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TMI Blog2024 (12) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... efit of proviso to section 12(2) of the Act, the said proviso is no more on the statute. It is settled law that the effect of omission of a provision from the said statute is that it never existed on the statute. Nevertheless, the said proviso is not in existence in the statute as on today. Hence, in our view, the assessee organisation cannot be granted benefit of the said provision by us while adjudicating upon appeal of the assessee in the year 2024, when such proviso already stood omitted w.e.f. 01.04.2023. Action of the AO in treading the expenditure incurred by the assessee organisation as capital in nature is concerned, we do not find any infirmity in the order of the Assessing Officer to the extent that expenditure incurred on creation of infrastructure would be capital in nature. However, expenditure incurred on maintenance of the infrastructure would be revenue in nature. Office Administration expenditure would also be revenue in nature. The assessee will be entitled to claim depreciation as per law on the infrastructure, which, has been, admittedly booked as asset by the assessee in the balance sheet. So far as the flaws in accounting method applied by the assessee are co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case, Ld. CIT(A) has erred in holding that grants received from government cannot be considered as income despite the fact that the assessee has considered the said grant as income in their return of income. 2. Whether on the facts and circumstances of the case, Ld. CIT(A) has erred in holding that grants received from government cannot be considered as income u/s 11/12 of the Income Tax Act, 1961 despite the fact that the assessee did not make any claim u/s 11112 in its return of income. The return of income was filed in ITR -5 without any such claim. 3. Whether on the facts and circumstances of the case, Ld. CIT(A) has erred in relying upon of the decisions of the Hon'ble High Court of Punjab and Haryana in the case of Mis State Urban Development Society, Haryana Vs DCIT which is distinguishable in facts. 4. Whether on the facts and circumstances of the case, Ld. CIT(A) has erred in allowing the project expenses of Rs. 44,57,02,200/- and interest on loan of Rs. 19.73 crore despite being capital in nature. 3. The brief facts of the case are that the assessee is a corporation established under Hooghly River Bridge Commission Act, 1969. The assessee organisat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions, firstly, that the assessee organisation is working on no profit no loss basis as an instrument of the government and the works are carried out by the assessee trust from the grants received from the Government, on behalf of the government, itself, and hence, the grants received by the assessee cannot be treated as income of the assessee. Secondly, that the assessee trust has been registered as a charitable organisation u/s. 12A of the Act. That though, the assessee organisation has been registered as a charitable institution from AY 2019-20, however, the appeal for the assessment year under consideration i.e. AY 2012-13 was pending before the Ld. CIT(A) on the date of grant of registration to the assessee. The Ld. Counsel, in this respect, has relied upon the proviso to section 12(2) of the Act (as it was on the statute at the time of registration of the assessee organisation in the year 2019, which, however, stood omitted vide Finance Act, 2023 w.e.f. 01.04.2023) which provided that where registration has been granted to a trust or organisation u/s. 12AA/12AB of the Act in a subsequent year then the benefit of such registration will be available to said trust or institution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee organisation is working on no profit no loss basis. Whenever, there would increase in the total collection of the assessee over the expenditure, it would definitely be the income of the assessee. 10. At this stage, we may refer to the provisions of section 10(46) of the Act whereby, certain authorities, boards or trusts, which have been established by the government with the object of regulating or administering any activity for the benefit of general public and if such institution or authority is not engaged in any commercial activity and is notified by the central government in the official gazette for the purpose of said clause, then the specified income of such an organisation, if such income is notified in the official gazette by the central government to qualify under the said provisions of section 10(46) of the Act, would be exempt. However, in this case, firstly, as pointed out, its doubtful, whether, the assessee organisation is not engaged in commercial activity. Secondly, the assessee organisation has not been notified as a board or authority entitled to exemption u/s. 10(46) of the act nor its income has been specified to be so by way of notification in the officia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of a provision from the said statute is that it never existed on the statute. Nevertheless, the said proviso is not in existence in the statute as on today. Hence, in our view, the assessee organisation cannot be granted benefit of the said provision by us while adjudicating upon appeal of the assessee in the year 2024, when such proviso already stood omitted w.e.f. 01.04.2023. 12. So far as the action of the AO in treading the expenditure incurred by the assessee organisation as capital in nature is concerned, we do not find any infirmity in the order of the Assessing Officer to the extent that expenditure incurred on creation of infrastructure would be capital in nature. However, expenditure incurred on maintenance of the infrastructure would be revenue in nature. Office Administration expenditure would also be revenue in nature. The assessee will be entitled to claim depreciation as per law on the infrastructure, which, has been, admittedly booked as asset by the assessee in the balance sheet. So far as the flaws in accounting method applied by the assessee are concerned, it is to be noted that the assessee organisation is regularly booking notional interest expenditure pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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