TMI Blog2010 (12) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... ), the appellant-revenue has challenged the order dated 12.12.2008 made by the Income Tax Appellate Tribunal (the Tribunal) proposing the following question: Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was justified in law in deleting the addition of Rs.23,17,13,997/- as the said addition made in accordance with the provisions contained in Section 12(1) of the Income Tax Act, 1961? 2. The assessment year is 2004-2005 and the relevant accounting period is the financial year 2003-2004. The respondent assessee is registered as a trust under the provisions of section 12A of the Act. Its income is exempt under the provisions of sections 11 to 13 of the Act subject to fulfilling the certain conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal. 3. Mrs. Mauna M. Bhatt, learned senior standing counsel, appearing on behalf of the appellant submitted that the impugned order of the Tribunal is erroneous as the same is not based on proper appreciation of facts. Reiterating the reasoning adopted by the Assessing Officer, it was submitted that the appeal deserves consideration and a question of law, as proposed or as may be deemed fit is required to be formulated. 4. Opposing the appeal, Mr. S.N. Soparkar, learned senior advocate appearing on caveat on behalf of the respondent-assessee, submitted that the Tribunal has rightly taken into consideration the Government Resolution dated 31st January, 2007 issued by the Government of Gujarat, Science and Technology Department as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Government agencies and similar bodies (whether local, national or international), it is appropriate that accounting for such grants should be based on the nature of the relevant grant to the enterprise. In the present case, the grants were provided against the total capital outlay and intended for implementing the capital project. As such, the accounting of the grants by the assessee was proper. The Commissioner (Appeals) placed reliance upon the decision of the Supreme Court in the case of Sahney Steel Press Works Ltd. v. Commissioner of Income-tax, A.P.-I, Hyderabad, (1997) 223 ITR 253, and keeping in mind the principles enunciated in the said decision, found that the assessee had correctly accounted the grants as capital receipts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibutions insofar as the same is relevant for the present purpose reads thus: 12. Income of trusts or institutions from contributions. [1] Any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) shall for the purposes of section 11 be deemed to be income derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and section 13 shall apply accordingly. [2] xxxxxx 10. A bare reading of the aforesaid provision makes it amply clear that for the purposes of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure, development of Science City Project and contribution towards corpus fund of the society. 13. Thus, the said Government Resolution specifically provides that the grant provided by it is by way of contribution towards the corpus fund of the society. In the circumstances, the contributions received from the Government would fall within the excluded category under section 12 of the Act, viz. contributions made with a specific direction that they shall form part of the corpus of the trust or institution. Hence, the amount received by way of the contributions made by the Government would not be income derived from property held under trust wholly for charitable or religious purpose for the purposes of section 11 of the Act. Moreover, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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