9911796707
TMI Blog1981 (10) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... ount stands as "Fairs and Exhibition Fund" in the assessee's balance sheet for the year ending 31-3-1974 and Note No. 6 annexed to the balance-sheet explains : "Fairs and exhibition fund represents the special ad hoc grant given to the Corporation by Government for setting up a permanent exhibition wing and for utilising the funds as rolling capital towards organising tourism-oriented exhibition and fairs as per G.O.Ms. No. 1070 Public (Tourism) Department dated 28-3-1974." Directors' Report under the heading "Other activities" reads: "During the year under report, the Corporation has successfully undertaken the stupendous task of conducting a Trade Fair with the co-operation of State Government in January 1974 and from this venture, a net profit of Rs, 1.61 lakhs has been realised. As the gesture of appreciation of the results achieved, the Government have converted the refundable advance of Rs. 5 lakhs given to the Corporation to an outright grant to conduct exhibition in future." G.O.Ms.No, 1070 Public (Tourism) Department dated 28-3-1974 referred to in the note to balance-sheet is reproduced below: "In the G.O. third read above the Government sanctioned a sum of Rs. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ootacamund, Kanyakumari and Tiruchirapalli. 3. Sanction is accorded for the grant of Rs. 10 lakhs towards the expenditure, for conducting the Pongal Tourist Festival during 1974, as indicated broadly in the annexure to this order by the Tamil Nadu Tourism Development Corporation. The details of the programme will be worked out by the Tamil Nadu Tourism Development Corporation in consultation with the Government in Public (Tourism) Department. The items of the expenditure will be decided by the Tamil Nadu Tourism Development Corporation under the advice of the Finance Secretary who is also a member of the Board of Directors of the Corporation. 4. The Managing Director, Tamil Nadu Tourism Development Corporation and the Additional Secretary to Government Public (Tourism) Department is authorised to draw the 1st instalment grant of Rs. 5 lakhs in advance from the total grant sanctioned in paragraph 3 above for advance planning and publicity by the Tamil Nadu Tourism Development Corporation. The Government direct that the need for releasing the rest of Rs. 5 lakhs may be considered in October 1973, and orders issued. 5. The above grant is sanctioned subject to the following condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had offered Rs. 1.61 lakhs as profits of Exhibition and Trade Fair at Madras mainly out of gate-collections and stall rents and also relatively minor collections for entertainment, recoveries for electricity charges, sales of materials after the fair was over, etc. Expenditure related to cost of construction of stalls, electricity charges, advertisement expenses, salaries, etc. He noticed that the amount of grant was not utilised for acquiring any capital assets and that it was made to meet the assessee's expenditure. All the three G.Os. according to him related to a waiver of a refundable advance to meet revenue expenses and, therefore, constituted revenue receipt. 5. Before the Commissioner (Appeals), it was the assessee's case that the assessee merely undertook to conduct the Pongal Festival on behalf of the Government and was entrusted with Rs. 5 lakhs to spend on behalf of the Government as is evident from the G.O. dated 10-7-1973. It was later that the idea of conducting a Tourist Fair arose. It was made clear in the second G.O. dated 30-11-1973, while communicating the new development, that the funds sanctioned in the first G.O. will be refunded out of profits and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the State Government. Actually all that the assessee was called upon to do was to decide upon items of expenditure under the advice of the Finance Secretary for celebration of the week in Madras city, Madurai, Ootacamund, Kanyakumari and Tiruchirapalli. Celebrating Pongal Festival was not the assessee's business and expenditure thereon was not the assessee's expenditure and much less the assessee's business expenditure. The grant contemplated by the First G.O. had nothing to do with the running of a Trade Fair whose receipts were trading receipts, the surplus of which has been offered for tax. There is a mix-up in the minds of the authorities as between the duty of running of the Trade Fair entrusted to the assessee by second G.O. dated 30-11-1973 and the grant by the first G.O. dated 10-7-1973 of moneys for meeting the expenditure on celebration of Pongal week. This mix-up is responsible, in our view, for the wrong inference drawn by the authorities. It is only because the first G.O. contemplated that the expenditure on celebration of Pongal is by the Government that it was made subject to Government Audit and return of any moneys left over. 9. It is G.O.No. 3147 dated 30-11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5 lakhs were actually later converted as "refundable advance" for conducting a Trade Fair which actually became the assessee's business. But a loan to enable assessee to meet the assessee's expenses can never become income. If it does, all loan by banks to traders as working capital would be income. Such a proposition is certainly absurd. When the Government waived its right to repayment, the loan does not get converted into revenue receipt. It is a capital accretion especially when such conclusion is under terms that it should be treated as a capital fund for setting a permanent exhibition wing. Hence, we find that a proper reading of the G.Os., balance sheet and directors' report could not give rise to an inference that what was received was only to meet the assessee's business expenditure by way of reimbursement as wrongly assumed by the authorities. 10. To sum up, we find that the amount of Rs. 5 lakhs was given to the assessee as capital fund. Even earlier it was only a loan and not a grant to cover trading expenses as wrongly assumed. The first G.O. dated 10-7-1973 merely refers to a grant made for the purpose of celebration or Pongal Festival, on behalf of the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X
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