TMI Blog2018 (6) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... A) does not require any modification. Nothing was placed on record to counter the findings of CIT(A) both on facts and on law. In the result, all the Revenue appeals are dismissed. - ITA No. 366/Hyd/18, 367/Hyd/18, 368/Hyd/18, 369/Hyd/18, 370/Hyd/18, 371/Hyd/18 And ITA No. 372/Hyd/18, C.O. No.09/Hyd/18, 10/Hyd/18, 11/Hyd/18, 12/Hyd/18, 13/Hyd/18, 14/Hyd/18 And C.O. No. 15/Hyd/18 - - - Dated:- 13-6-2018 - SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER For The Revenue : Shri R. Laxman, DR For The Assessee : Shri M. Chandramouleswara Rao, AR ORDER PER BENCH : These are seven appeals by Revenue from AYs. 2008-09 to 2013-14 and cross-objections by assessee. The Ld.CIT(A) has passed common ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,26,87,93,701 * u/s 147. Noticing that assessee has received ₹ 2516.90 Crores from 16 LI Schemes and also noticing that assessee has kept the amounts in Fixed Deposits and earned interest thereon, AO asked assessee to explain why the said interest cannot be brought to tax as accrued income of assessee. Assessee contended that the amounts are special grants in the nature of capital grants and they are deposited in a separate bank account and the State Government directed the assesseecompany to utilize any interest earned/accrued on such deposit in un-utilised grant funds only towards implementation of LIS projects and by various communications, the Government has directed to render account for such interest and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment of A.P. dated 21/10/2011 through which the Secretary directed the Appellant Company to remit to Government Account the amount of interest accrued on deposits. The Appellant Company is a State Government Public Sector Undertaking and is bound to follow the Government directions in Toto . 3.1. Assessee has relied on the judicial principles also as under: i. Tax Appeal No. 855 of 2013 in the case of Commissioner of Income Tax-II V/s. SAR Infracon P Ltd.,; ii. Gujarat Municipal Finance Board V/s. Dy. CIT reported in (1996) 318 ITR 317; iii. Gujarat Power Corporation Limited V/s. Income Tax Officer reported in (2013) 354 ITR 201 (Guj.); iv. Karnataka Urban Infrastructure Development and Finance Corporation 150 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was discussed in the 74th Board Meeting of the Company on 28-06-2008 while finalizing the accounts for Asst. Year 2008-09. The same is represented by the Directors representing GoAP also. The funds are given as Grants for Lift Irrigation works and are capital grants in nature. The assessee relied on the ratio laid down in the following cases to contend that interest earned on deposits made from Specific or Tagged Grants can not be taxed as revenue receipt. 1. Tax Appeal No.855 of 2013 in the case of Commissioner of Income Tax-II V/s. SAR Infracon P Ltd. 2. Gujarat Municipal Finance Board V/s. Dy. CIT reported in (1996) 318 ITR 317. 3. Gujarat Power Corporation Limited V/s. Income tax Officer reported in (2013) 354 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount is kept in fixed deposits. The same are not mixed with other funds of the assessee. iv) The 'treatment' to be given to the interest earned on deposits is being discussed in the Board meetings of the assessee Company which is a State Government undertaking. The Board has nominees of the State Government. The implicit consent/ direction of the GoAP can be inferred from the decisions in the Board Meeting. This is contemporaneous record dating back to 28-06- 2008. v) There is no finding that the interest was used for any purpose other than for the Lift Irrigation works for which capital grants are given by GoAP. vi) The above funds are given by the GoAP as Grants-in-Aid for the specific projects (electrical works) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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