9911796707
TMI Blog2024 (6) TMI 1358X X X X Extracts X X X X X X X X Extracts X X X X ..... ding claim of receipt cannot be allowed in the current year failed to appreciate what exactly the amount the assessee has been treating as income and what the amount the assessee is treating as expenditure. Assessee has been treating only such part of grants that are utilized by the implementing agencies as income and only such part of the funds released to the implementing agencies in respect of which the utilization certificates are received as expenditure. This method of accountancy followed by the assessee in treating the income and expenditure irrespective of the year of receipt of grant has not been appreciated or referred to by the learned Assessing Officer so as to find out any defects or reasons to reject the same. No illegality or irregularity in the method of accountancy followed by the assessee in treating the funds utilized by the implementing agencies as income and the funds covered by the utilization certificate as expenditure. According to us, learned CIT(A) was right in his approach in holding that on an incorrect appreciation of the accounting policies followed by the assessee, the learned Assessing Officer rejected the books, without actually bringing on record a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of receipt is the Grants from the Central Government, and the outflow is utilisation of the grants. Assessee undertakes the projects on Cold Water Fisheries, Aquaculture in Inland and Coastal areas, Deep-sea fishing, fish processing and other activities as per, the request of the State Government. The projects are developed by the respective State Governments and are supervised by the assessee. The funds required for development of the projects are indented from the Central Government by the State Government. Such indents are processed through the assessee. The, amounts so indented are sanctioned and paid by the Central Government to the assessee. The assessee based on the stage of completion of the project releases the grants to the State Government. 3. Assessee maintains the books of account and gets them audited. As part of such accounts, assessee disclosed the current year's receipts and payments in the "Receipts and Payments account" where the actual grant received are treated as receipt and the amount allowed as grant is treated as the payment. As per the details on the record, it is observed that when the grants are received, the same was kept in the liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 13(1)(d) read with section 11(5) of the Act. Basing on these two circumstances, learned Assessing Officer came to the conclusion that the shortfall in application of income below 85% of the total income of the trust for the year under consideration is liable to be taxed. 7. Aggrieved, assessee preferred appeal before the learned CIT(A) and contended that a separate income and expenditure account was annexed to the return of income, but the learned Assessing Officer wrongly placed reliance on the receipts and payments account and treated such receipts and payments account as income and expenditure account. It was further contended that the grants are for specific purpose and do not represent the income of the assessee, as they were received, kept and disbursed by the assessee as per the instructions of the Government, without holding any right to utilise such expenses otherwise than in compliance with the directions of the Government of India, but the learned Assessing Officer erroneously considered the specific purpose grants in aid as the income of the assessee. The other contentions of the assessee was that the entire expenditure incurred by the assessee and State Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r's investment in equity shares stands jettisoned for reasons given. Learned CIT(A) accordingly allowed the claim of exemption under section 11 of the Act. 9. Aggrieved, by such a finding returned by the learned CIT(A), Revenue preferred this appeal. It is the submission of the learned DR that the assessee has not been notified by the Government of India under section 10(46) or 10(46A) of the Act, assessee obtained registration under section 12AA of the Act for claiming exemption benefit under section 11 of the Act and, therefore, the assessee is bound to fulfil the conditions stipulated thereunder. The issue involved in this matter is, therefore, that whether the assessee complied with the conditions under section 11 of the Act to avail the benefit thereunder? According to him, the reference to the rule of consistency under Radhasoami Satsang vs. CIT (1992) 60 Taxman 248 (SC) is misplaced. Firstly, he contended that there is no record available before us to show whether or not such a claim was involved in the earlier assessment years, or such assessments were under section 143(1) or 143(3) of the Act. Secondly he submitted that rule of consistency cannot be extended to apply to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the specific purpose funds, the spending of which is not in the hands of the assessee, but as per the directions attendant to such grant of funds and, therefore, the view taken by the learned Assessing Officer that it constitutes the income of the assessee is incorrect. He further challenged the method of arriving at the income and expenditure by the learned Assessing Officer by considering the amounts received from Government of India to the tune of Rs. 146.40 crores as receipt and Rs. 86,51,86,058/- the funds released to the State Governments as expenditure stating that the expenditure actually incurred during the year, but not part of the amount spend should also have considered by the learned Assessing Officer. 13. We have gone through the record in the light of the submissions made on either side. It is not in dispute that the assessee is a statutory body and a registered society. It is also not in dispute that it maintains the books of accounts, bills, vouchers and all other requisite supporting documents in respect of the grants received, spent and other activities. Such books are audited by independent auditors. It is an undisputed fact that the assessee has been followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited accounts of the assessee. 15. It is true that the principle of res judicata is not applicable to the income tax proceedings and every year is a separate and independent, and merely because the learned Assessing Officer has not made any addition or rejected the claim of exemption under section 11 of the Act, preferred by the assessee in the earlier years, such an erroneous order of the learned Assessing Officer cannot be made to be perpetuated. But, if we accept the contention of the learned DR, then as against the actual grants during the current year to the tune of Rs. 146.40 crores, the assessee spent a sum of Rs. 178.13 crores which includes the expenditure on account of the grants received for the current year as against the earlier year, which is more than 85% of the grants received. Further it disturbs the method of accountancy consistently followed by the assessee. Since the assessee, in the instant case, is consistently treating the grants received from the Government of India and utilised by the implementing agencies as income and the grants released to the State Government, as and when the utilization certificates are received as expenditure, in compliance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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