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2020 (8) TMI 84 - AT - Income TaxAssessment of trust - Addition of capital gains - Capital gain addition on sale of land by the assessee, as per section 45 r.w.s 2(47) to the extent remaining unutilized for charitable purposes u/s 11(1A) - benefit of utilization for charitable purposes allowed u/s 11 being amount paid to the Government under the agreement - HELD THAT:- Role of the assessee in the Tripartite agreement, and the supplementary agreements, was receiving funds arranged for by the State government by getting its land sold through PUDA. The amount remitted to the assessee under the agreement, we have no doubt in holding therefore, was in the nature of grant received from the government Without dealing with the manner of taxation of the grants i.e on accrual or receipt basis, either ways nothing was taxable in the impugned year. As is evident from the facts narrated above, the initial agreement transferring possession of land to PUDA for development and sale and estimating revenue generation of ₹ 183 Crs ,was entered on 30-04-2002. The supplementary agreement, increasing the expected Revenue to be generated from the sale of land and remitted to the assessee, to ₹ 420 Crs was dt 01-07-2011. The second supplementary agreement did not effect any increase in the expected Revenue from sale of land. Even by the concept of taxability on accrual basis the grants did not accrue to the assessee in the impugned year. Further the facts demonstrate that except for an amount of ₹ 30 Crs .which was settled under the second supplementary tripartite agreement during the impugned year Dt.07-08-12,to be paid to the state government, all other amounts were received by the assessee in the preceding years. Therefore even by the concept of taxability on receipt of funds ,no amount was taxable in the impugned year except for ₹ 30 Crs. This amount ,we have noted from the agreement ,was stated to be paid to the state government in compliance with the amended and enlarged objectives of the assessee society for engaging with other institutions in the state for providing health care education and or facilities. The assessee had also provided a utilization certificate to this effect before the CIT(A),considering which he had treated the amount as applied for purposes of charity as per section 11 - DR has neither been able to controvert the aforestated facts nor has pointed any infirmity in the findings of the Ld.CIT(A).Therefore by any concept of taxation of income also, i.e accrual or receipt ,none of the amounts of funds due to or received by the assessee under the Tripartite agreement was taxable in the impugned year. Since we have held the amounts received under the tripartite agreement as being in the nature of grants from the government which did not accrue during the impugned year and not capital gain earned by the assessee, we do not find it relevant to adjudicate the issue raised in point no.(iv) of para 11 above relating to taxability of unutilized capital gains u/s 11 which capital gain was not received by the assessee at all. We hold that no capital gain was earned by the assessee under the tripartite agreement dt.30-04-2002 ,that in fact the assessee had received grants from the government under it, no portion of which was taxable in the impugned year either on receipt or accrual basis. - Decided against revenue.
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