"My issue with taking loss"

You seem to be explaining that there are expenses related to the same operation that resulted in that income. That's the point, isn't it? It isn't a grant of fun money. It's a grant for purposes of a specific activity. They had to apply for it. It's being offset by what they did with it.

Is this a USDA conservation grant? Most conservation grants are taxable. Read this topic to see if it helps:

https://www.calt.iastate.edu/article/tax-rules-implementing-conservation-or-climate-smart-practices