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TMI Blog2012 (8) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of interest income earned on advances received by the assessee from the Government of Uttar Pradesh. Since the facts of both the cases are almost similar except difference in quantum of addition, we extract the facts in ITA No. 344/LKW/2009 in order to adjudicate the impugned issue. 3. The assessee was incorporated with the Registrar of Companies vide certificate of incorporation dated 27.3.1987. It was established for construction and maintenance of residential and non-residential buildings for the Police Department. The assessee received a total advance of `4,46,18,000 for construction of buildings for the Police Department as per Government orders dated 1.8.1987 and 12.1.1988. In the sanction letter of the Government, it was men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be the income of the assessee, it was rather to be remitted back to the Government. These directions were reiterated through various letters of the Government, therefore, interest income was shown as liability in the balance sheet of the assessee. In the audited balance sheet, it was also mentioned that the interest earned on the advances is to be paid to the Government. Therefore, the lower authorities have wrongly treated this interest income to be the income of the assessee. He has also filed the copy of the ledger account in support of his contention that the interest income accrued to the assessee was remitted to the Government from time to time. 7. The ld. CIT (D.R.), Shri. Praveen Kumar, on the other hand, has contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retary of the Government of U.P. addressed to the D.G. Police through which advances were sanctioned to the assessee for construction of the residential house. In this letter, it has been specifically mentioned that whatever interest income is accrued on the advances from the Bank, it would be remitted to the Government. Our attention was also invited to another letter dated 3.4.1980 available at page 26 of the compilation of the assessee written by the Finance Secretary, Uttar Pradesh in which it has been categorically stated that the income earned from the Bank on these advances would not be the income of the assessee, it would be rather remitted to the Government. Similar letter is also available at page 30 of the paper book, written by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me would not be charged to tax in the hands of the assessee. 10. The other grounds raised in ITA No. 344/LKW/1999 relate to the validity of reopening of assessment and charging of interest under section 139(8) and 217 of the Act. 11. In this regard, we have carefully examined the order of the ld. CIT(A) and we find that the ld. CIT(A) has adjudicated these issues in detail in his order. Since no infirmity has been pointed out by the ld. counsel for the assessee in the order of the ld. CIT(A), we confirm his order and reject these grounds of appeal. 12. In ITA No. 345/LKW/1999, the other grounds raised by the assessee relate to disallowance of claim of deduction under section 80G(iiig) of the Act and charging of interest under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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