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2015 (11) TMI 391 - HC - Income TaxInterest earned on grants made by the State Government kept in fixed deposits pending utilization - whether should be treated as additional grant of the scheme or a revenue receipt exigible to tax under the head 'Income from other sources'? - Held that:- The very purpose of granting ₹ 10 crores to the assessee was to act as a nodal agency for implementation of the scheme. There is no profit motive as the entire fund entrusted and the interest accrued therefrom from deposits has to be utilised only for the purpose of the scheme originally granted. The whole of the fund belongs to the State exchequer and the assessee has to channelise them to achieve the objects of centrally sponsored scheme of infrastructural development as specified in the Government order. Hence, interest on all these fixed deposits are considered to be capitalised and not revenue receipts to treat it as an income. The Tribunal considering these aspects and more particularly, following the judgment of this court in KUIDC case [2006 (2) TMI 114 - KARNATAKA High Court ] has held that the interest earned on these grants is not an income, which we do not find fault with. - Decided in favour of assessee.
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