2012 (11) TMI 63 - AT - Income Tax

Pradhanmantri Gram Sadak Yojna - addition of interest on account of unutilized grants - CIT(A) deleted the addition - Held that - As decided in CIT Versus Gujarat Safai Kamdar Vikas Nigam 2011 (5) TMI 815 - GUJARAT HIGH COURT it was a scheme envisaged for implementation of certain Government programmes in particular, to uplift the living condition of manual scavengers and other Safai Kamdars involved in similar activities. Assessee Corporation was not sole trustee, Scheduled Caste Development Board was also liable for implementation of the scheme to be supervised by a Committee headed by the Deputy Minister which included other Government officials, Tribunal committed no error in holding that the grant in question fulfills the requirement of section 11(d)(1) read with section 12(1)thus tax appeal is dismissed - there was a direction contained in the Government circular releasing grant in favour of the assessee thus such amount shall not form corpus of the assessee - in favour of assessee.

Summary

Issues:
- Appeal against two separate orders of CIT(A) for assessment years 2005-06 and 2006-07.
- Whether grants received under "Pradhan Mantri Gram Sadak Yojana" are assessable as income.
- Treatment of interest on unutilized grants as income.

Analysis:
1. Assessment Year 2005-06:
- The revenue appealed against the CIT(A)'s decision regarding grants received under "Pradhan Mantri Gram Sadak Yojana" not being assessable income.
- The CIT(A) noted the trust's registration under various acts and the nature of funds received under the scheme.
- The revenue argued against allowing the claim based on a Supreme Court judgment.
- The AR supported the CIT(A) with reference to a tribunal decision and subsequent confirmations by the High Court and Supreme Court.
- The CIT(A) decision was in favor of the assessee, citing the specific purpose of the grants and the treatment of interest on unutilized grants.
- The tribunal found the CIT(A)'s decision in line with previous judgments and dismissed the revenue's appeal.

2. Assessment Year 2006-07:
- The revenue contested the CIT(A)'s ruling on grants received under the same scheme and interest on unutilized grants.
- The bench highlighted that the assessed income remained nil even after additions due to the allowance under section 11 of the Income Tax Act.
- The bench considered the revenue's appeal as of academic interest only, as the assessed income remained unaffected.
- Consequently, the appeal was dismissed due to its academic nature.

3. Combined Result:
- Both appeals by the revenue were dismissed, affirming the decisions of the CIT(A) for both assessment years.
- The orders were pronounced in open court, concluding the proceedings.

This detailed analysis outlines the issues, arguments, and decisions made by the authorities in the legal judgment concerning the assessment years 2005-06 and 2006-07, specifically focusing on the treatment of grants received under the "Pradhan Mantri Gram Sadak Yojana" and interest on unutilized grants.