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TMI Blog2013 (12) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax, rejecting the application for renewal of the respondent assessee for exemption under Section 80G of the Income Tax Act, 1961 (the Act). In the year 2004 the respondent assessee was in the process of establishing an eye hospital, and was enjoying the exemption under Section 80G. It applied for renewal of the exemption, which was rejected by the Commissioner of Income Tax-1, Kanpur on 19.9.2007 on the ground that the grant given by the State Government of Rs.75.12 lacs, for specific purpose namely for purchase of equipments was not utilised within the time stipulated by the State Government i.e. upto 31.12.2004. The grant was kept in a fixed deposit in the Union Bank of India. The respondent assessee was utilising the interest of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue of purchase of plant and machinery for which grant was given by the State Government was also pending for the reasons beyond the control of the assessee. As per conditions laid down by the State Government, if the grant was not utilised, it had to be refunded. Even a part of the grant, which was not utilised had to be refunded to the government. The Tribunal observed that the department has allowed the approval to the assessee upto 31.3.2007, and that there was no change of facts to record finding that the conditions under Section 85G (5) (i) were not complied with. The Tribunal, thereafter, observed as follows:- "Clearly in the present case, plant and machinery for which grant is given by the Govt. would fall in the category of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch income would not be liable to inclusion in its total income under the provisions of sections 11 and 12 [* * *][***] [or clause (23AA)] [or clause (23C)] of section 10 : [Provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of section 11 shall not apply in relation to such income, if? (a) the institution or fund maintains separate books of account in respect of such business; (b) the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and (c) the institution or fund issues to a person making the donation a certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the rules67 made in this behalf [;and] [(vii) Where any institution or fund had been approved under clause (vi) for the previous year beginning on the 1st day of April, 2007 and ending on the 31st day of March, 2008, such institution or fund shall, for the purpose of this section and notwithstanding anything contained in the proviso to clause (15) of section 2, be deemed to have been- (a) established for charitable purposes for the previous year beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2009; and (b) approved under the said clause (vi) for the previous year beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2009.]" Shri Dhananjay Awasthi, learned counsel for the department a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery would fall in the capital account. The amount could not be utilised as there was certain disputes with regard to mortgage of land to the bank for borrowing and for which the Kanpur Development Authority has not given no objection certificate. From the facts, stated in the orders of the Commissioner of Income Tax and the Tribunal we find that the petitioner neither misutilised the grant nor utilised it for any business. The observations of CIT that the interest was utilised for business is not based on any material and the discussion of the manner in which the interest was utilised. He also did not record any finding that the respondent assessee did not comply with the terms and conditions of the utilisation of the grant. Section 80G ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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