9911796707
TMI Blog2019 (2) TMI 2093X X X X Extracts X X X X X X X X Extracts X X X X ..... d in doing taxing of interest on those funds which are not owned by appellant and kept as custodial of those funds for GOR/GOI, may please be deleted. 2. That Ld. AO has erred in not properly appreciating facts of the case and erroneously holding the appellant company as Commercial concern whereas appellant is a Government Company. Thus finding of Ld. AO may please be declared as erroneous finding." 2. Ground no. 1 is regarding the addition made on account of interest on FDRs by treading the same income of the assessee. The assessee company is a State Government Company and whose entire share capital is being held through Governor of Rajasthan and is working as Nodal Agency for implementation of various Central/State Government Schemes for which funds are provided by Central/State Government. The assessee is disbursing the funds for implementation of various welfare schemes i.e. Atal Mission for Rejuvetion and Urban Transformation (AMRUT), Rajeev Avas Yojna (RAY), Jawahar Lal Nehru National Urban Renewal Mission (JNNURM) and various other schemes for the welfare of State. During the course of assessment proceedings, the AO noted that as per 26AS the assessee received Rs. 4,80, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o any of the State urban local bodies and NGOs (Non-Government Organizations) for the social welfare, development works, commercial activities and other works related directly or indirectly with the objects of these agencies and bodies. (3A) To deploy funds/reverses /share capital towards Rajasthan Urban Development Fund and/or any other development funds or other funds as may be created, setup and directed by the Government of Rajasthan and/or any Department/body/authority/undertaking or the case may be, as grant/contribution/investment and/or as directed by State Government." (8A)To work as Nodal Agency for and/or on behalf of the Government of Rajasthan and/or any Department /Body/Authority/Undertaking owned and controlled by the Government of Rajasthan for maintaining, monitoring, managing or to carry all/or any activity related to and in respect to the Rajasthan Urban Development Fund and/or any other development funds or other funds as may be created, setup and directed by the Government of Rajasthan and/or any Department /Body/Authority/Undertaking or the case may, for this purpose of infrastructure, housing and/ or any developmental activities related or incidental or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment institutions for the above; f) to identify, develop, produce, propagate and sell cost effective building components, based on the Research and Development findings; g) to develop new innovative planning method for the economical use of available land; h) to develop alternative building materials to wood for ecological balance and to use waste materials as building material through Research and Development efforts and put up such production plants; to propagate and sell the same." 3.1 Thus, he has submitted that the object of the company is to create and maintain a fund for the development of infrastructural assets on a continuing basis and channelize them to the objects of the Centrally sponsored scheme of infrastructural development, welfare of nation/ state in accordance with its objects. Generally there remains a time leg in between of receipt of funds and direction for getting them disbursed to various DLB/ULB's and till then these funds are parked with the bank so that it will not lose interest and further this interest component is further to be implemented/ applied for and in accordance with guidelines of scheme. It is also clarified that appellant i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d cannot be treated as income of the assessee but the same is forming part of the particular fund to be allocated to the project. In support of his contention, he has relied upon the decision of Hon'ble Karnataka High Court in case of CIT & Anr. Vs. Karnataka Urban Infrastructure Development & Finance Corporation 315 ITR 301, decision of Hon'ble Gujarat High Court in case of Gujarat Power Corporation vs. ITO 354 ITR 201 and decision of Coordinate Bench of this Tribunal in case of Rajasthan Avas Vikas & Infrastructure Ltd. vs. DCIT dated 18.03.2016 in ITA No. 247 & 248/JP/2014. 4. On the other hand, ld. DR has relied on the orders of the authorities below and submitted that once the assessee is taking the credit of the TDS deducted on the said interest then, the income on account of interest will be assessed in the hands of the assessee. Further, the interest was earned and received by the assessee and it is not a case of diversion of income before it has reached to the assessee, therefore, once the assessee has earned and received the interest then subsequent use of the said amount will not change the character from assessable income to no income. The ld. DR has submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the interest if any earned in the mean time would not belong to the assessee but it will be forming part of the fund itself which is meant for a particular scheme(s) or project(s). The assessee has been showing the interest as liabilities and give the treatment to the said interest as the fund itself being liability in the balance sheet. The Hon'ble Karnataka High Court in case of CIT & Anr. Vs. Karnataka Urban Infrastructure Development & Finance Corporation (supra) while considering the issue of interest income brought to tax has held in paras 6 to 8 as under:- "6. We have no doubt in our mind that the said judgment squarely covers the issue involved in this appeal. It has been held by the Division Bench of this court in the aforesaid judgment in the relevant paragraph as under (page 584) : "The material on record shows that the very purpose of constitution of the assessee was to act as a nodal agency for implementation of the mega city scheme worked out by the Planning Commission. Both the Central and the State Governments are expected to provide requisite finances for implementation of the said project. The funds from the Central and State Governments will flow directly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side the order of the Assessing Officer which is affirmed by the first appellate authority. The finding given by the Tribunal is purely a question of fact. We do not find any substantial question of law involved in this appeal and, therefore, this appeal is liable to be dismissed at the stage of admission itself." In the light of the aforesaid findings recorded by the Division Bench of this court, we are of the considered opinion that there is no merit or sub stance in this appeal. No substantial question of law arises to be answered by this court. Thus, the appeal is hereby dismissed. 7. As observed supra, Explanation 3C has now in clear terms provided that 7 such conversion of interest amount into loan shall not be deemed to be regarded as "actually paid" amount within the meaning of section 43B. In view of clear legislative mandate removing this doubt and making the intention of the legislature clear in relation to such transaction, it is not now necessary for his court to interpret the unamended section 43B in detail, nor it is necessary for this court to take note of facts in detail is also the submissions urged in support of various contentions except to place reliance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) Any sum referred to in sub-section (1A) of section 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made. (3) The Board may, for the purposes of giving credit in respect of tax deducted or tax paid in terms of the provisions of this Chapter, make such rules as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub-section (1) and sub-section (2) and also the assessment year for which such credit may be given." 7. The revenue relies on the phrase "shall be treated as a payment of tax on behalf of the person from whose income the deduction was made" to contend that the assessee's TDS claim cannot be based on the receipts of M/s REPL. However, the assessee fairly admitted throughout the proceedings for its TDS claim of Rs. 1,20,73,097/- that the benefit of such claim has not been availed by M/s. REPL. Therefore, the revenue, having assessed M/s REPL's income in respect to such TDS claim cannot now deny the assessee's claim on the mere technical ground that the income in respect of the said TDS claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bank on the interest accrued on the FDRs. In our view, the Revenue is taking the hyper technical plea of not returning the TDS to the assessee on the pretext that the amount has been deposited with the bank on behalf of State of Rajasthan. Since the State of Rajasthan is not a taxable entity, therefore, refund of TDS cannot be given to the State of Rajasthan. It is not disputed that the assessee after realizing the interest income from the bank has given back the amount to the State of Rajasthan . Similarly it is also undisputed that the refund of TDS has not been claimed by the State of Rajasthan and is only claimed by the Assessee being the nodal agency of the State of Rajasthan for this project . In our view, no prejudice will be caused to any person if the TDS is refunded to the assessee being the nodal agency with the undertaking to return the amount to the State of Rajasthan Avas Vikas & Infrastructure Ltd. Vs. DCIT Rajasthan. In view of thereof and also in view of the judgment referred hereinabove, the TDS deducted by the Income Tax Department is directed to be paid to the assessee and we accordingly hold the same. In this view of the matter, the appeal of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of the assessee that the interest income accrued on the FDRs was not taxable. The assessee has submitted that the assessee is entitled to the refund of entire amount of Rs. 45,02,798 in the assessment year 2009-10. In the context of above facts, the Coordinate Bench relied on the decision of Hon'ble Delhi High Court in case of CIT vs. Relcom (2015) 234 Taxman 693 (Delhi) and its relevant findings are as under:- "In the present case the amount was deposited as FDR's by the assessee on behalf of State of Rajasthan with the Bank of Rajasthan and on the FDR's deposit the interest has been accrued. The TDS was deducted by the Bank on the interest accrued on the FDRs. In our view, the Revenue is taking the hyper technical plea of not returning the TDS to the assessee on the pretext that the amount has been deposited with the bank on behalf of State of Rajasthan. Since the State of Rajasthan is not a taxable entity, therefore, refund of TDS cannot be given to the State of Rajasthan. It is not disputed that the assessee after realizing the interest income from the bank has given back the amount to the State of Rajasthan. Similarly it is also undisputed that the refund of TDS has ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
