TMI Blog2018 (8) TMI 654X X X X Extracts X X X X X X X X Extracts X X X X ..... sue raised in both the appeals are similar and identical in facts. Therefore, taking into consideration the submissions and with the consent of both the parties, we proceed to dispose of the same by a consolidated order for the sake of convenience. ITA No. 2361/Kol/2016 A.Y 2012-13 by the assesse 3. Amongst grounds of appeal, the only effective ground emanates i.e confirmation of addition made on account of TSS Grant in the facts and circumstances of the case. 4. The ld. AR further submits that the issue involved in both the appeals of assesse are covered by the order dt. 17-11-2017 of the Co-ordinate Bench of ITAT, Kolkata in assessee s own case for the A.Ys 2009-10 2010-11 and referred to paras 8 to 18 of the said order. 5. On the other hand, the ld. DR did controvert the above submissions of the ld.AR. 6. Heard rival submissions and perused the record. We find that the issue raised in both the appeals of assesse are covered by the order dt. 17-11-2017 in assessee s own case for A.Ys 09-10 10-11. Relevant portion of which is reproduced herein below:- 8. We have heard the submissions of the ld. Counsel for the assessee and the Learned DR. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure development like commissioning of Homogenizer, erection of LPD Bulk Milk Cooler, purchase of laboratory equipment, Cost of DG set etc. He submitted that state wide network of milk production and distribution calls for constant development of robust infrastructure and the co-operatives are not capable of achieving the same unless a financial support for the same is regularly received. It was the policy of the Government to make it available through this modus operandi. The Ld. CIT(A) had placed too much emphasis on the form rather than the substance and the purpose of the Grant. 12. The Ld. DR however contended that the assessee was constituted for the purpose of making profits from manufacture, distribution of sale of milk and milk products. The amounts received though it was for improvement of infrastructure was in the course of business and therefore assumes the character of income. A query was raised by the Bench as to whether the money spent by the assessee for the purpose of TSS is claimed as an expenditure and whether the entire fund is brought to tax without considering the money spent for the purpose of envisage by TSS. It was agreed by the parties that the expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in this regard relied on certain judicial pronouncements which are to the effect that if the subsidy is for the purpose of brining into existence a capital asset or for establishing a new industry, it should be regarded as capital receipt not chargeable to tax. According to him contributions to TSS were made for meeting capital expenditure and therefore the receipt in question should be regarded as capital receipt not chargeable to tax. We are of the view that the receipt in question cannot be regarded as subsidy in the sense it was a voluntary contribution by Mother Diary and others. We have already seen that in the resolution dated 21.7.1998, it was resolved that the Assesssee, Mother Diary (out of the entire amount earmarked for infrastructure development of the Unions) and State Government (out of the amount payable by the Assessee to the State Government as dividend on its share capital) would contribute to a Fund called TSS. The various milk unions were also free to contribute to TSS. The fund so created was to be used only for infrastructure development of the Unions. It was also resolved that a task force headed by principal secretary, ARDD would examine proposals for uti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount in form of dominion and right to use the said amount. We find support for our conclusions as above from a decision of the Hon ble Delhi High court in the case of CIT Vs. DTTDC in ITA Nos. 166/2001, 161/2004 320/2004 ITR Nos. 30 - 33/1997 dated 20th March, 2012. The facts of the aforesaid case are identical to the facts of the case of the Assessee in the present appeal. The Assessee in the case before the Hon ble Delhi High Court was a Government Company established by the Government of NCT of Delhi. In a meeting held on 24th April, 1989, it was observed that the Articles of Association and objectives of the assessee should be expanded to include investments in transport infrastructure particularly bridges, grade separators, underpasses and pedestrian cross, over bridges or sub-ways. It was also noticed that there was substantial shortage of funds being faced for creation of the said infrastructure in Delhi. There was a need to establish separate mechanism whereby resources, apart from the plan resources, were tapped and a major programme mounted. Retail trade in country liquor and 50 degree U.P. Rum was then undertaken by Excise Department, Delhi Administration. It was dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the character of revenue receipts includable in the taxable income. The focus has to be into the true nature, character and purpose of realization. The amounts which are held as deposits and have to be returned at a specified point of time or happening of specified contingency, which is not otherwise uncertain; which are treated as someone's else money and when the assessee does not have unfettered dominion over the money, are good indicators not to categorize as the receipt as income. The Supreme Court expounded that the following questions should be raised and answered: (1) Do the receipts bear a character of income at the time it reached the hands of the assessee? (2) Does the title in the receipt vest with the assessee? (3) Does the assessee exercise complete dominion over the funds in question? (4) Does the assessee regarded the money as that of a third party or treat the money of that of a third party, with assessee having no unfettered dominion over the same? (5) Does the assessee stand in the position of debtor in relation to those funds/deposits? (6) What is the primary purpose of collection of said amount? 33. It was elucidated and explained in S. Shahak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... negative, the court pointed out that it is the true nature and quality of the receipt that is material but not the head under which it is entered in the account books-- a principle which is reiterated in a catena of decisions. The court then went on to conclude that the receipts by way of deductions from the purchase price were not in the nature of deposits. In this context, the reasoning of the Bench may be noticed (page 330 of [1988] 172 ITR) : The essence of a deposit is that there must be a liability to return it to the party by whom or on whose behalf it is made on the fulfilment of certain conditions. Under the unamended bye-law, the amounts deducted from the price and credited to the said fund were first liable to be used in adjusting the losses of the respondentsociety in the working year; thereafter in the repayment of initial loan from the Industrial Finance Corporation of India and then for redeeming the Government share and only in the event of any balance being left, it was liable to be converted to share capital. The primary purpose for which the deposits were liable to be used were not to issue shares to the members from whose amounts the deductions were ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecifying the details of expenditure proposed to be incurred from out of the area development fund. They should obtain the sanction of the Director of Sugar for incurring such expenditure. Such information is also required to be placed before the general body of the society and the approval to be obtained from the general body. On June 21, 1988, the Agriculture and Co-operation Department of the Government of Maharashtra framed certain directive principles laying down the modalities of utilization of Area Development Funds. The said order was issued in exercise of the power under section 79A of the Maharashtra State Co-operative Societies Act. This order passed during the middle of the last assessment year relevant to these appeals gives statutory basis for the already existing practice. It is difficult to equate this fund to the other categories of funds, as has been done by the Tribunal and affirmed by the High Court. Unlike the other funds like Chief Minister's Relief Fund, the amount collected towards Area Development Fund is retained by the sugar factory itself and utilized as per the guide lines issued by the Government or the National Co-operatives Development Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi High Court set out above. We are also of the view that in the present case, if the receipt in question is held as income, then the corresponding money spent by the Assessee from TSS have to be regarded as expense (though they might have been laid out for meeting capital expenditure) and only the net receipt can be brought to tax. Since all these aspects have not been examined by the revenue authorities, we deem it fit and proper to set aside the order of the CIT(A) and remand for fresh consideration by the AO, the question whether the receipt in question has to be regarded as income of the Assessee or not. The AO will afford opportunity of being heard to the Assessee before deciding the issue. 7. In the light of aforementioned order of Co-ordinate Bench, ITAT, Kolkata in assessee s own case, it is noted that this Tribunal has relied on a decision of the Hon ble High Court of Delhi in the case of CIT vs. DTTDC in ITA Nos. 166/2001, 161/2004 320/2004 ITA Nos. 3-33/1997 dt. 20-03-2012 and in view of the same, remanded the issue to the file of AO for fresh consideration in terms of finding of the Hon ble High Court of Delhi in the case of supra. Respectfully following t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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