TMI Blog2022 (7) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... rest on the unutilized funds, to the respective Government Departments, and not only this, the U.P. Government, vide order dated 12.12.2014, has classified the accounting head for the deposit of interest in the Government Treasury. Hon'ble Gujarat High Court, in the case of CIT vs. SAR Infracon (P) Ltd. [ 2014 (3) TMI 728 - GUJARAT HIGH COURT] while considering a similar stipulation of the Central Government, while sanctioning the grant in favour of that assessee, stipulated that interest earned on the Central Grant already utilized would form part of the Central Grant limit, held that the Tribunal was right in holding that the interest earned on the Central Grant already released could not be said to be the income of the assessee. This decision was followed by the ld. CIT(A) in the earlier years (supra) in the assessee s own case and it has been held by the Tribunal to have been rightly so followed. The fact-situation during the year has admittedly remained unchanged. Addition of bad debts - CIT-A deleted the addition - DR has contended that the ld. CIT(A) failed to consider that the bad debts were never included by the assessee in the debtors and that this is agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee, but the assessee had not shown interest income in its total income, which is against the provision of section 198 and 199 of the Income Tax Act. 2. The Ld. CTT(A), Lucknow had erred in law and facts ignoring the fact that assessee is enjoying double benefit by claiming interest income as not taxable but taking credit of TDS out of total taxes payable, which is also against the provision of section 198 and 199 of the Income Tax Act. 2. The Grounds taken by the Revenue in ITA No. 374/Lkw/2020 read as under: 1. The Ld. CIT(A). Lucknow had erred in law, and facts in deleting the addition of Rs. 57,96,84,591/- on account of interest income without appreciating the fact that the assessee had claimed TDS deducted by the bank on interest Income received from the FDRs and S.B. Accounts, the FDRs and SB Accounts are in the name of the assessee, but the assessee had not shown interest income in its total income, which is against the provision of section 198 and 199 of the Income Tax Act. 2. The Ld. CTT(A), Lucknow had erred in law and facts ignoring the fact that assessee is enjoying double benefit claiming income as not taxable but taking credit of TDS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sections 198 and 199 of the Act. 7. The ld. counsel for the assessee, on the other hand, has placed strong reliance on the impugned order. It has been submitted that as rightly taken into consideration by the ITAT in the assessee s case for the earlier years, while confirming the order passed by the ld. CIT(A), the interest in question was earned on bank fixed deposits and savings deposits made out of funds received from the Government for executing civil contract work, which interest was the income of the U.P. Government as per U.P. Government Office order dated 02.03.1998; that it is this decision of the Tribunal in the Assessee s case, which has rightly been followed by the CIT(A), under similar facts. 8. It remains undisputed that the U.P. Government, vide G.O. No.B-1/564/10- 7/97, dated 02.03.1998, specifically mentioned that whatever interest income accrues on the advances from the bank, would be remitted to the Government by the assessee. The assessee is a Government Company. It has been declared as a construction agency for Government works. It gets advance for execution of construction projects on behalf of the U.P. State Government. These funds are used by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that this is against the requirement of Section 36(2)(i). 15. The ld. counsel for the assessee, per contra, has placed reliance on the impugned order, contending that the amount of Rs. 2,98,05,040/- represented the amount of service tax payable for 574, Grameen Sachivalay, completed by the assessee during 2012-13 and since no service tax was payable on Government contracts, the income was inflated by the said amount; and that the assessee reduced this amount from the income of the year under consideration, on receipt of objection from CAG, which contention of the assessee was wrongly rejected by the AO while making the addition. 16. It has not been disputed that the amount of Rs.2,98,05,040/- out of the bad debts, was the service tax component. This became unrealizable because of the objection raised by the CAG. It was, therefore, that the same was reduced from the income of the assessee and was treated as bad debt. As such, we do not find any error in the action of ld. CIT(A) in deleting the addition. It has not been shown as to how the assessee, a Government Company, was not bound by the objections raised by the CAG, which rendered the amount in question, claimed as bad deb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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