9911796707
TMI Blog2013 (12) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... on FDR is not taxable? The facts giving rise to this reference are stated as follows:- "The assessee company is a subsidiary of M/s. U.P. State Handloom Corporation Ltd., Kanpur which is the Holding Company. Voluntary return was filed on 30.11.1983 on an income of Rs.1,62,025/- and revised return was filed on 4.4.1986 on a net income of Rs.7,29,500/-. The assessment was completed u/s 143 (3) on 9.3.1987 on a net taxable income of Rs.9,15,590/-. On perusal of details of interest account it showed receipt of interest of Rs.4,39,765/- on deposits from FDR and Savings Bank A/c. and Rs.38,006/- from weavers against loan advanced to them. The total interest earned during the year was 5,27,771/- out of which Rs.2,09,714/- was further deducted be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the State. The entire amount of interest, was credited into the account of grant in aid. On being asked, the assessee had informed the Assessing Officer that interest was treated as part of grant in terms of U.P. Government instructions dated 3.4.1980, under letter DO V-1/1580/10-1980 from Finance Secretary, providing that the grant was given with the condition, that unutilized fund during the year will be kept in bank other than Government Treasury and the interest accrued or earned should not be accounted for in the P & L Account. Following the instructions, the interest of Rs.2.09,503/-, earned on FDR, was not accounted for in the P & L Account. The Assessing Officer did not accept the contention and taxed the interest. In appeal, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintained which have been audited by Govt. auditors. The un-utilised grants were kept in Bank in the shape of FDRs. The interest accrued on this FDRs cannot be taken to the profits and loss account in view of the above mentioned letter of the State Govt. 5. The appellant has also stated that exactly the same point was involved in the case of Harijan Evam Nirbal Varg Avas Nigam Ltd., where the Hon'ble Tribunal vide their order dated 29.04.1987 in ITA No. 1056/Alld/84 assessment year 1980-81 have held that such interest cannot be brought to tax as revenue gain to the appellant. It has argued that earlier also in the case of U.P. Development Systems Corporation Ltd., wherein the claim of the appellant had been allowed by the Tribunal vide or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) No. 16797 of 2005 in which the Supreme Court while granting liberty to the appellant, for moving an application for clarification before the High Court if there was any such material, dismissed the SLP on 5.12.2005. The order of the Supreme Court is quoted hereunder:- "It is stated by the learned counsel appearing on behalf of the petitioner that the High Court did not consider the material on record to the effect that the interest had in fact been paid by the petitioner to the State Government. According to the petitioner there was material on record also to show that the petitioner had complied with the State Government's directions in this regard. It is also submitted that the High Court did not consider the order dated 3rd April, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
