TMI Blog2014 (5) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... cceed - once the amount is assessed as income, it cannot be added back to the assessee's income over again - the grants cannot be assessed as income as they were made for specific or assigned projects – relying upon C1T Vs. Ganga Charity Trust Fund [1985 (10) TMI 67 - GUJARAT High Court] - for the purpose of applying the income of the trust for charitable purposes, income derived from the trust property must be determined on commercial principles and in doing so, all outgoings including income-tax must be deducted and it is only from the surplus income in the hands of the trustees that the question of application of income can arise - the amount which was earlier assessed as income, refunded to DRDA during the year, constitutes a deduction while ascertaining the application of the income for the purpose of section 11(1)(a) of the Act – Decided against Revenue. - ITA No. 946/Ahd/2011 - - - Dated:- 16-5-2014 - Shri Mukul Kr. Shrawat And Shri N. S. Saini,JJ. For the Petitioner : Shri Alok Johri, CIT-D.R., For the Respondent : Shri S.N. Soparkar, AR ORDER Per Shri Mukul Kumar Shrawat, Judicial Member This is an appeal filed by the Revenue arising fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAT regarding this issue has decided that since the conditions that the interest should be refunded by the assessee found part of the grant itself and there was bar on the assessee's right to enjoy the interest income; right from the inception, such interest does not belong to the assessee. Alternatively, the Hon'ble ITAT has also held that the amount of interest credited to the account of the State Government should be treated as application of the income for the purpose of section 11(1)(a) of the Act, on commercial consideration. Therefore, the interest in question is held to be not income of the assessee and therefore not taxable in its hands. The question of, its application becomes redundant. 4. Heard both the sides. Before us an order of ITAT Ahmedabad C Bench for A.Y.2006-07 titled as Gujarat State Disaster Management Authority Vs. ACIT, Gandhinagar Circle, Gandhinagar bearing ITA No.949/Ahd/2009, dated 5th June, 2009 is cited wherein an order of Hon ble Gujarat High pronounced in the case of Gujarat Municipal Finance Board, 221 ITR 317 is cited and thereafter held as under: The aforesaid judgment of the Hon'ble jurisdictional high court supports the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired to explain as to how the said payment is not treated as non application of income for the purpose of trust. The assessee has furnished the details of the amount received time to time and also informed the AO that the unspent balance amount was refunded to DRDA. However, the AO was not convinced and according to him refund of unspent grant of earlier years on which the assessee had already claimed exemption u/s.11(1)(a) in respective years should not be treated as an application of income for the year under consideration so as to be eligible for the exemption; hence, impugned amount was taxed in the hands of the assessee. 8. When the matter was carried before the First Appellate Authority, learned CIT(A) followed the order of the Tribunal pronounced in assessee s own case for A.Y. 2006-07. After considering the explanation of the assessee as well as following the order of the Tribunal learned CIT(A) has decided this issue in assessee s favour as follows: 5.1 It was pointed put to the assessee vide order sheet entry dated 9/12/2010 by the undersigned that they should show cause as why return of original grant be treated as application of money. Once the original grant ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court that for the purpose of applying the income of the trust for charitable purposes, income derived from the trust property must be determined on commercial principles and in doing so, all outgoings including income-tax must be deducted and it is only from the surplus income in the hands of the trustees that the question of application of income can arise. In C1T Vs. Sheth Manilal Ranchhoddas Visram Bhavan Trust, (1992), 198 ITR 598 it was held that depreciation on the assets of the trust was deductible while arriving at the income available for application to charitable and religious purposes. Respectfully applying the principles laid down in these judgments to the present case, it seems to us that the amount of Rs.13 crores which was earlier assessed as income, refunded to DRDA during the year under appeal, constitutes a deduction while ascertaining the application of the income for the purpose of section 11(1)(a) of the Act. Accordingly, we uphold the assessee's contention and allow grounds no.3 and 4. 14. Ground No.5 is to the effect the C1T(A) erred in law in not allowing the deduction under Section 11(1)(a) without considering the amounts of Rs.9,82,70,573/- and ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
