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TMI Blog2019 (12) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in appeal of the Revenue are reproduced as under : "1. On the facts and circumstances of the case, the learned CIT(A) is legally justified in deleting addition of interest income of Rs. 64,16,15,379/- by ignoring an admitted fact that the assessee had earned interest on the deposits in its bank account out of funds received by the assessee to be used as its own and the claim of transfer of the interest income to the payer was in contravention to provisions of section 60 of the Income Tax Act(the Act)? 2. Whether in facts and circumstances of the case , The Ld. C'IT(A) is legally justified in deleting addition of interest income of Rs. 64,16,15,379/- by ignoring the fact that the assessee had claimed credit of TDS on the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny and notice u/s. 143(2) of the Income-tax Act (in short 'the Act') was issued and complied with. The assessment u/s. 143(3) was completed on 24.03.2015 after making disallowances of interest earned on deposit of advances received from Rural Electrification Company (REC) of Rs. 64,16,15,379/- and disallowances of Rs. 5,99,893/- u/s. 37(1) of the Act. On further appeal, the ld. CIT(A) deleted the addition of interest earned on deposit on advances received from REC, however, sustained the disallowance of Rs. 5,99,893/-. Aggrieved, both the assessee and the Revenue are in appeal before the Tribunal, raising the grounds as reproduced above. 5. Before us, the ld. counsel for the assessee submitted that the issue in dispute of disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (A) clarifies those facts. In his order the learned CIT (A) clearly states that interest earned was to be utilized towards cost of project and interest was not to be treated as income of the assessee. The learned CIT (A) has made a finding of fact that all funds received from REC limited for implementation of projects was credited in separate bank accounts of the appellant and interest accrued thereon was also credited in the same bank account. The learned CIT (A) has also made finding of fact that out of total interest earned by assessee interest amounting to Rs. 19,87,59,407/- related to this account. The learned CIT(A) has also made a finding of fact that the conditions stipulated for grants of funds to the appellant clearly provides t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above, respectfully following the findings of Hon'ble Courts, the action of the ld. CIT(A) in deleting the disallowance is upheld. Grounds Nos. 1 & 2 of the appeal of Revenue are accordingly, dismissed. 11. Ground No. 3, being general in nature, we are not required to adjudicate upon. 12. Regarding the issue and dispute raised in appeal of the assessee, the ld. counsel of the assessee submitted that expenditure of Rs. 5,99,893/- was incurred on social responsibility activities in the area, in which the project activities were carried out. According to the ld. counsel, the expenditure incurred was for smooth functioning of the project activities in the Rural areas and thus being in the nature of expenditure incurred wholly and exclusivel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocial responsibility for claiming u/s. 37(1) has been inserted by the Finance Act No. 2 of 2014 w.e.f. 01.04.2015, which reads as under : "Explanation 2.-For the removal of doubts, it is hereby declared that for the purposes of sub-section (1), any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 (18 of 2013) shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession." 14. The Tribunal in the case of National Seeds Corporation Ltd. (supra) has held the above Explanation 2 to be prospective and not to be operated retrospectively. Since the assessment year involved in the instant cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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