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2014 (2) TMI 789 - HC - Income TaxCharitable Institution - Grant from Government - Whether the grant from the Government of Gujarat constitute the income of the assessee as per provisions of Section 11(2) of the Act – Held that:- The decision in Gujarat Municipal Finance Board Vs. DCIT (Assessment) [1996 (5) TMI 71 - GUJARAT High Court] followed - The Tribunal held that the grants are sanctioned the assessee only for the project under Rehabilitation Programme and same cannot be treated as assessee's income - grant given by the State Government to another entity which was to spend grants only for the stated purpose cannot be considered as voluntary contribution nor can the same be assessed under section 12 of the Act as income of recipient - the funds were made available to the Corporation for implementing the scheme in a particular manner - The Tribunal committed no error in holding that the grant in question fulfills the requirement of section 11(d)(1) read with section 12(1) of the Act – Decided against Revenue. Deletion of Interest Income - Whether the Tribunal is correct in deleting the addition of interest income – Held that:- The decision Gujarat Municipal Finance Board Vs. DCIT (Assessment) [1996 (5) TMI 71 - GUJARAT High Court] followed - Tribunal was of the view that the interest derives by investing the grant temporarily for interest is also not taxable - It did not confirm with the view of CIT (Appeals) that the assessee treated the grants given by the State Government as its income and therefore the interest earned by temporary investment of the grants cannot be exempted by holding that ratio in the said judgement is that any grant-in-aid cannot be considered as income - merely because the grant is treated as income by the assessee in its books, the interest does not become taxable – the findings of the Tribunal upheld – Decided against Revenue. Addition made on refund of grant to District Rural Development Agency – Held that:- The decision in CIT Vs. Ganga Charity Trust Fund [1985 (10) TMI 67 - GUJARAT High Court] followed - for the purpose of applying the income of the trust for charitable purposes, income derived from the trust properly must be determined on commercial principles and in doing so, all outgoings including income-tax must be deducted and it is only from the surplus income in the hands of the trustee that the question of application of income can arise - the amount of Rs.13 crores, which was earlier assessed as income, refunded to DRDA constitutes a deduction while ascertaining the application of the income for the purpose of section 11(1)(a) of the Act – the order of the Tribunal upheld – Decided against Revenue.
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