TMI Blog2019 (12) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... grants of funds to the appellant clearly provides that interest earned on the deposits shall be utilized for cost of the projects by way of adjustment in the last instalment and therefore there was no difference between funds granted by the Government and the interest credited by the bank in the account of the appellant. We find that learned CIT (A) has correctly allowed relief to the assessee and we do not find any infirmity in his order. Expenditure was incurred on social responsibility activities - HELD THAT:- In comparison to the business turnover of the assessee, the amount incurred on community development and welfare is very miniscule amount and has been incurred to encourage a conducive atmosphere in the area of working of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case, the learned CIT(A) is legally justified in deleting addition of interest income of ₹ 64,16,15,379/- by ignoring an admitted fact that the assessee had earned interest on the deposits in its bank account out of funds received by the assessee to be used as its own and the claim of transfer of the interest income to the payer was in contravention to provisions of section 60 of the Income Tax Act(the Act)? 2. Whether in facts and circumstances of the case , The Ld. C'IT(A) is legally justified in deleting addition of interest income of ₹ 64,16,15,379/- by ignoring the fact that the assessee had claimed credit of TDS on the interest income but had not credited the corresponding interest in the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 11,12,14,130/-. The case was selected for scrutiny and notice u/s. 143(2) of the Income-tax Act (in short the Act ) was issued and complied with. The assessment u/s. 143(3) was completed on 24.03.2015 after making disallowances of interest earned on deposit of advances received from Rural Electrification Company (REC) of ₹ 64,16,15,379/- and disallowances of ₹ 5,99,893/- u/s. 37(1) of the Act. On further appeal, the ld. CIT(A) deleted the addition of interest earned on deposit on advances received from REC, however, sustained the disallowance of ₹ 5,99,893/-. Aggrieved, both the assessee and the Revenue are in appeal before the Tribunal, raising the grounds as reproduced above. 5. Before us, the ld. cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of Power, Government of India to Chief Executive Officer of the appellant company as reproduced by learned CIT (A) clarifies those facts. In his order the learned CIT (A) clearly states that interest earned was to be utilized towards cost of project and interest was not to be treated as income of the assessee. The learned CIT (A) has made a finding of fact that all funds received from REC limited for implementation of projects was credited in separate bank accounts of the appellant and interest accrued thereon was also credited in the same bank account. The learned CIT (A) has also made finding of fact that out of total interest earned by assessee interest amounting to ₹ 19,87,59,407/- related to this account. The learned CIT(A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of law. 9. The Hon ble Supreme Court in SLP(Civil) Diary No. (5) 11488/2018 vide order dated 23.04.2018 has also upheld the order of Hon ble High Court. 10. In view of the above, respectfully following the findings of Hon ble Courts, the action of the ld. CIT(A) in deleting the disallowance is upheld. Grounds Nos. 1 2 of the appeal of Revenue are accordingly, dismissed. 11. Ground No. 3, being general in nature, we are not required to adjudicate upon. 12. Regarding the issue and dispute raised in appeal of the assessee, the ld. counsel of the assessee submitted that expenditure of ₹ 5,99,893/- was incurred on social responsibility activities in the area, in which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. In view of the fact, the finding of the ld. CIT(A) that expenditure has not been incurred wholly and exclusively for the purpose of business can not be said to be correct. Further, Explanation-2 to section 37(1) which has prohibited expenditure on corporate social responsibility for claiming u/s. 37(1) has been inserted by the Finance Act No. 2 of 2014 w.e.f. 01.04.2015, which reads as under : Explanation 2.-For the removal of doubts, it is hereby declared that for the purposes of sub-section (1), any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 (18 of 2013) shall not be deemed to be an expenditure incurred b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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