TMI Blog2024 (1) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, this addition must be deleted. R R Disaster Relief - The assessee is CSR arm of THDCIL and holds these funds as liability. It cannot use these funds for its own aims and objectives. The ld. CIT(A) held that the AO does not appear to have appreciated this point and made this addition stating that these funds should have been transferred to the income expenditure account and accounts should have been maintained separately. Since, the assessee is not allowed to use these funds for its own aims and objectives, it is not reasonable to expect it to route through its income expenditure account. This is a peculiar fact which needs to be appreciated in the context in which the assessee has handled these funds. Therefore, the assessee's action of taking this amount directly to its balance sheet is correct. CIT(A) further held that the assessee has to return these funds to the agency/PSU/Department who have contributed to the funds. The letters from the Chairman DVC and minutes of meetings for implementing reconstruction and rehabilitation (R R) efforts by PSUs that shows clearly that the assessee merely holds these funds on behalf of these participating agencies and can spend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustainable in law and nonest in law and subsequent notices issued under section 143(2) dated 19.04.2017 and 21.07.2017 are barred by limitation, therefore, the impugned assessment order against the time barred notice is illegal, unsustainable in law, void-ab-initio and liable to be quashed. c) That neither any Show Cause was given to the assessee for transfer the case from I.T.O.-1(4)(2), Rishikesh to Dy. C.I.T. (Exemption Circle), Ghaziabad nor any order under section 127 of the Income Tax Act, 1961 was passed in this regard, therefore, the Impugned assessment order is illegal, void-ab-initio and liable to be quashed. d) That the case was converted from limited scrutiny to complete scrutiny in contravention to the C.B.D.T. Circular, therefore, the impugned assessment is unsustainable in law and the addition/disallowance made therein are liable to be deleted. 4. The society is engaged in developing and welfare of public in general of whole country and particularly population of catchments area operational rehabilitation area of THDCL project. The Society is registered u/s 12AA and 80G and enjoying exemption under the I.T Act, 1961. The Assessing Officer enquired about the fund of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs.4,59,43,344/-. Out of this excess over expenditure during the year under consideration for the year under consideration an amount of Rs. 1,50,00,000/-was set apart and accumulated under section 11(2) of Income Tax Act, 1961 and appropriate Notice on form 10 and copy of resolution of management dated 26/06/2015 was submitted to the department on 11/08/2015. Copy of form 10 alongwith management committee resolution is enclosed at P.B. No 33-34 Therefore, the amount of Rs. 1,50,00,000/- was set apart accumulated from the excess of income over expenditure i.e. surplus of the year under consideration and again including the said amount in the Income will result in DOUBLE BOOKING/ACCOUNTING of same income. 13. After going through the submissions, the ld. CIT(A) held that the issue relevant to this assessment year arose after the Uttarakhand floods. Under the chairmanship of Ministry of State for Power, Senior Officers and CMDs of PSUs, all the PSUs and department agree to make a contribution of Rs. 25 crores to rebuild the state of Uttarakhand. It was decided that the project selected for funding the society would be decided in consultation with the State Government and would be as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Senior Officers and CMDs of Power Sector PSUs in which all the PSUs/Department agreed to make a contribution of Rs.25.00 crore to rebuilding the state of Uttarakhand. It was decided that the project selected for funding the society would be decided in consultation with the State Government and would be as per needs of the State Government. It was further decided to nominate THDCIL as Nodal Agency. Copy of the said letter dated 08.07.2013 is enclosed at Paper Book No 35. Again a meeting was held on 26.07.2013 for implementing/rehabilitation (R R) efforts by Public Sector Undertaking in the Power Sector was held under the ages of National Disastrous Management Authority, Govt. of India and it was decided that Power Sector undertakings will contribute Rs.25.00 Crores for Disastrous R R in Uttarakhand as under: (a) NTPC 10.00 Cr (b) Power Grid Corporation 5.00 Cr (c) Power Finance Corporation 3.00 Cr (d) Rural electrification Corporation 2.00 Cr (e) THDC India Limited 1.00 Cr (f) NHPC 1.00 Cr (g) DVC 1.00 Cr (h) NEEPCO 1.00 Cr (i) SJVN 1.00 Cr Several other decisions were also taken in the said meeting some of which are summarized as under: 1. THDCIL was nominated as Nodal Agency t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of core committee meeting held on 24.07.2014. [PB-44-53]. From the facts and circumstances of the case, it is clear that all the funds received for R R activities in the state of Uttarakhand were never owned by the appellant society, these were disbursed on the directions of the core committee of Public Sector undertaking and THDCIL India Ltd. (Nodal Agency) appointed by the Central Government and after the activities, the balance was to be refunded back to the respective Public Sector Undertakings. M/s. Sewa THDCIL was merely facilitator for opening the Saving Bank Account for this purpose, therefore, on the basis of principles of divergence of income at source by over riding title, the amount received for R R activities in the state of Uttarakhand i.e. R R funds was not the income of the appellant and hence not to be included in the income and expenditure account for this reason the said amount is outstanding as on 31.03.2015 was shown on the liability side of the Balance Sheet for Sewa THDC i.e. for appellant. Reliance in this regard is placed on the following Judgments: 1. Judgment of Hon'ble Allahabad High Court in the case of U.P. Bhoomi Sudhar Nigam Vs. CIT [2006] 280 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngh Dudhuria's case (supra) and rather falls within the rule stated by the Judicial Committee in P.C. Mullick's case (supra)... On the facts and circumstances of the case, it is humbly prayed that the addition made by the Ld. A.O. Amounting to Rs. 3,31,57,338/- in relation to R R Funds may kindly be deleted. 17. After going through the submissions, the ld. CIT(A) held that the amount that the THDCIL received as a nodal agency for rebuilding of the State of Uttarakhand for the calamitous floods. The assessee is CSR arm of THDCIL and holds these funds as liability. It cannot use these funds for its own aims and objectives. The ld. CIT(A) held that the AO does not appear to have appreciated this point and made this addition stating that these funds should have been transferred to the income expenditure account and accounts should have been maintained separately. Since, the assessee is not allowed to use these funds for its own aims and objectives, it is not reasonable to expect it to route through its income expenditure account. This is a peculiar fact which needs to be appreciated in the context in which the assessee has handled these funds. Therefore, the assessee's acti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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