TMI Blog2016 (11) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest on the deposit at the later date the character of the money would remain the same and addendum can be termed as only by way of a clarification. It was not a matter where the question was to be considered with the retrospectivity as observed by the Tribunal. When the assessee is held as a custodian and the full command for utilization of the money including interest earned thereon remains with the Government, same cannot be termed as income of the assessee. The impugned order passed by the Tribunal is set aside and the questions are answered in favour of the assessee - ITA NOS.103-104/2016 & 387-388/2016 C/W ITA NO.306/2014 - - - Dated:- 5-10-2016 - Jayant Patel And Aravind Kumar, JJ. For the Petitioner : Sri. S Parth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being released by the Government for its various schemes to the appellant assessee and such amount of grant is to be utilised for the purposes specified by the Government. Until the amount of grant is utilised, money is to remain in the respective Bank account of the assessee Society and interest may accrue thereon. In the assessment proceedings, assessing officer found that interest earned on the aforesaid deposits lying in the Bank account can be termed as income of the assessee and therefore, exemption from income was unavailable. Matters were carried in the appeal before the CIT (Appeals) and CIT (Appeals) dismissed the appeal. The matter was further carried in appeals before the Tribunal and the Tribunal observed thus: 4.4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the year 2008-09 under the Account Head 3604-00-193-0-01 (100) (plan). In the Government Order, Director, Directorate of Municipal Administration has been authorized to draw from State Huzur Treasury and to recover a sum of ₹ 197.00 lakhs, which was released to Karnataka Municipal Data Society for the year 2007-08, and the remaining amount of ₹ 77.00 Lakhs to Karnataka Municipal Data Society for the Operational Cost and pay through cheque . 13. It is seen from the above Government Order that the purpose for which the grant is to be utilized and the utilization of interest income out of the grant have not been specifically spelt out. However, in the addendum dated 2.2.2010, this lacunae has been filed up. This was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ementation of e- Governance. If any asset is created out of this fund shall belong to the Government. Utilization certificate shall be submitted to Government after spending the funds. Further in case the amount is unspent the same shall vest in such an institution or body which Government prescribes together with any accretion thereto. 14. It can thus be seen from the above that the addendum, if at all, would operate only for the previous year relevant to A.Y.2010-11 and not to an earlier period viz., A.Y.2009-2010. In other words during the previous year relevant to A.Y.2009-10, there were no restrictions whatsoever on the use of the grant by the assessee. It cannot therefore be said that there was diversion of income by overri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns as given for specified purpose and the interest earned is also to be utilised for specified purpose, but under the control of the Government as per the conditions of the grant. There is no liberty available to the assessee to utilize the amount of interest as per its desire. 6. This Court in more or less under similar circumstances had an occasion to consider the matter in the case of COMMISSIONER OF INCOME TAX AND ANOTHER vs KARNATAKA URBAN INFRASTURCTURE DEVELOPMENT AND FINANCE CORPORATION in its decision reported at (2006)284 ITR 0582 wherein of course, Tribunal had held that it is not an income of the assessee but the revenue was in appeal before this Court. In the said decision, this Court at para 4 observed thus: 4. The mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lised, is parked in a bank. The finding recorded by the Tribunal clearly shows that the entire money in question is received for implementation of the scheme which is for a public purpose and the said scheme is implemented as per the guidelines of the Central Government and, therefore, the assessee is only acting as a nodal agency of Central Government for implementation of these projects. It is not the case of the Revenue that the assessee was carrying on any business or activities of its own while implementing the scheme in question. The unutilised money, during which the project could not be fully implemented, is deposited in a bank to earn interest. That interest earned is also again utilised for the implementation of the mega-city sche ..... X X X X Extracts X X X X X X X X Extracts X X X X
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