TMI Blog2016 (11) TMI 526X X X X Extracts X X X X X X X X Extracts X X X X ..... no reason to interfere with the order of ld. CIT(A). - Decided against revenue - ITA No. 2953/Ahd/2013 - - - Dated:- 19-9-2016 - Shri S.S. Godara, JM, Shri Manish Borad, AM. For The Appellant : Shri Prasoon Kabra, Sr. DR For The Respondent : Shri Sanjay R. Shah., AR ORDER PER Manish Borad, Accountant Member . This appeal by Revenue for Asst. Year 2006-07 is directed against the order of CIT(A)-IV, Baroda, dated 3.9.2013 vide appeal No.CAB/IV-A-274/2011-12. Assessment u/s 143(3) r.w.s. 147 of the IT Act, 1961 (in short the Act) was framed by ACIT, Anand Circle, Anand, on 7.10.2011. Revenue has raised following grounds of appeal :- 1. On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the addition of ₹ 7,28,21,000/- on account of grant received under Sampoorna Gramin Swarojgar Yogna (SGSY) from Government, without appreciating the fact that the assesses started its commercial activities much before the receipt of the aforesaid grant, hence the same ought to be treated as revenue receipt as per Explanation 10 of section 43 of the Act. 2. The appellant craves leave to add to, amend or alter the above grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- The learned AO erred in not appreciating the fact thai grant received was not to be utilized for creating the assets for the appellant and also was not to be used for the business purpose of the appellant and that appellant has not claimed any depreciation on assets created out of the grant. It is submitted that it be so held now. The learned AO also erred in not appreciating the fact that benefits accrued due to implementation of scheme do not remain with the appellant in spite of such facts being brought to the notice of the learned AO and further that on the contrary appellant had to contribute to the project in form of technical services as well as monetary contribution in addition to penalty of 5% if project would not be implemented in time. The learned AO failed to appreciate that purpose of scheme was to provide equipment to SGSY families and to improve upon the socio economy status and community development of villages, First of all it is pertinent to note that question whether it is capital receipt or revenue receipt doesnot arise at all for consideration when the amount is received by the appellant on behalf of third person viz. Central govt. for carrying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w measures. (3)Maintain a special Bank account for the same and also arrange audit of the same from registered CA firm. AH the funds meant for the project will be transferred to this account. Any interest accruing in this account will belong to the project. (4)Act as guarantor for the Bank Loan. (5)Provide required technical know how for this project. (d) Compensation: In order to guarantee success of this project and meet the schedules finalised in the Annual Action plans , DRDA will pay an incentive of 2% of the project cost to AMUL at the end of the project period if all the activities are completed within the time period mentioned in the Action plan. However in case any critical activity is delayed beyond 60 days, Amul will pay a penalty @ 5% of the cost of that activity. In the reason recorded by the AO, he has mentioned that Income of ₹ 728.12 lacs has escaped the assessment for A.Y, 2006-07 . In this regard it is submitted that amount of ₹ 728.12 is not income of the appellant. The appellant had received the amount of ₹ 728.12 for infrastructure development for implementation of SG5Y project on behalf of District ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilization of the grant was enclosed which shows that grant received has been utilized for the purpose of implementation of SGSY project.(Page no.68-69) In this regard, the appellant relies on following decisions: Decision-of Punjabi Haryana High Court in case of CIT v The Punjab State EGovernance Society in which it is held that Grants-tn-aid received from the Government for specific cannot be treated as Voluntary contribution or as taxable income of the society. In M/s. Punjab Energy Development Agency it was held that interest received by the assessee on amount of grant deposited in the bank was also in the nature of grant itself. The copy of decision is attached herewith (Page No. 188 to 192 ). Facts of the above decision are more or less similar to the facts of the present case. 7. We have heard the rival contentions and perused the material on record and gone through the decision. The solitary grievance of the Revenue is against the order of ld. CIT(A) deleting the addition of ₹ 7,28,12,000/- on account of grant of SGSY from the Government. Revenue is also aggrieved that ld. CIT(A) has not appreciated the fact that assessee started its c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are to be specifically used for the attainment of objects as referred in the MOU. Further we observe that similar type of issue came up before Hon. Punjab Haryana High Court in the case of CIT vs. The Punjab State E-Governance Society (supra) dealing with the specified type of grant whether to be treated as revenue receipt or capital receipt. While adjudicating this issue Hon. High Court held as below :- 12. We have considered the rival submissions carefully. The factual matrix on this issue lies in a narrow compass. The assessee has earned interest income on fixed deposits placed in the banks. The FDRs were placed out of the unspent balance of grants received from the Government for a specific purpose. The interest income so earned has been taxed by the Assessing Officer assessable in the hands of the assessee as income from other sources . In this connection, the Commissioner of Income-tax (A) in para 10 of his order, has reproduced clause (xii) of the Terms Conditions governing the grant-in-aid, which reads as under:- The grantee institution should maintain separate audited account for the project. If it is found expedient to *** keep a part or whole of the grant i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the bank was also in the nature of grant itself. 5. In view of the above, the view taken by the Tribunal is consistent with the view already taken by this Court. No substantial question of law arises. The appeal is dismissed. 10. We further observe that ld. CIT(A) has deleted the impugned addition by not treating the grant as revenue received by observing as under :- 3.2.3. I have considered the order of the AO as well as the / submission of the AR. From the details submitted by the appellant during the course of the assessment proceedings and the appellate proceedings, and from the copy of .MOU between the appellant, District Rural Development Agency, Nadiad (DRDA) and Commissioner, Rural Development, Government of Gujarat, Gandhinagar, it is seen that the appellant has received this funds for the specific purposes. As per the MOU, the appellant is required to maintain a special bank account for this purpose and also arrange audit of the same from the registered CA firm. All the funds made for the project has to be transferred to this account. It has also been provided that any interest accrued in this account will belong to the project. The MOU also provides that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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