2018 (8) TMI 654 - AT - Income Tax

Additions on account of TSS Grant - capital receipt and not in the nature of income - Held that - if the receipt in question is held as income then the corresponding money spent by the Assessee from TSS have to be regarded as expense (though they might have been laid out for meeting capital expenditure) and only the net receipt can be brought to tax. - Since all these aspects have not been examined by the revenue authorities matter remanded back.

Summary

Issues Involved:
1. Confirmation of addition made on account of TSS Grant.
2. Confirmation of addition made on account of interest under Section 244A.

Issue-wise Detailed Analysis:

1. Confirmation of Addition Made on Account of TSS Grant:

The primary issue in both appeals was the confirmation of addition made on account of TSS Grant. The appellant argued that the TSS Grant should not be treated as income. The appellant's counsel referenced a previous ITAT Kolkata order dated 17-11-2017, which dealt with similar contributions in the appellant's own case for the assessment years 2009-10 and 2010-11. The counsel contended that the contributions from Mother Dairy and others were capital receipts and not income, as they were meant for infrastructure development under governmental guidelines.

The Tribunal examined the accounting treatment of the TSS in the appellant's books, noting that the TSS fund was shown as a liability under the head "deposits receipt," indicating that the appellant treated the amount as a burdened receipt meant for a specific purpose rather than as income. The Tribunal also considered the nature of the contributions and the specific purposes for which the funds were spent, such as infrastructure development.

The Tribunal referenced the Delhi High Court's decision in the case of CIT vs. DTTDC, which emphasized that not all receipts are income; the nature and purpose of the receipt must be considered. The Tribunal concluded that the receipt in question must be tested against the criteria set out in the Delhi High Court's decision. Consequently, the Tribunal remanded the issue to the Assessing Officer (AO) for fresh consideration, directing the AO to examine whether the receipt should be regarded as income and to account for the corresponding expenses if it is deemed income.

2. Confirmation of Addition Made on Account of Interest Under Section 244A:

The second issue related to the addition made on account of interest under Section 244A. The Tribunal found this issue to be consequential in nature and did not require separate adjudication. The ground was allowed for statistical purposes.

Conclusion:

In conclusion, both appeals were allowed for statistical purposes. The Tribunal remanded the primary issue of the TSS Grant back to the AO for fresh consideration, aligning with the previous ITAT order and the Delhi High Court's decision in CIT vs. DTTDC. The issue regarding interest under Section 244A was deemed consequential and did not require further adjudication. The Tribunal's order was pronounced in open court on 08-08-2018.