is not part of the profits derived from industrial undertaking. The issue is squarely covered by the decision of the Hon'ble Supreme Court in case of Commissioner of Income Tax versus Meghalaya Steels Ltd., [2016] 67 taxmn.com 158 (SC) wherein the Hon'ble Supreme Court by placing reliance on the decision in case of CIT versus Sterling Foods, [1999] 237 ITR 579/104 Taxman 204 (SC) lays down a very important test in order to determine whether profits and gains are derived from business of an industrial undertaking. There should be a direct nexus between such profits and gains and the industrial undertaking or business. There should be a direct nexus between such profits and gains and the industrial undertaking or business. Such nexus cannot be only incidental. Therefore the Tribunal has rightly held that the assessee is entitled for deduction under Section 80IA of the Income Tax Act, 1961 without deducting the amount of subsidy given by the Government to the farmers and accordingly allowed the claim of the assessee. We therefore answer the question in favour of the assessee and against the revenue. 8. In the premises aforesaid, appeal is dismissed.