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TMI Blog2024 (6) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Ld. CIT(A)/NFAC in so far as it is prejudicial to the interest of the Revenue is opposed to law and the fact and circumstances of the case. 2. Whether on the facts and circumstances of the case, the Ld. CIT/ANFAC was justified in giving relief to the assessee on the ground of addition made on interest received on FDs of Rs. 14,38,03.521/- by relying on the decision of Hon'ble High Court of Karnataka in the case of CIT vs M/s Kamataka State Agricultural Produce processing and Export Corporation Ltd. for the A.Y. 2008-09, which is not accepted by the Department and further appeal is pending as SLP before the Hon'ble Supreme Court. 3. On the facts and circumstances of the case, the Ld. CIT(A)/NFAC ought to have apprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t may be urged." 3. The brief facts of the case are that the assessee is a Government of Karnataka undertaking and they are the nodal agency for the government to propagate the non-conventional energy sources, i.e. solar and wind mill energy by setting up/helping to set up wind mills and solar power plants. The respondent assessee commenced its operation of business from 1996. During the course of their activity the assessee had received grants from the government and after spending the grants, the unutilised grants available with them was deposited in the banks by way of fixed deposits and the interest income received from the deposits were credited into the grant account which was not offered to tax as income. Similarly the assessee also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is pending for consideration and therefore the interest received on the unutilised grants are income under the provisions of the Act. The learned D.R. further submitted that the expenditure has been incurred by the assessee for setting up the Karnataka Visveswaraya Solar Award, which is an onetime expenditure and therefore the same is in capital nature and not an eligible expenditure. 5. The learned A.R. of the assessee submitted that the interest received out of the unutilised grants is also a government grant and therefore not to be treated as income under the provisions of the Act. The learned A.R. further submitted that the main objective of the assessee is to promote the nonconventional energy sources and in order to furtherance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Bang/2019 has dismissed the appeal of revenue. Further, the Hon'ble ITAT has decided similar issue in favour of the appellant for A.Y. 2015- 16, 2017-18 and 2018- 19 vide order dated 31.07.2023 in ITA No.387/396/397/Bangalore/2023. Considering that there is no change in the facts, circumstances and nature of interest earned during the year under consideration as compared to the AY 2014- 15,2015-16, 2017-18 and 2018-19, respectfully following the decision of the jurisdictional Tribunal in appellant's own case as mentioned above, it is held that the interest earned on parking of unutilized grant in aid in bank as fixed deposit is not the income of the appellant but is part of the grant in aid. The addition of Rs. 14,38,03,521/- is ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional Solar Alliance(ISA) for setting up Karnataka Visveswaraya Solar Award and has claimed the same as revenue expenditure for the year under consideration. However, the AO has treated the said expenditure as Capital Revenue and has disallowed the same. The appellant has claimed that the said payment was paid to the International Solar Alliance as per the direction of the Government of Karnataka in sponsoring the award namely "Karnataka Visvesvaraya Solar Award". The first issue here is that whether the said expense is for business purpose or not. On perusal of the memorandum and articles of the appellant, it is seen that giving of awards, prizes etc. is one of the ancillary object of the company. Considering the statuary obligation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Weaving Mills Ltd. 11. The above said view of the learned CIT(A) was also approved by the coordinate bench of this Tribunal in its order in ITA Nos. 387, 396 & 397/Bang/2023 dated 31.07.2023, in the Respondent's case, wherein it was held as under: - "18. We have heard the rival submissions and perused the material on record. It is an admitted fact that the assessee is into the core activity of propagating renewable energy programmes since March, 1996, and is a nodal agency of Government of Karnataka. In propagation of renewable energy, the assessee had incurred expenditure for publishing advertisement in newspaper for popularization of renewable energy. The CIT(A), after going through the Board's approval for incurring the expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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