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2011 (4) TMI 1332 - HC - Income TaxNature of interest received on the amount of grant - grants-in-aid - taxable income of the society - The assessee received grants through State Government and interest from the banks on the deposits. The AO held that assessee failed to spend 85% of its income as required for exemption u/s 011. It was further held that tied-up grants were at par with voluntary contributions and were liable to be treated as income of the assessee. The AO also held that interest income was to be treated as taxable income being separate from the grants-in-aid. The CIT(A) set aside the additions holding that tied-up grants will not constitute income of the assessee. It was further held that interest received by the assessee was to be treated as part of the grant. HELD THAT:- it was held that grants-in-aid received from the Government for specific purpose cannot be treated as voluntary contribution or as taxable income of the society. In M/s Punjab Energy Development Agency [2009 (7) TMI 654 - PUNJAB & HARYANA HIGH COURT] it was held that interest received by the assessee on the amount of grant deposited in the bank was also in the nature of grant itself. Therefore, the view taken by the Tribunal is consistent with the view already taken by this Court.
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