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2017 (6) TMI 1321 - AT - Income TaxSurplus earned from functioning of PDS [Public distribution system] on behalf of Government - Taxability as income in the hands of assessee - HELD THAT:- Assessee company was set up by the Government of Gujarat under the companies Act, 1956. The assessee company manage the public distribution system and other public welfare scheme on behalf of the Government of Gujarat. The Government of Gujarat has been providing handling commission as per the Government of Gujarat (GR) Government Resolution - the surplus which was earned by the assessee for the activities carried out on behalf of the Government of Gujarat belonged to the Government and payable to the Government along with interest after deducting of commission earned by the assessee. We further observed that the commission income earned by the assessee on the activities carried on behalf of the Government and other income from its own activities are taxable in the hand of the assessee. In the earlier assessment year the assessing officer has accepted the similar accounting practices followed in the case of the assessee. We considered that surplus earned on behalf of the Government for carrying out function of Public Distribution System as agent of Government is not taxable in the hand of the assessee. As elaborated in the order of the Ld.CIT(A) and considered that the Ld.CIT(A) is justified in deleting the addition made by the Assessing Officer by stating that surplus earned from functioning of PDS on behalf of Government cannot be taxed in the hand of the assessee. In view of the above stated facts and findings we uphold the order of the Ld.CIT(A). Deduction not found to be justified as the assessee failed to substantiate with relevant supporting evidence that the said amount was offered to tax in the earlier years - We have also gone through the paper book filed by the assessee and noticed that hand-written entry as per page no.126 was not sufficient to prove that such amount was offered to tax in the earlier year, therefore, we do not find any reason to interfere in the decision of the Ld.CIT(A) on this issue.
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