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TMI Blog2018 (2) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011-12) 1. That the ld. CIT(A)-ll, Agra has erred in law and on facts in deleting the addition of ₹ 40,38,534/- made by AO without appreciating the facts that the assessee himself has offered the accrued interest on FDRs, which are part of infrastructure Development Fund, for the tax in Assessment Year 2013-14. 2. That the ld. CIT(A)-II, Agra has erred in law and on facts in deleting the addition of ₹ 40,38,534/- after relying on the judgment of Hon ble ITAT Agra Bench Agra in assessee s own case in ITA No. 169/Agra'2015 dated 24.06.2015 for Assessment Year 2006-07 ignoring the facts that the said decision of Hon ble ITAT Agra Bench Agra was not accepted by the department, but due to monetary limit, the appeal was not fled before the Hon ble High Court. ITA No.170/Agra/2015 (AY 2010-11) 1. That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. AO in making addition of ₹ 26,71,081/- being Intereston Year Marked Funds (i.e. Development Fund Infrastructure Development Fund). 2. That in any case and in any view of the matter Ld. CIT (A) has erred in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st on these funds does not accrue to the assessee and even interest receipts are at the disposal only in accordance with Government directions on disposal of the funds relating to infrastructure development. The assessee does not get any unfettered discretion to use such interest earnings, but these earnings only add up to the corpus which can be used in terms of Government directives and for the purpose of infrastructure development That aspect of the matter being undisputed before me, I am of the considered view that interest in question cannot be treated as income of the assessee. I, therefore, direct the Assessing Officer to delete the impugned addition at ₹ 7,26,878/-. The assessee gets the relief accordingly. 7.1 In the remand report, the AO has mentioned that order of Hon'bleITAT(Supra) though accepted by the department, however, it was due to the monetary limit that the appeal was not filed before the Hon'ble High Court. The AO has further stated that the assessee's appeal on the same issue for the assessment year 2010-11 has been decided by the Ld. CIT(Appeals) against the assessee. Thus as per the AO, the appeal for the year under consideration des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest income which comes to ₹ 15,73,581/- (Rs.26,71,081 - ₹ 10,97,500). Though the assessee has shown earning of such interest income on those FDRs, which are marked as infrastructure fund but after examination of details of investment and bank balances maintained by the assessee as found declared in its balance sheet, I have found as already discussed in previous para that theassessee has not maintained Infrastructure Development Fund Account as per the directions contained in G.O. dated 15.12.1998 and rather, it has invested surplus money available with it in FDRs for the purpose of earning interest. Therefore, I agree with the AO that even the balance amount of ₹ 15,71,581/- should be considered as revenue income in the hand of the assessee being earned on the investment made by it and such income cannot be said to be part of the Infrastructure Development Fund because this interest amount is not accumulated on the money deposited in a separate bank account maintained for the purpose of Infrastructure Development Fund to be utilized for infrastructure development of the city. Such account maintained with District Cooperative Bank has balance of ₹ 2,23, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 13, February, 2007 [Page: 1-4] Page-2 Tribunal found that there was close nexus between the business of the company, namely banking, and placing of the funds of the Bank in Government securities. In the circumstances, such conduct arising out of compulsion of its business^ the Interest earned thereon would have to be treated as income from business. Page-3 As rightly observed by the Tribunal, the conduct arising out of compulsion of law under the provisions of the Banking Regulation Act cannot be viewed to make a company as an investment company, so long as the principal business continued as a banking company. Page-4, Para-5 In the context of the decision of the Supreme Court and this Court that income from securities has to be assessed as income from business and having regard to the admitted position that the true business of the assessee is only banking bus/ness STATUTORY RESERVES OF BANKS PLACED WITH RBI - SLR AND CRR - TO REGULATE MONETARY POLICY; LIQUIDITY AND INTEREST RATE- THE INTEREST THEREON QUALIFIES AS INCOME OF ASSESSEE UNDER THE HEAD BUSINESS AND ELIGIBLE TO DEDUCTION U/S SOP IF THE BANK IS A COOPERATIVE SOCIETY. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the 1998 Directions and, therefore, in the matter of its presentation under the said directions, there would be an add back but not under the Income-tax Act necessarily. It is important to note that collectability is different from accrual. 7. The ld. counsel for the assesseesubmitted that the assessee is a statutory authority which was established under the provisions of Uttar Pradesh Planning and Development Act, 1973; that the government order dated 15.01.1998 is an administrative instruction of State Government, explaining as to which part of the certain receipts are to be transferred and set a part and thereafter how and for what purposes this accumulated amount has to be applied and thus out of the gross receipts the funds belonging to the State Government to be utilized as per their direction and are kept in separate bank account. The assessee do not have any ownership or control over such funds as the assessee is only a trustee. 8. The ld. counsel for the assessee further submitted that the same issue was earlier decided in favour of the assessee in ITA No. 169/Agr/2015 order dated 24.06.2015, AY 2006-07, in the assessee s own case by ITAT Agra Bench, A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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