TMI Blog2015 (2) TMI 526X X X X Extracts X X X X X X X X Extracts X X X X ..... rry out statutory audit in case of assessee. The assessee has appointed his own chartered accountants for obtaining tax audit u/s 44AB and provisional balance sheet & P&L Account, which were filed before the AO. Now that the statutory audit report is available for the relevant financial year, we are of the opinion that such an evidence is to be admitted and this issue should be restored back to the file of the AO to be consider the statutory audit report and complete the assessment afresh taking into account such report. - Decided in favour of assessee for statistical purposes. Taxability of interest - Held that:- Ld. Counsel has filed on office memorandum dated 04.01.2014, issued by the Government of Maharashtra clarifying that interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Income Tax (Appeals) erred in ignoring the fact that the average net profit of the past years was 9.13%. 4. The learned CIT (Appeals) erred in confirming the interest credited to the grant-in-aid account of ₹ 13,76,73,805/- as income chargeable to tax and failed to appreciate the fact that the said interest did not accrue or belong to the appellant owing to the principle of over-riding title. 5. In the alternative and without prejudice to the above the learned CIT (Appeals) erred in not appreciating that income being interest on unutilized grants was in the nature of contingent income. 6. In the alternative and without prejudice to the fact that the interest of ₹ 13,76,73,805/- is not accruing or taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how cause notice as to why profit should not be estimated @ 30% gross receipts, the assessee submitted as under:- (a) we are following mercantile system of accounting consistently. Also the accounting standards as notified in the official Gazette from time to time under section 145 of the Income Tax Act, 1961 are being complied with to the extent possible in preparation of accounts. (b) We respectfully submit further that our organization is a body incorporated where in 100% stake is owned by the State of Maharashtra. We are subjected to statutory Audit as well as audit by the Comptroller and Auditor General of India. Our statutory Audit and AG Audit are completed only up to Assessment year 2004-05. Appointment of statutory auditors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee s explanation in this regard before the AO was as under - Corporation has parked unutilized amounts under various grant received in fixed deposits in banks. As per the Office memorandum received from Ministry of Tourism, Government of India the interest accruals on said deposits can be used only for the projects for which grants have been received. Therefore, the interest earned is not in the nature of income but it is part and parcel of grants only. Therefore, the such interest earned ₹ 13,76,73,805/- has been credited to grant account. However, the assessing officer rejected the assessee s contention and added the same as income from other sources. 4. Before the Ld.CIT(A) the assessee filed detailed submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w new facts have come on record, which goes to show that the assessee s contention that the interest accrued on grant-in-aid is part of said aid only and it is not the income of the assessee. This new fact he submitted is in form of office memorandum dated 04.01.2014 issued by Government of Maharashtra, and other documents have vital bearing for adjudication of this issue. 8. Ld. DR submitted that, so far as the first issue regarding estimation of net profit, the matter can be sent back to the file of the AO to carry out fresh assessment in light of statutory audit report. However, for the second issue, he submitted that the decision of the Tribunal in assessee s own case for the earlier years should be followed as a matter of precedence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, similar issue has been decided against the assessee by the Tribunal in the A.Y. 1996-97. The assessee s case has been that the interest which has been accrued on account of fixed deposits made out of unutilized grand-in-aid fund, partaks the character of grant-in-aid only. That is why, the said interest has been credited to the grant-in-aid account. Now before us, the Ld. Counsel has filed on office memorandum dated 04.01.2014, issued by the Government of Maharashtra clarifying that interest on the utilized grant is to be characterized as part of grant-in-aid only. Such a letter/memorandum has a vital bearing on the issue involved, therefore, we admit the said additional ground and remit the matter back to the assessing officer to tak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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