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TMI Blog2014 (2) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... contribution nor can the same be assessed under section 12 of the Act as income of recipient - the funds were made available to the Corporation for implementing the scheme in a particular manner - The Tribunal committed no error in holding that the grant in question fulfills the requirement of section 11(d)(1) read with section 12(1) of the Act – Decided against Revenue. Deletion of Interest Income - Whether the Tribunal is correct in deleting the addition of interest income – Held that:- The decision Gujarat Municipal Finance Board Vs. DCIT (Assessment) [1996 (5) TMI 71 - GUJARAT High Court] followed - Tribunal was of the view that the interest derives by investing the grant temporarily for interest is also not taxable - It did not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef facts of this case are as follows :- 1. The assessee respondent, a Government undertaking has been constituted by a Notification issued under the Gujarat State Disaster Management Act, 2003 which has been granted registration as a Charitable Institution u/s. 12AA of the Income Tax Act, 1961 (hereinafter referred to as Act ) vide order dated 9th August, 2005. For the assessment year 2006-07, assessment on total income was made to the tune of Rs. 21,73,91,450/- u/s. 143(3) of the Act. The interest of the said amount worked out to be Rs. 9,82,70,573/- earned by the assessee Trust payable under the head of Current Liabilities payable to the Govt. of Gujarat. Out of the total amount granted to the assessee respondent by District Rural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2). The Tribunal has sought to rely upon the judgment of this Court given in case of Gujarat Municipal Finance Board Vs. DCIT (Assessment) reported in (1996) 221 IT'R 317. Relying on the said judgment from the record that, it can be discerned that the grant was made available to the assessee respondent by the State Government for the purpose of implementing the earthquake reconstruction and rehabilitation. It further gets revealed that the same was directed to be kept in a separate bank account with the specific directions that the amount of interest is deposited with the State Government in the consolidated fund as the amount given to the State Government by World Bank and ADR includes 30% grant and 70% loan to be repaid by the State Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Gujarat Safai Kamdar Nigam (Supra) was challenged before this Court by the Revenue in Tax Appeal No. 1934 of 2009, order of Tribunal has been confirmed by the Court by observing thus : The task of implementing the scheme was entrusted to the Gujarat Scheduled Caste Development Board with the Cooperation of the respondent assessee. The State Government sanctioned additional establishment, provided for the pay-scales, etc. and for implementation of the scheme, a committee headed by the Deputy Minister for Social Justice and Empowerment was also constituted. The Committee also included several Government officials. From the above, it can be seen that detailed provisions were made for allotment of funds to the respondentassessee. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... temporary investment of the grants cannot be exempted by holding that ratio in the said judgement is that any grant-in-aid cannot be considered as income and merely because the grant is treated as income by the assessee in its books, the interest does not become taxable. This Court sees no reason to take a different view from the one taken by the Tribunal and it thus confirms its reasonings on the said issue. 10. As far as Issue No.3 is concerned the same relates to the additions made by the assessing officer on refund of grant to the District Rural Development Agency (DRDA). The assessee accordingly to the Tribunal was asked to explain how the refund can be treated an application of the income of the trust. It claimed that the refund a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation on the assets of the trust was deductible while arriving at the income available for application to charitable and religious purposes. Respectfully applying the principles laid down in these judgments to the present case, it seems to us that the amount of Rs.13 crores, which was earlier assessed as income, refunded to DRDA during the year under appeal, constitutes a deduction while ascertaining the application of the income for the purpose of section 11(1)(a) of the Act. Accordingly, we uphold the assessee's contention and allow grounds No.3 4. There does not to be any infirmity or mistake in the reasonings given by the Tribunal. Resultantly, there does not arise any question of interference as far as also this issue also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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