TMI Blog2014 (12) TMI 341X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has also shown centage charges - the working of the assessee is not proper and the basis adopted by the AO is also not scientific – thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO for fresh decision – Decided in favour of assessee. Addition of earned interest on unutilized fund payable to UP Govt. deleted – Held that:- Out of total amount shown as interest on unutilized fund at ₹ 34,07,81,937/- as against opening balance of ₹ 29,12,39,888/-, the AO has treated the amount of ₹ 4,95,42,098/- as income of the assessee for the present year - This amount is difference in opening balance and closing balance - no finding is given by CIT(A) that in fact, the amount of interest income is earned in respect of interest on unutilized fund – thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO for fresh decision in after examining this contention of the assessee that as per the direction of the U.P. Government, from whom the grant was received by the assessee, if any unutilized fund is kept in bank and any interest is earned then such interest income is not income of the assessee and it has to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as wrong and unjustified in confirming the addition of ₹ 14,05,710/- relating to prior year expenses crystallized during the relevant Assessment Year. 6. That the Learned Commissioner of Income Tax (Appeal)-II Lucknow was wrong in confirming the addition of ₹ 96,337/- claimed by the Appellant as allowable deduction. 7. That the Learned Commissioner of Income Tax (Appeal)-II Lucknow was wrong and unjustified in confirming the addition of ₹ 1,06,03,40,887/- on account of estimating the amount of centage receivable on Work in Progress (WIP) at 12.5% which according to Tax Authorities is not reflected in the Books of Accounts. 8. That the Learned Commissioner of Income Tax (Appeal)-II Lucknow was wrong in confirming the addition of ₹ 1,06,03,40,887/- without any valid reason. 9. That the Learned Commissioner of Income Tax (Appeal)-II Lucknow was wrong in not appreciating that the opening balance of Work in Progress (WIP) ₹ 8,23,80,91,932/- was relating to earlier years and in no case could be the basis for working out the profit @12.5% on such balance which was already taken into account for the purposes of tax in earlier years. 10. That the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges and supervisory charges. In reply, it was submitted by Learned A.R. of the assessee that such charges are as per the contract. He also submitted that centage charges are not fixed and it is varying on the basis of type of contract. He also submitted that certain state government works are allotted to the assessee on which no centage is admissible. He also submitted that these works include M.P./M.L.A. works allotted by the district level authorities works and non centage works. He also submitted that the assessee is bound to execute these non centage works also. The Bench wanted to know as to whether the working of centage charges and supervisory charges as per each contract is available on record. In reply, it was submitted that such workings are available on pages 272 to 313 of the paper book. On going through these pages, it was pointed out by the Bench that on a turnover of ₹ 7,699.92 lacs, it is stated that there is no centage charges allowable. As per these details, this includes mainly such projects which are on account of M.L.A./M.P. Nidhi but for similar contracts on account of M.L.A./M.P. Nidhi, centage charges are shown in some cases as per the details ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has raised the following grounds: 1. The Commissioner of Income-tax(Appeal)-II, Lucknow has erred in law and on facts in deleting the additions made by the A.O. of ₹ 4,95,42,049/- on account of earned interest of unutilized fund payable to U.P. Govt. In doing so he failed to follow the decision of Hon'ble ITAT, Lucknow Bench in the case of U.P. Police Awas Nigam Ltd. for A.Y. 1995-96 to 1998-99 and 2002-03 and 2003-04 in which interest income earned on advances from government was treated as income of assessee. Further, Ld. CIT(A) has failed to appreciate the fact that during the assessment and remand proceeding assessee has failed to produce any evidence to show that it has ever remitted the interest to the Govt. 11. Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee supported the order of learned CIT(A). He also drawn our attention to page No. 78 of the paper book being copy of Government order dated 03/04/80 as per which if any interest income is earned from bank out of grant given by the U.P. Government, such interest income should not be considered as income of the corporation i.e. the assessee but it shall be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per law as per above discussion after affording adequate and reasonable opportunity of being heard to the assessee. 13. In the result, the appeal of the revenue stands allowed for statistical purposes. 14. Now we take up the Cross Objection of the assessee. In this Cross Objections the assessee has raised the following grounds: 1. That the Ld. A.O. was wrong in relying on the case of U.P. Police Avas Nigam Ltd., said to have been decided by ITAT, Lucknow Bench without indicating the citation. 2. That the Ld. A.O. is wrong in stating that during the assessment and remand proceeding assessee has failed to produce any evidence to show that it has ever remitted the interest to the Govt. 3. That the Ld. CIT (Appeals) was wrong in not deciding the following grounds taken before him :- No.4 That the Ld. A.O. erred in making an addition of ₹ 4,95,42,049/- as interest earned on the utilization funds inasmuch as such interest belongs to the Government of U.P. and cannot be called as income of the assessee. No.5. That the treatment of such income by the appellant done consistently in the manner as done in the year under consideration was wrongly taxed as inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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