ITO, Chandigarh V. M/s Punjab Police Housing Corporation, Chandigarh

ITA 1141/CHANDI/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86125 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 22-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 07-11-2012
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Keywords: Charitable institution; Retrospective amendment
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 1141/CHD/2012 ASSESSMENT YEAR: 2009-10 THE ITO, VS. PUNJAB POLICE HOUSING CORPORATION WARD-1(3) SCO 171-72 , SEC 8-C CHANDIGARH CHANDIGARH PAN NO.AAACP9909L (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. JYOTI KUMARI RESPONDENT BY : SHRI. T.N. SINGLA DATE OF HEARING : 22/12/2014 DATE OF PRONOUNCEMENT :12/01/2015 ORDER PER T.R.SOOD, A.M. THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A), CHANDIGARH ON 14/08 /2012 2. IN THIS APPEAL REVENUE HAS RAISED THE GROUND WHI CH IS AS UNDER: THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 9,55,56,666/- MADE BY THE AO ON ACCOUNT OF INTEREST ON SURPLUS FUNDS PARKED IN THE BANK EVEN THOUGH DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE COULD NOT EXPLAIN/ESTABLISHED AS TO HOW THE INTERES T IS EXEMPTED FROM TAX. . 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG THE ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT OUT OF THE TOTAL RE CEIPT OF SUM OF RS. 9,55,56,666/- REPRESENTED THE INTEREST INCOME. IT W AS ALSO FOUND THAT ASSESSEE HAS SHOWN EQUAL AMOUNT AS INTEREST EXPENDI TURE. IT WAS FURTHER NOTICED THAT ASSESSEE HAVE NO SECURED LOAN AND THER EFORE ASSESSEE WAS REQUESTED TO EXPLAIN THE INTEREST EXPENDITURE. 4. IT WAS EXPLAINED THAT INTEREST EARNED CAN BE UTI LIZED ONLY FOR THE PURPOSE OF CONSTRUCTION WORK AND IF NOT UTILIZED IT SHALL REMAIN PAYABLE TO THE STATE GOVERNMENT. IT WAS ALSO EXPLAINED THAT CO RPORATION WAS 2 EXECUTING WORK ON BEHALF OF THE GOVERNMENT OF PUNJA B AND HAS RECEIVED FUNDS FROM GOVERNMENT. IN THIS BACKGROUND IT WAS ST ATED THAT INTEREST INCOME CANNOT SAID TO BE THE INCOME OF CORPORATION. HOWEVER AO DID NOT ACCEPT THESE SUBMISSIONS AND ADDED RS. 9,55,56, 666/- TO INCOME OF ASSESSEE. 5. ON APPEAL SUBMISSIONS MADE BEFORE THE AO WERE RE ITERATED. FURTHER WRITTEN SUBMISSION WERE FILED WHICH READS A S UNDER THAT WE HAVE EARLIER BEEN SUBJECTED INCOME TAX AS SESSMENT PROCEEDINGS FOR THE A.Y. 1990-91, 1991-92 AND 2006- 07, WHERE THE QUESTION OF TAXABILITY OF INTEREST EARNED ON GOVERN MENT FUNDS HELD BY THE CORPORATION AROSE AND IT WAS DECIDED THAT SU CH INTEREST IS NOT AN INCOME TO BE TAXED IN THE HAND OF CORPORATIO N (COPY OF RELEVANT ASSESSMENT ORDERS ATTACHED). THAT THE LD. A.O. TOTALLY IGNORED THE PAST HISTORY OF THE CASE, RELEVANT SUBMISSIONS MADE, PREVIOUS ASSESSMENTS OF THE APPELLANT, AUDIT REPORT ACCEPTED BY THE CAG, AND ALSO THE FACT UAL AND LEGAL WHILE FRAMING SUCH HIGH PITCHED ASSESSMENT. THAT NO COGNIZANCE WAS GIVEN TO MEMO NO. 3/79/FD(BP E)SO-VI/45 DATED 07/01/1993 ISSUED BY GOVERNMENT OF PUNJAB, BU REAU OF PUBLIC ENTERPRISES, CHANDIGARH BY THE LD. A.O. IT I S SUBMITTED THAT THE SAID MEMO AMPLY CLARIFIES OUR POSITION REGARDIN G INTEREST ON THE FUNDS HELD ON BEHALF OF GOVERNMENT COPY ATTACHED AN D STATE AS BELOW: PUNJAB POLICE HOUSING CORPORATION PURELY ACTS LIK E THE EXTENDED WING OF THE GOVERNMENT BECAUSE IT WAS CREATED TO EX ECUTE THE POLICE HOUSING AT GOVERNMENT COST WITHOUT ANY COMME RCIAL ELEMENT OF RETURN. THE CORPORATION HAS ALSO BEEN DI SCHARGING THESE FUNCTIONS TO COVER PURELY CONFINED TO THE ROLE OF E XECUTOR OF THE GOVERNMENT POLICE HOUSING SCHEME. THE MONEY RELEASE TO IT FROM TIME TO TIME ARE FOR EARMARKED PURPOSE. ANY ACCRUAL OF INTEREST ON SUCH AMOUNTS WILL CONSTITUTE A PART OF THE FUNDS RE LEASED BY THE GOVERNMENT TO THE P.P.H.C. THE GOVERNMENT CAN ALSO, IF IT DEEMS FIT, RECALL THE AMOUNT OF INTEREST. THEREFORE, THE ENTIRE AMOUNT OF THE INTEREST WHICH ACCRUED ON THE FUNDS RELEASED TO THE PPHC FROM TIME TO TIME ARE TO BE TREATED AS A PART OF GOVERNM ENT FUNDS. IT MAY ALSO BE UNDERSTOOD THAT PPHC ACTUALLY FUNCTIONS LIKE A GOVERNMENT BOARD RATHER THAN AS A CORPORATION. THUS THE INTEREST ON DEPOSITS BY THE CORPORATION ARE TO BE TREATED AS A PART OF THE GOVERNMENT INCOME WITH RETROSPECTIVE EFFECT. ON THE DEMAND BY THE MINISTRY OF HOME AFFAIRS, NEW DELHI ABOUT THE INTEREST ACCRUAL ON THE FUNDS PROVIDED BY THE G OVT. OF INDIA, PPHC HAS BEEN INFORMING MINISTRY OF HOME AFFAIRS, N EW DELHI ABOUT THE INTEREST AMOUNT. THIS INTEREST AMOUNT HAS BEEN TREATED AS CENTRAL GOVT. FUND BY THE MINISTRY OF HOME AFFAIRS AND HAS BEEN SUBSEQUENTLY DEDUCTED FROM THE SANCTIONED AMOUNT WH ILE RELEASING THE FUNDS TO THE PUNJAB GOVT. FOR VARIOUS ACTIVITIES. AN EXAMPLE OF THIS IS THE DEDUCTION OF RS. 4.62 CRORE FROM THE SANCTIONED AMOUNT OF RS. 12.07 CRORE AS MODERNIZATI ON GRANT FOR THE YEAR 2009-10 (PHOTOCOPY ATTACHED). STATE GOVT. ALSO HAS TREATED THE INTEREST MONEY AS STATE FUND AND SO HAS UTILIZED IT FOR CONSTRUCTION OF VARIOUS POLI CE BUILDINGS I.E. CONSTRUCTION OF CYBER CRIME POLICE STATION, F.S.L. BUILDING, PHASE IV, SAS NAGAR, CONSTRUCTION OF POLICE INTEGRATED TRANSI T COMPLEX, SECTOR32, CHANDIGARH, CONSTRUCTION OF VARIOUS POLIC E OFFICERS (DSP, EOW, NRI, POLICE CONTROL ROOM & PPHC) AT PHASE-VII, MOHALI. AS THE 3 REQUISITE FUNDS WERE NOT RELEASED BY THE PUNJAB GOV T. THESE BUILDINGS WERE COMPLETED WITH THE INTEREST MONEY AV AILABLE WITH THE PUNJAB POLICE HOUSING CORPORATION. THE UTILIZAT ION OF INTEREST MONEY FOR THE COMPLETION OF VARIOUS POLICE BUILDING S BY THE PUNJAB POLICE HOUSING CORPORATION HAS BEEN APPROVED BY THE STATE EMPOWERED COMMITTEE IN ITS MEETING HELD ON 16.08.20 11 UNDER THE CHAIRMANSHIP OF CHIEF SECRETARY, PUNJAB. THE MINUTE S OF THE EMPOWERED COMMITTEE MEETING HELD ON 16.08.2011 UNDE R THE CHAIRMANSHIP OF WORTHY CHIEF SECRETARY, PUNJAB WERE ISSUED BY THE HOME DEPARTMENT VIDE ENDST. NO. 2/210-2H6/2611 DATE D 23.11.2011 (PHOTOCOPY ATTACHED). IT COULD BE PERTINENT TO MENTION HERE THAT HONBLE KARNATAKA HIGH COURT VIDE THEIR DECISION I.T.A. NO. 78 OF 2008-09 JANUARY, 2009 IN THE CASE OF CIT& ANR. KARNATAKA URBAN INFRASTRUCTURE DE VELOPMENT &FINANCE CORPORATION V. KARNATAKA URBAN INFRASTRUCT URE DEVELOPMENT AND FINANCE CORPORATION HAS DECIDED THA T WHERE IN A CASE, NODAL AGENCY EARNS INTEREST ON FUNDS RECEIV ED BY IT FOR IMPLEMENTATION OF NATIONAL SCHEMES, INTEREST EARNED ON SUCH FUNDS, BEING NOT A PROFIT MOTIVE, IS NOT TAXABLE AS INCOME. IT HAS BEEN HELD IN THE ABOVE NOTED CASE FOLLOWING THE DEC ISION IN CIT VS KARNATAKA URBAN INFRASTRUCTURE DEVELOPMENT & FINANC E CORPORATION 2006 ITR 284 PAGE 282. THAT IN THE CIRC UMSTANCES AS WHERE A NODAL AGENCY EARNS INTEREST ON SUCH FUNDS, BEING NOT A PROFIT MOTIVE IS NOT TAXABLE AS INCOME. THAT IN THE CASE OF APPELLANT BOTH THE CENTRAL AND STATE GOVT. ARE PROVIDING REQU ISITE FINANCES FOR IMPLEMENTATION OF THEIR RESPECTIVE PROJECTS. TH E FUNDS FROM THE CENTRAL AND STATE GOVT. WILL FLOW DIRECTLY TO THE S PECIALIZED INSTITUTIONS / NODAL AGENCIES AS GRANT AND THE NODA L AGENCY WILL CONSTITUTE A REVOLVING FUND WITH THE HELP OF CENTRA L AND STATE SHARES OUT OF WHICH THE PUNJAB POLICE HOUSING CORPO RATION LIMITED ACTS ON THEIR BEHALF EXECUTES THE WORK OF CONSTRUCT ION OF BUILDINGS FOR THE POLICE DEPARTMENT ONLY. THE OBJECTIVE IS TO CREATE AND MAINTAIN A FUND FOR THE DEVELOPMENT CONSTRUCTION OF ASSETS ON CONTINUING BASIS AND THEREFORE THE ASSESSEE IS A NO DAL AGENCY CREATED AS PER THE GUIDELINES, THEREFORE IS NOT PRO FIT MOTIVE AS THE ENTIRE FUND ENTRUSTED AND THE INTEREST ACCRUED THER EFORE FROM THE DEPOSITS IN BANK THROUGH IN THE NAME OF THE ASSESSE E HAS TO BE APPLIED FOR THE PURPOSE OF CONSTRUCTION OF PREMISES FOR THE POLICE DEPARTMENT ONLY FOR THE NATION/STATE AS PROVIDED IN THE GUIDELINES. THE WHOLE OF THE FUND BELONGS TO THE EX-CHEQUER AND THE ASSESSEE HAS TO BE CHANNELIZE THEM TO THE ASSETS OF CENTRALL Y/STATE SPONSORED SCHEMES. THE MONEY SO RECEIVED, TILL THEY ARE UTILIZED ARE P ARKED IN A BANKS. THUS THE ENTIRE MONEY IN QUESTION RECEIVED FOR THE IMPLEMENTATION WHICH IS FOR PUBLIC PURPOSE AND THE SAID SCHEME IS IMPLEMENTED AS PER THE GUIDELINES OF CENTRAL/STATE GOVT. AND THERE FORE THE ASSESSEE IS ONLY ACTING AS A NODAL AGENCY. IT IS NOT THE CASE OF THE ASSESSEE THAT THE ASSESSE E WAS CARRY ON ANY BUSINESS ACTIVITIES OF ITS OWN WHILE IMPLEMENTING T HE SCHEME IN QUESTION. THE PUNJAB POLICE HOUSING CORPORATION LIM ITED THE APPELLANT IS NOT DOING ANY OF ITS OWN BUSINESS OR O THER ACTIVITIES AS HAS ALREADY BEEN DULY ENQUIRED AND ACCEPTED THE INC OME TAX DEPARTMENT DURING THE COURSE OF ASSESSMENT PROCEEDI NGS PERTAINING TO A/Y 1990-91, 1991-92 AND 2006-07. WHE RE ACCEPTING THE APPELLANTS VIEW THE INCOME WAS NOT TAXABLE. TH ERE IS NO CHANGE OF APPELLANT SYSTEM OR CHANGE OF ANY LAW IN THE INCOME TAX ACT AND AS SUBMITTED ABOVE, IT IS PRAYED THAT T HE APPELLANT HAS NO INCOME. THE INTEREST INCOME BELONGS TO THE CENTR AL / STATE GOVERNMENT. AND IS NOT TAXABLE IN THE HANDS OF APPE LLANT. 4 6. LD. CIT(A) FOUND FORCE IN THE SUBMISSIONS AND DE LETED THE ADDITION PARTICULARLY BY OBSERVING THAT IN EARLY YEARS THE E XPLANATION OF THE ASSESSEE WAS ACCEPTED. 7. BEFORE US LD. DR STRONGLY RELIED ON THE ORDER OF THE AO AND SUBMITTED THAT SURPLUS FUND HAVE BEEN INVESTED AND THEREFORE INCOME ON THE SAME IS TAXABLE. 8. ON THE OTHER HAND LD. COUNSEL FOR THE ASSESSEE R EFERRED TO PAGE 1 & 2 OF THE PAPER BOOK AND POINTED OUT THAT FUNDS WERE BEING GIVEN BY GOVERNMENT AND INTEREST, IF ANY, ON THE SAME WOULD FORM PART OF THE FUNDS FOR THE FUTURE CONSTRUCTION. THIS AMOUNT OF I NCOME DOES NOT BELONG TO THE ASSESSEE. HE FURTHER SUBMITTED THAT IN SIMIL AR CIRCUMSTANCES IN THE CASE OF ITO VS. M/S STATE URBAN DEVELOPMENT AUTHORI TY IN ITA NO. 488/CHD/2011 THE APPEAL OF THE REVENUE WAS DISMISSE D BY THE TRIBUNAL AND THE ORDER OF THE TRIBUNAL HAS BEEN CONFIRMED BY THE HONBLE PUNJAB & HARYANA HIGH COURT. HE FILED COPIES OF BOTH THESE ORDERS. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFULL Y WE FIND THAT LETTER OF GOVERNMENT OF PUNJAB COPY OF WHICH IS PLACED AT PAG E 2 READ AS UNDER: DEPARTMENT OF FINANCE MAY REFER TO THEIR ENDST. REGARDING THE AMOUNT OF CREDIT OF THE INTEREST A CCOUNT OF THE FUNDS RELEASED TO THE PUNJAB POLICE HOUSING COR PORATION. PUNJAB POLICE HOUSING CORPORATION, PURELY ACTS LIK E EXTENDED WING OF THE GOVT. BECAUSE IT WAS CREATED T O EXECUTE THE POLICE HOUSING AT GOVT. COST WITHOUT ANY COMMERCIAL ELEMENT OF RETURN. THE CORPORATION HAS BEEN DISCHARGING THESE FUNCTIONS TO COVER PURELY CONFINED TO THE ROLE OF EXECUTOR OF TH E GOVT. POLICE HOUSING SCHEMES. THE MONEYS RELEASED TO IT FROM TIM E TO TIME ARE FOR EAR MARKED PURPOSE. ANY ACCRUAL OF INTEREST ON SUCH AMOUNTS WILL CONSTITUTE A PART OF FUNDS RELEASED BY THE GOV T. TO THE P.P.H.C. THE GOVT. CAN ALSO, IF IT DEEMS FIT, RECALL THE AMO UNT OF THE INTEREST. THEREFORE, THE ENTIRE AMOUNT OF THE INTEREST WHICH ACCRUED ON THE FUNDS RELEASED TO THE PPHC FROM TIME TO TIME ARE TO BE TREATED AS A PART OF GOVT. FUNDS. IT MAY ALSO BE UNDERSTOOD TH AT PPHC ACTUALLY FUNCTIONS LIKE A GOVT. BOARD RATHER THAN AS A CORPO RATION. THUS THE INTEREST EARNED ON DEPOSITS BY THE CORPORATION ARE TO BE TREATED AS A PART OF THE GOVT. INCOME WITH RETROSPECTIVE EF FECT. THE ABOVE CLEARLY SHOWS THAT FUNDS BELONG TO THE GO VERNMENT AND INTEREST WHICH ACCRUES ON SUCH FUNDS WAS ALSO TO BE TREATED AS FUND FOR THE NEXT YEAR. THIS CLEARLY SHOWS THAT INCOME DOES NOT BELONG TO THE ASSESSEE. WE FURTHER FIND THAT IN IDENTICALLY SIMIL AR CASE IN THE CASE OF ITO VS. M/S STATE URBAN DEVELOPMENT AUTHORITY IN ITA NO . 488/CHD/2011THE ISSUE WAS DECIDED VIDE PARAS 8 TO 13, WHICH READS A S UNDER : 5 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS A LOCAL BODY CONSTITUTED BY THE PRESIDENT OF INDIA UNDER THE NOTIFICATION IN THE OFFICIAL GAZETTE DATED 18 TH FEBRUARY, 1991. THE ASSESSEE WAS THE IMPLEMENTING AGENCY FOR PUNJAB FOR IMPLEMENTING THE SCHEMES FOR THE BENEFIT OF URBAN POOR THROUGH URBAN LOCAL BODIES I.E. MUNICIPAL CORPORATION, NACS IN THE STATE. THE ASSESSEE DURING THE FINANCIAL YEAR 2005- 06 RELEVANT TO ASSESSMENT YEAR 2006-07 WAS ENGAGED IN IMPLEMENTING SWAYARNA JAYANTI ROZGAR YOJANA, A SCHEME WHICH AIMS AT IMPROVING LIVING STANDARDS OF THE URBAN POOR. THE ASSESSEE WAS RECEIVING FUNDS FROM UNION GOVERNMENT AND STATE GOVERNMENT AND WAS DISBURSING THE SAME TO VARIOUS MUNICIPALITIES I N ACCORDANCE WITH THE GUIDELINES OF THE SCHEME. THE ASSESSEE WAS NOT ENGAGED IN ANY OTHER ACTIVITY AND WAS NOT GENERATING ANY REVENUE AND ACCORDINGLY NOT DRAWING ANY INCOME AND EXPENDITURE/PROFIT & LOSS ACCOUNT. THE OPERATIONAL EXPENSES OF THE ASSESSEE WERE BEING MET OUT OF THE FUNDS (5%) PORTION BEING ALLOCATED AGAINST THE SCHEMES. THE ASSESSEE WAS THE CUSTODIAN OF THE FUNDS RECEIVED FROM CENTRAL AND STATE GOVERNMENTS AND WAS HOLDING THE FUNDS PENDING DISBURSEMENT IN SAVING BANK ACCOUNTS WITH BANKS IN ACCORDANCE WITH THE DIRECTIONS OF THE CENTRAL/STATE GOVERNMENT. THE INTEREST EARNED ON THE SAID FUNDS DEPOSITED IN THE BANK ACCOUNTS, AS CLAIMED BY THE ASSESSEE WAS THE INCOME OF CENTRAL/STATE GOVERNMENTS, TO WHOM THE FUNDS BELONGED, WHICH IN TURN WERE PARKED IN FIXED DEPOSITS WITH BANKS. NO PART OF THE SAID INTEREST INCOME AROSE TO THE ASSESSEE. DURING THE YEAR THE TOTAL INTEREST INCOME OF RS.22,12,471/- WAS CREDITE D TO THE FIELD INTEREST ACCOUNT AND REFLECTED AS LIABILITY IN THE BALANCE SHEET. THE UTILIZATION OF SAID INTEREST WAS ALSO AS PER THE DIRECTIONS OF CENTRAL/STATE GOVERNMENT. THE GOVERNMENT OF INDIA VIDE NOTIFICATION DATED 17.3.1999 HAD ISSUED GUIDELINES FOR THE UTILIZATION OF INTEREST EARNED O N THE AMOUNTS DEPOSITED OUT OF FUNDS RELEASED UNDER SJSRY SCHEME. AS PER THE SAID NOTIFICATION, THE INTEREST EARNED ON SUCH DEPOSITS WAS TO BE DISTRIBUTED BETWEEN ALL THE COMPONENTS OF THE SCHEME ON PRO RATA BASIS. 9. THE ISSUE ARISING IN THE PRESENT APPEAL IS THE ASSESSABILITY OF THE SAID INTEREST INCOME ARISING O N SURPLUS FUNDS PARKED IN DEPOSITS/SAVING FUND ACCOUNTS. WE FIND SIMILAR ISSUE AROSE IN THE CASE OF STATE URBAN DEVELOPMENT SOCIETY, I.E. SOCIETY FORMED BY GOVERNMENT OF HARYANA. IN THE RELEVANT YEAR, THE SAID SOCIETY WAS DISBURSING MONEY UNDER TWO SCHEMES I.E. SJSRY AND NSDP. THE QUESTION OF ACCESSIBILITY OF BOTH THE GRANTS RECEIVED UNDER THE RESPECTIVE SCHEMES AND INTEREST EARNED ON SURPLUS FUNDS NOT DISBURSED UNDER THE SCHEME AROSE BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ORDER DATED 30.7.2 010 IN ITA NO.17/CHD/2009 & C.O.NO.19/CHD/2009 HELD THAT THE SAID GRANTS DISBURSED BY THE CENTRAL/STATE GOVERNMENT UNDER THE RESPECTIVE SCHEMES WERE NOT THE INCOME OF THE SOCIETY. FURTHER IT WAS HELD THA T INTEREST INCOME WAS ALSO NOT INCLUDIBLE AS INCOME I N THE HANDS OF SOCIETY. 6 10. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. M/S STATE URBAN DEVELOPMENT SOCIETY IN ITA NO.210/CHD/2011 DATE OF DECISION 19.10.2011 HAS UPHELD THE ORDER OF THE TRIBUNAL AND HAS DISMISSED THE APPEAL FILED BY THE REVENUE. THE ASSESSEE HAS PLACED ON RECORD THE COPY OF THE AFORESAID ORDER OF THE HON'BLE PUNJAB & HARYANA HIGH COURT. 11. IN THE FACTS OF THE PRESENT CASE BEFORE US THE ASSESSEE IS A STATUTORY BODY CARRYING ON SIMILAR WO RK IN THE STATE OF PUNJAB UNDER THE SAME SCHEME OF SJSRY. THE REVENUE IS IN APPEAL BEFORE US ON THE ISSUE OF ACCESSIBILITY OF INTEREST INCOME EARNED BY THE ASSESSEE SOCIETY ON THE FUNDS DEPOSITED IN THE BANKS. THE SAID ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF CIT VS. M/S ST ATE URBAN DEVELOPMENT SOCIETY (SUPRA). THE ASSESSEE IN THE PAPER BOOK FILED ON RECORD HAS FURNISHED THE COPY OF NOTIFICATION ISSUED BY THE CENTRAL GOVERNMENT FOR UTILIZATION OF INTEREST, PLACED AT PAGES 22 AND 23 OF THE PAPER BOOK. AS PER THE AFORESAID NOTIFICATION DATED 17.3.1999, THE INTERES T EARNED ON THE AMOUNT DEPOSITED IN THE SAVING BANK ACCOUNT OUT OF FUNDS NOT UTILIZED UNDER SJSRY SCHEME, ARE TO BE DISTRIBUTED BETWEEN ALL THE COMPONENTS OF THE SCHEME ON PRO RATA BASIS AND THE EXPENDITURE OUT OF SUCH INTEREST INCOME IS TO B E APPLIED ACCORDINGLY. IN VIEW OF THE ABOVE SAID INSTRUCTIONS OF THE CENTRAL GOVERNMENT, THE ASSESSE E SOCIETY IS NOT THE RECIPIENT OF THE AFORESAID INCOM E ARISING ON ACCOUNT OF INTEREST EARNED ON DEPOSITS WITH BANKS. FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF CIT VS. M/S STATE URBAN DEVELOPMENT SOCIETY (SUPRA), WHICH WAS FORMED BY THE GOVERNMENT OF HARYANA, WE ARE IN AGREEMENT WITH THE ORDER OF THE CIT (APPEALS) IN THIS REGARD. 12. THE CIT (APPEALS) HAS FURTHER ALSO ADDRESSED THE ISSUE OF APPLICABILITY OF PROVISIONS OF SECTION 10(23BBA) OF THE ACT AND THE FINDINGS OF THE CIT (APPEALS) VIDE PARA NOS.11 TO 13 ARE AS UNDER: 11. THUS, FROM THE ABOVE, IT IS CLEAR THE SAID EXPLANATION OF INTRODUCING THE STATUTORY PROVISION TO S.10(23BBA), IT WILL BE CLEAR THAT THE SAID EXEMPTI ON HAS BEEN INTRODUCED IN ORDER TO EXEMPT THE INCOME OF THE BODIES OR AUTHORITIES WHICH ARE SET UP BY OR UNDER ANY CENTRAL, STATE OR PROVINCIAL ACT AND WHIC H ARE ENTRUSTED WITH THE ADMINISTRATION OF PUBLIC RELIGIOUS AND CHARITABLE TRUSTS WITHIN THEIR JURISDICTION. IT WAS MADE CLEAR THAT SINCE THE BOD IES ARE NOT ENGAGED IN ANY COMMERCIAL ACTIVITY, IT WAS PROPOSED TO INSERT A NEW CL.(23BBA) TO S.10 IN ORDE R TO GRANT EXEMPTION IN RESPECT OF INCOME ARISING TO ANY BODY OR AUTHORITY ESTABLISHED, CONSTITUTED OR APPOINTED UNDER ANY ENACTMENT. BUT SUCH EXEMPTION WOULD NOT APPLY TO THE INCOME OF SUCH TRUST, ENDOWMENT OR SOCIETY WHICH ARE OBVIOUSLY NOT CREATED UNDER ANY ENACTMENT. THEREFORE, UNDER CL. (23BBA) OF S.10 OF THE ACT EXEMPTION IS ONLY GRANTE D TO THE BODIES WHICH ARE CREATED UNDER AN ACT PASSED BY THE STATE GOVERNMENT, CENTRAL GOVERNMENT OR PROVINCIAL GOVERNMENT. BUT, SUCH 7 EXEMPTION IS NOT EXTENDED TO ANY TRUST, ENDOWMENT OR THE SOCIETY WHICH IS CREATED BY PARTIES. 12. IT IS NOT IN DISPUTE THAT THE APPELLANT IS A LO CAL AUTHORITY CONSTITUTED BY THE PRESIDENT OF INDIA UND ER THE NOTIFICATION IN THE OFFICIAL GAZETTE DATED 18 TH FEB 1991. FROM THE PERUSAL OF THE OBJECTIVES OF THE APPELLANT IS QUITE CLEAR THAT THE PROVISO TO S.10(23BBA) DOES NOT APPLY TO THE PETITIONER. THE INCOME EARNED DOES NOT BELONG TO THE APPELLANT. IT HAS TO BE APPLIED TO ALL THE COMPONENTS OF THE SCHEME OF ROZGAR YOJNA ON PRORATE BASIS. THE LETTE R DATED 17.3.99 FROM GOVT. OF INDIA TO THE PRINCIPAL SECRETARY, DEPARTMENT OF LOCAL SELF GOVT. GOVT. OF PUNJAB IS VERY CLEAR ON THE ISSUE (COPY ENCLOSED). THE INTEREST EARNED CAN BY NO STRETCH OF IMAGINATIO N BE TERMED AS APPELLANTS INCOME. 13. THE SECTION CLEARLY PROVIDES THAT ANY INCOME IN ANY FORM EARNED BY THE ASSESSEE WHICH FALLS UNDER SECTION 10(23BBA) IS EXEMPT. THE AO ON THE ONE HAND ACCEPTED THAT THE ASSESSEE IS A LOCAL AUTHORIT Y CONSTITUTED BY THE GOVT. OF PUNJAB BUT ON THE OTHER HAND DENIED THE EXEMPTION AVAILABLE TO SUCH BODIES OR AUTHORITIES WITHOUT POINTING OUT ANY SPECIFIC REASON FOR ADDING BACK THE INTEREST INCOME. SECTION 10(23BBA) PROVIDES UNCONDITIONAL EXEMPTION TO THOSE ASSESSEES WHO FALL UNDER SECTION 10 OF THE INCOME TAX ACT, 1961. 13. WE ARE IN AGREEMENT WITH THE AFORESAID FINDINGS OF THE CIT (APPEALS) AND UPHOLDING THE SAME WE DISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE. THE ABOVE VIEW HAS BEEN CONFIRMED BY THE HONBLE PU NJAB & HARYANA HIGH COURT IN CASE OF CIT VS. M/S STATE URB AN DEVELOPMENT SOCIETY IN ITA NO. 210 OF 2011 VIDE ORDER DT. 19/10 /2011. 10. THEREFORE, FOLLOWING THE ABOVE ORDERS WE DECIDE THIS ISSUE AGAINST THE REVENUE. 11. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 12/01/2015 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :12/01/2015 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR