9911796707
TMI Blog2024 (10) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... nd utilized by other government agencies, such as District Collectors. These passthrough funds did not impact TCGL s operational finances and, therefore, were not subject to the 15% charge. We find that the assessee s treatment of these funds is in line with the established accounting practices and the terms of the GOG Resolution. CIT(A) conducted a thorough examination of the facts, submissions, and relevant financial records. CIT(A) rightly observed that the AO s addition was based on assumptions and conjecture, without any substantive evidence to support the contention that TCGL was obligated to charge 15% of the decentralized grants as income. CIT(A) s findings are well-reasoned and supported by the consistent policy followed by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s later reopened under section 147 due to discrepancies identified by the AO. A notice under section 148 was issued on 22/09/2016, to which the assessee filed its return of income on 28/12/2016. 2.1. During the course of assessment proceedings, the AO observed that the statutory auditors highlighted that the company consistently recognizes 15% of the grants received from the Government of Gujarat as income for administrative overheads, as authorized by Government Resolution. However, for the assessment year in question, the amount paid to District Collectors and other implementing agencies (Rs. 13,39,91,645/-) was not considered while calculating the grant utilization, leading to an understatement of income by Rs. 2,00,98,747/-. The AO issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lay in the payment of employees' contributions towards EPF, which was paid well beyond the due date. Therefore, the delayed payment of Rs. 7,39,238/- was added to the income, as it was paid beyond the stipulated time frame. 3. The assessee preferred an appeal before the CIT(A), who partly allowed the appeal of the assessee. While doing so, the CIT(A) directed the AO to delete the addition of Rs. 2,00,98,747/-. The CIT(A) upheld that the assessee followed a consistent and reasonable policy in recognizing income, and the amount in question was rightfully excluded from taxable income. 4. Aggrieved by the order of the CIT(A), the Revenue is in appeal before us with following grounds of appeal: i. Whether, the Ld. Commissioner of Income-Tax( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rism in Gujarat. The corporation receives grants from GOG, which are utilized for various tourism-related activities, including administrative expenses, salaries, and infrastructure maintenance. As per the GOG s Government Resolution (GR) dated 27.05.1998, TCGL is authorized to charge 15% of the grants utilized as income to cover overhead costs. The AR also stated that the assessee has consistently recognized 15% of the grants utilized as income in accordance with the GOG resolution. The same method was followed for the assessment year under consideration, and income was offered to tax accordingly. The AR further stated that with the expansion of tourism activities, GOG decentralized certain projects, assigning them to other state governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle that only actual income that accrues to the taxpayer can be taxed. 7. Upon careful consideration of the facts, grounds of appeal, and submissions made by both parties, we conclude that the AO did not undertake any independent verification to ascertain the nature of the grants passed through TCGL from the Government of Gujarat. The AO s reliance solely on the statutory auditor s remarks, without conducting any factual inquiry or obtaining corroborative evidence from GOG, undermines the addition made. The AO s failure to establish the factual basis of the alleged income renders the addition unsustainable. The assessee furnished documentary evidence, including the GOG resolution dated 27.05.1998 and audited financial statements, to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
