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2023 (3) TMI 155 - JHARKHAND HIGH COURTAccrual of income - interest income earned on the fixed deposit - effect of overriding title - Assessee is a government undertaking working under the instruction of the Government who on the directions of the Government keeps a portion of unutilized funds in short term bank deposits and interest earned from these deposits is transferred to the respective fund accounts of the Government - whether said interest income being covered under the ‘Income from Other Sources’ as defined in the Income Tax Act, 1961? - Tribunal justification in holding that an executive guideline (guideline issued by the Ministry of Tourism in the case) can override the statutory provisions of the Income Tax Act, 1961 - HELD THAT:- As a matter of fact, an office memorandum issued by the Joint Secretary, Ministry of Tourism, Govt. of India had directed to the Assessee that funds released as installments of Central Financial Assistance (CFA) from the Ministry of Tourism were to be deposited in saving accounts or fixed deposits in banks and as a result a substantial amount accrues as interest on deposits made out of CFA. It was also directed to ensure utilization of earned interest on deposits for the execution and completion of concerned projects without deviation to any other head of expenditure. In case there is no scope to utilize the amount of interest for execution of the concerned project, such amount may be returned to the Ministry of Tourism. Thus, the income never reached the Assessee and was diverted at source by an overriding title. The law is well settled by a long catena of cases to the effect that in event of there being a diversion of income by overriding title, question of income being assessed in the hands of Assessee does not and cannot arise. Reference in this regard may be made to the case of Shri Sitaldas Tirathdas, Bombay [1960 (11) TMI 17 - SUPREME COURT]. Thus it is clear that the Assessee never becomes the owner of money and as such the addition made by the AO was not sustainable in both the assessment years. CIT (A) as well as the ITAT who has sustained the order of CIT (A) did not commit any error in holding that the petitioner never became the owner of the money which came from interest and deleted the addition. We are of the considered view that no error ahs been committed by both the forums. - Decided against revenue.
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