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2024 (1) TMI 655 - AT - Income TaxAssessment of trust - construction of Public Toilets under the Central Government Scheme “Swach Bharat Abhiyan' - Additions against the Swach Bharat Fund directly transferred to the Balance sheet without taking it into Income & expenditure account of the assessee - HELD THAT:- As correctly decided by CIT(A) this fund is for the society to be used for its aims and objectives. The amount that the society receives from the various PSUs and departments for the rebuilding of the State of Uttarakhand are not part of its aim and objectives and merely holder of the funds. Returning to the issue of Rs. 1,50,00,000/- of Swachh Bharat Abhiyan Fund, as examined the accounts of the assessee. This is even submitted to the AO. There is no doubt that this sum has been routed through the income & expenditure account, therefore, this point made by the AO does not have any legs to stand on. The AO has not pointed out any other deficiency and therefore, this addition must be deleted. R & R Disaster Relief - The assessee is CSR arm of THDCIL and holds these funds as liability. It cannot use these funds for its own aims and objectives. The ld. CIT(A) held that the AO does not appear to have appreciated this point and made this addition stating that these funds should have been transferred to the income & expenditure account and accounts should have been maintained separately. Since, the assessee is not allowed to use these funds for its own aims and objectives, it is not reasonable to expect it to route through its income & expenditure account. This is a peculiar fact which needs to be appreciated in the context in which the assessee has handled these funds. Therefore, the assessee's action of taking this amount directly to its balance sheet is correct. CIT(A) further held that the assessee has to return these funds to the agency/PSU/Department who have contributed to the funds. The letters from the Chairman DVC and minutes of meetings for implementing reconstruction and rehabilitation (R&R) efforts by PSUs that shows clearly that the assessee merely holds these funds on behalf of these participating agencies and can spend these funds only as per the mandate provided to it. It was held that the assessee does not even spend these funds on its own but passed it to the designated state agency who will inturn spend these funds. As gone through the various correspondences of the Power Finance Corporation, REC, NDMA, NTPC and the assessee being nominated as the nodal agency to facilitate the implementation of R&R projects - we hold that the assessee is not the owner of the funds but holding the same in fiduciary capacity, hence, no addition is called for on this account. The order of the ld. CIT(A) on this issue is affirmed.
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