ITO (Exemption) ward - 1(1), Kolkata, Kolkata V. M/s. Central Tool Room & Training Centre, Kolkata

ITA 1684/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4315 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 19-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHUR Y
• Assessee Lawyers: ARVIND AGARWAL LD
• Keywords: Capital asset; Competent authority; Capital receipt; Revenue expenditure; Capital expenditure; TDS
• Section: 143(3); 12A; 10B; 205

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI S.S. GODARA, JM & HONBLE SHRI DR. ARJUN LAL SAINI, AM ] I .T . A NO. 1684 /KOL/ 201 7 A.Y 20 1 4 - 15 I.T.O (EXEMPTION), VS. CENTRAL TOOL ROOM & WARD - 1(1), KOL. TRAINING CENTRE, KOLKATA PAN: AAAAC2480P (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI ROBIN CHOUDHURY, ADDL. CIT (DR) FOR THE RESPONDENT : SHRI A RVIND AGARWAL, ADVOCATE, LD.AR DATE OF HEARING : 2 2 - 04 - 2019 DATE OF PRONOUNCEMENT: 10 - 0 5 - 2019 ORDER SHRI S.S. GODARA, JM : 1. THIS REVENUES APPEAL FOR ASSESSMENT YEAR 20 1 4 - 15 ARISE S AGAINST THE CIT(A) , 25 , KOLKATA S ORDER DATED 0 2 - 05 - 2017 PASSED IN CASE NO . ITBA APPEAL NO. CIT(A), KOLKATA 25/10322/2016 - 17 INVOLVING PROCEEDINGS U/S 143(3) OF THE I.T ACT , 1961 (IN SHORT ACT) . 2. HEARD BOTH THE PARTIES. CASE FILE AS WELL AS ASSESSEES DETAILED PAPER BOOK COMPRISING OF HONBLE JURISDICTIONAL HIGH COURTS DECISION, THE CIT(A)S FINDING S , ANNUAL ACCOUNTS FOR F.YS 2011 - 12 TO 2013 - 14, FORM 10B FOR THE F.Y 2013 - 14, ANNUAL ACCOUNTS FOR F.Y 2014 - 15, ACKNOWLEDGEMENT AND I.T R ETURNS FOR THE A.Y 2012 - 13 TO A.Y 2015 - 16, SECTION 12A REGISTRATION CERTIFICATE, STATEMENT OF EXPENDITURE INCURRED AGAINST GOVT. GRANTS FROM F.YS 2013 - 14 TO 2014 - 15 WITH COPIES OF LEDGER ACCOUNTS, CORRESPONDENCE WITH REGARD TO GRANT S UTILIZATION AND DIRE CTION S OF UTILIZATION CERTIFICATE ISSUED BY 2 ITA NO. 1684/KOL/2017 ITO, E, W 1(1) KOL VS. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 2 GOVT. OF INDIA, UTILIZATION OF CERTIFICATES AND VARIOUS JUDICIAL PRECEDENTS ETC. , STAND PERUSED . 3 . THE REVENUE FIRST OF ALL TAKES US THROUGH THE CIT(A)S FINDINGS UNDER CHALLENGE HOLDING THE ASSESSEE IS A GOVT. OF INDIA ORGANIZATION AND ALSO DELETING ADDITION OF RS. 8 , 21 , 56,000/ - ON SUM ALLOTTED BY GOVT. OF INDIA AS FOLLOWS: - 6. THE POINTS FOR DETERMINATION IN THIS APPEAL. I HAVE GONE THROUGH THE MATTER. THE ISSUE INVOLVED ACTUALLY ONLY REQUIRES THE BASIC ENTIRE PERSPECTIVE TO BE SEEN; NOT JUST MERE ACCOUNTING TREATMENT. THE ISSUE THEN BECOMES VERY ELEMENTARY AND STRAIGHT - FORWARD. THUS THE FOLLOWING ARE THE POINTS FOR DETERMINATION ARISING: A. WHO IS THE APPELLANT - WHETHER IT IS LIABLE TO BE ASSES SABLE TO INCOME - TAX IN THE FIRST PLACE? B. THE GOVERNMENT GRANTS - THE FINDING, THE ALLOCATION, THE GOVERNMENT RULES TO BE OBSERVED/COMPLIED. C. WHETHER SUCH GRANTS HAD BEEN RECEIVED IN EARLIER YEARS/LATER YEARS. D. ON THE GROUNDS OF APPEAL, PER SE. 7. WHO IS THE AP PELLANT - WHETHER IT IS LIABLE TO BE ASSESSABLE TO INCOME - TAX IN THE FIRST PLACE ? 7.1 IN THE ANNUAL REPORT OF THE APPELLANT INSTITUTION: 1. INTRODUCTION: CENTRAL TOOL ROOM & TRAINING CENTRE (CTTC) KOLKATA HAD BEEN ESTABLISHED IN THE YEAR 1978 UNDER THE TEC HNICAL CO OPERATION PROGRAMME BETWEEN GOVERNMENT OF INDIA AND GOVERNMENT OF DENMARK. IN ORDER TO PROVIDE GRATER AUTONOMY, THE CENTRE WAS ESTABLISHED AS A GOVT. OF INDIA SOCIETY. THE MANAGEMENT OF AFFAIRS OF THE CENTRE RESTS WITH THE GOVERNING COUNCIL CONSTITUTED BY GOVT. OF INDIA. ADDITIONAL SECRETARY & DEVELOPMENT COMMISSIONER (MSME), MINISTRY OF MICRO, SMALL & MEDIUM ENTERPRISES, GOVT. 3 ITA NO. 1684/KOL/2017 ITO, E, W 1(1) KOL VS. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 3 OF INDIA IS THE PRESIDENT OF THE SOCIETY AND CHAIRMAN OF ITS GOVERNING COUNCIL. THE GOVERNING COUNCIL, FOR THE RELEVANT FY 2013 14, IS 10. GOVERNING COUNCIL DETAILS: THE GOVERNING COUNCIL OF THE TOOL ROOM WAS CONSTITUTED VIDE OFFICE OF THE AS & DC LETTER NO. 21/05/RECONS/KOL/2014/TR II DATED 25.02.2014 FOR A PERIOD OF 3 YEARS OR TILL THE TIME IT IS CONSTITUTED. GO VERNING COUNCIL AS ON 31.3.2014 1.ADDITIONAL SECRETARY & DEVELOPMENT COMMISSIONER, : CHAIRMAN OF GC (MSME) MINISTRY OF MSME, NIRMAN BHAWAN, 7 TH FLOOR, AND EX OFFICIONEW DELHI 110 108 PRESIDENT OF THE SOCIETY 2. JOINT SECRETARY, MINISTRY OF MSME, UDYOG BHAVAN, : MEMBER NEW DELHI 3. DIRECTOR (TR) ALTERNATIVELY DD(TR), OFFICE OF THE DC (MSME), NIRMAN BHAWAN, 7 TH FLOOR, NEW DELHI110108 : MEMBER 4. DIRECTOR/US(IF WING), MINISTRY OF MSME, UDYOG BHAVAN, NEW DELHI 110 108 : MEMBER 5. DIRECTOR, MSME DEVELOPMENT INSTITUTE, KOLKATA 700 108 : ME MBER 6. PRINCIPAL SECRETARY, MICRO & SMALL SCALE ENTERPRISES & TEXTILES, GOVT OF WEST BENGAL, WRITERS BUILDING, KOLKATA : MEMBER 4 ITA NO. 1684/KOL/2017 ITO, E, W 1(1) KOL VS. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 4 7. DIRECTOR OF INDUSTRIES, GOVT OF MANIPUR, SECRETARIAT NORTH BLOCK, IMPHAL 795 001. : MEMBER 8. DIRECTOR OF INDUSTRIES, GOVT OF SIKKIM, GANGTOK SECRETARIAT, ANNEXE 1, S.T MARG, GANGTOK 737001. : MEMBER 9. SECRETARY, TECHNICAL EDUCATION & TR AINING DEPARTMENT , GOVT. OF W.B, VIKASH BHAWAN, SALT LAKE 700 091. : MEMBER 10. GENERAL MANAGER, ORDNANCE FACTORY DUMDUM, JESSORE ROAD, DUMDUM, KOLKATA 700 028 : MEMBER 11. HOD, MECHANICAL ENGINEERING DEPARTMENT, JADAVPUR UNIVERSI TY, KOLKATA 700 032. : MEMBER 12. PRESIDENT ALTERNATIVELY SECRETARY, BENGAL NATIONAL CHAMBER OF COMMERCE & INDUSTRIES, 23 R.N MUKHERJEE RD, KOLKATA 700 001. : MEMBER 13. SHRI BIPRODAS CHAKRABORTY, 88/A ROY BAHADUR ROAD, BEHALA, KOLKATA, HONORARY DIRECTOR, M/S. MIRACLE INFO WEB PVT. LTD, KOLKATA : MEMBER 14. THE PRESIDENT, INDIAN PLASTICS FEDERATION, 88 ROYD STREET, 1 S T FL., KOLKATA : MEMBER 15. SHRI PUSHPJEET YADUKA, FCA C/O SINGHANIA AGARWAL & CO., CHARTERED ACCOUNTANTS, C 5 OMER MANSION, 29A WESTON STREET, KOLKATA : MEMBER SECRETARY 16. GENERAL MANAGER, CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 700 108 : MEMBER SECRETARY THE FOLLOWING GOVERNING COUNCIL/AGM MEETING WAS HELD DURING THE YEAR 2013 14 25.09.2014 80 TH GC MEETING AT O/O MSM E, NEW DELHI 25.09.2014 36 TH GC MEETING AT O/O MSME, NEW DELHI SO THE APPELLANT INSTITUTION IS AN INSTITUTION OF THE GOVERNMENT OF INDIA UNDER THE MINISTRY OF MICRO, SMALL & MEDIUM ENTERPRISES [ MSME]. THE GOVERNMENT APPOINTS/CONSTITUTES THE GO VERNING COUNCIL WHICH CONSIST OF SENIOR GOVERNMENT OFFICIALS IN THE MINISTRY OF MSME, DIRECTOR OF INDUSTRIES OF STATE GOVERNMENTS [ IN THE EASTERN STATES]. GOVERNMENT ORDNANCE FACTORY, UNIVERSITY, AND SOM REPRESENTATIVES FROM THE TRADE & INDUSTRY. THE CHA IRMAN OF THE GOVERNING COUNCIL IS THE ADDITIONAL SECRETARY & DEVELOPMENT COMMISSIONER [MSME], MINISTRY OF MSME, GOVT. OF INDIA . THE APPELLANT IS A GOVERNMENT INSTITUTION. 5 ITA NO. 1684/KOL/2017 ITO, E, W 1(1) KOL VS. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 5 6 ITA NO. 1684/KOL/2017 ITO, E, W 1(1) KOL VS. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 6 8. THE GOVERNMENT GRANTS THE FUNDING, THE ALLOCATION, THE GOVERNMENT RULES. 8.1 WHAT IS GOVERNMENT GRANT? GOVERNMENT GRANT IS UNDER ARTICLE 113 OF THE CONSTITUTION OF INDIA WHEREBY PARLIAMENT VOTES ON THE FINANCE BILL, I.E THE BUDGET ESTIMATES FOR THE FINANCIAL YEAR. THE VOTE IS TO APPROVE THE EXPENDITURE FROM THE CONSOLIDATED FUND OF INDIA. THE FOLLOWING EXTRACT FROM THE KEY TO THE BUDGET DOCUMENTS [ FROM FINANCE MINISTRY WEBSITE WWW.FINMIN.GOV.IN EXPLAINS GRANTS 3. (B) DEMANDS FOR GRANTS I) ARTICLE 113 OF THE CONSTITUTION MANDATES THAT THE ESTIMATES OF EXPENDITURE FROM THE CONSOLIDATED FUND OF INDIA INCLUDED IN THE ANNUAL FINANCIAL STATEMENT AND REQUIRED TO BE VOTED BY THE LOK SABHA, BE SUBMITTED IN THE FORM OF DEMANDS FOR GRANTS. THE DEM ANDS FOR GRANTS ARE PRESENTED TO THE LOK SABHA ALONG WITH THE ANNUAL FINANCIAL STATEMENT. GENERALLY, ONE DEMAND FOR GRANT IS PRESENTED IN RESPECT OF EACH MINISTRY OR DEPARTMENT. HOWEVER, MORE THAN ONE DEMAND MAY BE PRESENTED FOR A MINISTRY OR DEPARTMENT DE PENDING ON THE NATURE OF EXPENDITURE. WITH REGARD TO UNION TERRITORIES WITHOUT LEGISLATURE, A SEPARATE DEMAND IS PRESENTED FOR EACH OF SUCH UNION TERRITORIES. IN BUDGET 2017 18 THERE ARE 100 DEMANDS FOR GRANTS. EACH DEMAND INITIALLY GIVES SEPARATELY THE T OTALS OF (I)'VOTED' AND 'CHARGED' EXPENDITURE; (II) THE 'REVENUE' AND THE 'CAPITAL' EXPENDITURE AND (III) THE GRAND TOTAL ON GROSS BASIS OF THE AMOUNT OF EXPENDITURE FOR WHICH THE DEMAND IS PRESENTED, THIS IS FOLLOWED BY THE ESTIMATES OF EXPENDITURE UNDE R DIFFERENT MAJOR HEADS OF ACCOUNT. THE AMOUNTS OF RECOVERIES ARE ALSO SHOWN. THE NET AMOUNT OF EXPENDITURE AFTER REDUCING THE RECOVERIES FROM THE GROSS AMOUNT IS ALSO SHOWN. A SUMMARY OF DEMANDS FOR GRANTS IS GIVEN AT THE BEGINNING OF THIS DOCUMENT, WHIL E DETAILS OF 'NEW SERVICE: OR 'NEW INSTRUMENT OF SERVES' SUCH AS, FORMATION OF A NEW COMPANY, UNDERTAKING OR A NEW SCHEME, ETC., IF ANY, ARE INDICATED AT THE END OF THE DOCUMENT. (II) EACH DEMAND NORMALLY INCLUDES THE TOTAL PROVISIONS REQUIRED FOR A SERVI CE, THAT IS, PROVISIONS ON ACCOUNT OF REVENUE EXPENDITURE, CAPITAL EXPENDITURE, GRANTS TO STATE AND UNION TERRITORY GOVERNMENTS AND ALSO LOANS AND ADVANCES RELATING TO THE SERVICE. WHERE THE PROVISION FOR A SERVICE IS ENTIRELY FOR EXPENDITURE CHARGED ON TH E CONSOLIDATED FUND OF INDIA, FOR EXAMPLE, INTEREST PAYMENTS (DEMAND FOR GRANT NO. 37), A SEPARATE APPROPRIATION, AS DISTINCT FROM A DEMAND, IS PRESENTED FOR THAT EXPENDITURE AND IT IS NOT REQUIRED TO BE VOTED BY THE LOK SABHA. WHERE, HOWEVER, EXPENDITURE ON A SERVICE INCLUDES BOTH 'VOTED' AND 'CHARGED' ITEMS OF EXPENDITURE, THE LATTER ARE ALSO INCLUDED IN THE DEMAND PRESENTED FOR THAT SERVICE BUT THE 'VOTED' AND 'CHARGED' PROVISIONS ARE SHOWN SEPARATELY IN THAT DEMAND. 7 ITA NO. 1684/KOL/2017 ITO, E, W 1(1) KOL VS. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 7 GRANT IS FROM THE CONSOLIDATED FUN D OF INDIA. GRANT IS ONLY FOR SPECIFIC PURPOSE TO BE EXPENDED. THUS, THERE JUST CANNOT BE ANY ELEMENT OF INCOMEIN A GRANT. 8.2 ACCOUNTING FOR THE GRANT: GRANT BEING ALLOCATION OF FUND FROM THE CONSOLIDATED FUND OF INDIA IT THUS JUST FOLLOWS THAT T HE GOVERNMENT RULES ON FINANCIAL MATTERS ARE TO BE OBSERVED AND FOLLOWED. THE MAIN RULES ARE IN THE GENERAL FINANCIAL RULES, 2005' [GFR ]. IN THE GFR ARE RULES FOR ALLOCATION, ACCOUNTING, SANCTION, UTILISATION , ETC. . THAT IS WHY IN THE RELEASE OF GRANT LETTER ITSELF IS SPECIFICALLY MENTIONED THAT THE GRANT WILL BE SUBJECT TO THE PROVISIONS CONTAINED IN THE GENERAL FINANCIAL RULES, 2005. ONE OF THE RELEASE LETTERS IS HEREUNDER: NO. 21/08/KOL/2013 14/TR I DATE : 10 06 2013 TO THE PAY & ACCOUNT OFFICER, PAO (MSME), NIRMAN BHAWAN, NEW DELHI. SUB : RELEASE OF GRANT IN AID (PLAN/NON RECURRING) TO CENTRAL TOOL ROOM & TRAINING CENTRE (CTC), KOLKATA FOR THE FINANCIAL YEAR 2013 14 UNDER TOOL ROOM & TECHNICAL INSTITUTIONS. SANCTION OF THE PRESIDENT OF INDIA IS HEREBY CONVEYED TO THE RELEASE OF RS. 241.56 LAKH (RUPEES TWO CRORE FORTY ONE LAKB FIFTY SIX THOUSAND ONLY) TOWARDS NON RECURRING GRANT IN AID (CREATION O[ CAPITAL AS~) TO CENTRAL TOOL ROOM & ; TRAINING CENTRE (CITC), KOLKATA [OR NON RECURRING EXPENSES AS PER A C TION PLAN FOR THE FINANCIAL YEAR 2012 13. 2. THE GR A NT IN A ID WILL BE REGULATED IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN THE SCHEME/GUIDELINES. THE GRANT IN AID IS ALSO SUBJ ECT TO THE PROVISIONS CONTAINED IN CHAPTER 9 OF THE GENERAL FINANCIAL RULES, 2005, AS AMENDED FROM TIME TO TIME, READ WITH THE GOVERNMENT OF INDIA'S DECISIONS INCORPORATED THEN: UNDER, AND ANY OTHER GUID ELINES WHICH MAY BE ISSUED IN THIS REGARD, AND IN P ARTICULAR TO THE FOLLOWING CONDITIONS: (I) THE GRAN! SHALL BE UTILIZED [OR THE PURPOSE OF CREATING CAPITAL ASSETS. ITS UTILIZATIO N WOULD RESULT IN ACHIEVEMENT O F THE FOLLOWING QUANTITATIVE AND QUALITATIVE TARGETS TO BE FIXED BY COMPETENT AUTHORITY : S.NO. ACTIVITY TARGET 8 ITA NO. 1684/KOL/2017 ITO, E, W 1(1) KOL VS. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 8 1. CASH COST RECOVERY RATIO (CCRR) % 2. TRAINEES TRAINED 3. UNITS BENEFITED (II) THE I INSTITUTION S H AL L MAINTAIN SEPARATE SUBSIDIARY BANK ACCOUNTS FOR THE GO VERNMENT GRANTS RECEIVED AND UTIL IZED. IN ADDITION, A SEPARATE BANK ACCOUNT SHALL BE MAINTAINED FOR THE GOVERNMENT GRANTS . (III) THE GRANT RELEASED WILL BE UTILIZED BY CENTRAL TOOL ROOM & TRAINING CENTRE (CTTC), KOLKATA BY 31.03.2015 FOR THE PURPOSED INDICATED IN PARA 2(I) ABOVE (IV) CENTRAL TOOL ROOM & TRAINING CENTRE (CTTC), KOLKATA MAY FURNISH THEIR PERFORMANCE CUM ACHIEVEMENT REPORT ON OR BEFORE 31.03.2014 TO THE SANCTIONING AUTHORITY. (THE BANK ACCOUNT SHOULD BE SAME WHICH WAS AUTHORIZED FOR OPERATION AT THE TIME OF REGISTRATION UNDER THE 'CENTRAL PLAN SCHEME MONITORING SYSTEM'(CPSMS) OF THE MINISTRY OF FINANCE) ( V ) CENTRAL TOOL ROOM &: TRAINING CENTRE (CTT'C). KOLKATA SHOULD MAINTAIN A REGISTER OF PERMANENT AND SEMI PERMANENT A SSETS ACQUIRED WHOLLY OR MAINLY OUT OF THE ABOVE GRA NT IN THE PRESCRIBED FO RMAT AND COPY THEREOF SH OULD BE, FURNISHED TO THIS MINISTRY. (VI) ASSETS . AC QU I RED WHOLLY OR SUBSTANTIALLY OUT OF GOVERNMENT GRANT &HALL NOT BE DISPOSED OF WITHOUT OBTAINING THE PRIOR APPROVAL OF THE SANCTIONING AUTHORITY OF GR ANT IN AID. (VII) THE . ACCOUNTS OF CE NTRAL TOOL ROOM & TRAINING CENTRE ( C TTC ) , KOLKATA S HALL BE OPEN F O R INSPECTION BY THE SANCTIONING AUTHORITY AND AUDIT., BOTH BY THE COMPTROLLER & AUDITOR GENERAL OF INDIA UNDER THE PROVISION OF C&.AG(DPC) A CT, 19 71 IN ACCORDANCE WITH THE PROVISIONS LAID DOWN IN SECTION 14 OF THE C&.A G (DPC 1971) AS AMENDED FROM TI ME TO TIME AND INT ERNAL AUDIT PART OF THE PRINCIPAL ACCOUNTS OFFICE OF THE MSME , WHENEVER IT IS CALLED UPON TO DO SO. (VIII) THE GRANTEE SHALL SUBM.IT THE UTILIZATION C ERTIFICATE IN THE PRESCRIBED FORM GFR 19A DULY S IGNED BY THE HEAD OF THE INSTITUTION/ GRAN TEE LA TEST BY 31.03.2015 . THE U TI 1I.LIZATION CERTIFICATE IN RESPECT OF GRANTS SHOULD DISCLOSE WHET H ER THE SPECIFIED. QUANTIFIED AN D QUALITATIVE TARGETS THAT SHOULD HAVE BEEN REACHED AGAINST THE AMOUNT UTILIZED WERE IN FACT REACHED. AND IF NOT , THE REASONS THEREFORE. THEY SHOULD CONTAIN AN OUTPUT BASED PERFO RMANCE ASSESSMENT INSTEAD OF INPUT BASED PERFORMANCE ASSESSMENT . (IX) CENTR AL TOOL ROOM & TRAINING CENTRE (CTTC). KOLKATA SHALL FU RNISH AN AUDITED STATEMENT OF ACCOUNTS O F THE FINANCIAL YEAR BEFORE 30.09.20 14. (X) GRANT IN AID SHALL BE UT ILIZED SUBJECT TO THE ECONOMY AND OTHER INSTRUCTIONS I SSUED FROM TIME TO TIM E BY THE M / O FINANCE OR BY THE COMPETENT AUTHORITY. 9 ITA NO. 1684/KOL/2017 ITO, E, W 1(1) KOL VS. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 9 (XI)THE UNSPENT BALANCES AVAILABLE WITH CENT RAL TOOL ROOM &. TRAINING CENTRE (CTTC). KOL KA TA HAVE BEEN TAKEN INTO ACCOUNT. (XII)CENTRAL TOOL ROOM &. TRA IN ING CENTRE (C'T' T C), KOLKATA S H ALL CERTIFY THAT THE UT ILIZA TION CERTIFICATES DUE FOR SUBMISSION FOR GRANTS IN AID SANCTIONED IN THE PREVIOUS YEARS C ONTAININ G ALL THE RELEVANT DETA IL S UNDER G FR 2 12 (1) HAVE BEEN SUBMITTED TO THE SATISFACTION OF THE MINISTER (MSME). (XIII) CENTRAL TOOL ROOM & TRAINING CENTRE (CTT C). KOLKATA SHALL CERTIFY THAT NO GRANT IN A I D FOR THIS PURPOSE OR ACTIVITIES HAVE BEEN APPLIED FOR OR OBTAINED FROM ANY OTHER MINISTRY OR DEPARTMENT OF THE GOVERNMENT OF INDIA OR STATE GOVERNMENT. (XIV) *(APP LICABLE IN CASE OF GRANTEE INSTITUTION RECEIVING MORE THAN 50% OF THEIR RECURRING EXPENDITURE IN THE FORM OF GRANTS IN AID) (A) CENTRAL TOOL ROOM & TRAINING CENTRE (C1IC), KOLKATA SHA LL ENSURE THAT ALL THE TERMS AND CONDITIONS OF THE SERVICE OF THEIR EMPLOYEE S ARE NOT HIGHER THAN THOSE APPLICABLE TO SIMILAR CATEGORIES OF EMPLOYEES OF CENTRAL GOVERNMENT, AND WHERE IT IS NOT IN ACCORDANCE WITH ABOVE. THE RELAXATION OF MINISTRY OF FINANCE HAS BEEN OBTAINED AS REQUIRED UNDER GFR 209(6)(IV)(A). (B) CENTRAL TOOL R OOM A: TRAINING CENTRE (CT T C), KOLKATA WILL MAKE RESERVATIONS F OR SCHEDULED CASTES AND SCHEDULED TRIBES OR OBC IN THE POSTS OR SERVICES UNDER ITS CO N TROL ON THE LINES INDICATED BY THE GOVERNMENT OF INDIA, (XV) CENTRAL TOOL ROOM &. 1'RAIN.ING CENTRE ( CITC). KOLKATA SHA1J ADHERE TO ALL THE RELEVANT PROVISIONS OF OFR AND ANY OTHER INST RUCTIONS/ GUIDELINES ISSUED BY THE GOVERNMENT FROM TIME TO TIME, WHILE MAKING PROCUR EMENT /PURCHASES OF GOODS AND SERVICES I NC LUDING COMPLIANCE TO GFR PROVISIONS IN EASE OF OUT SOURCING OF SERVICES AND ENGAGEMENT OF CONSULTANTS. (XVI) #BEFORE RELE ASE OF PAYMEN1 INVOLVED IN THIS SA NCTION, THE MEMBERS OF THE EXECUTIVE COMMITTEE OF CE N TRAL TOOL ROOM &. TRAINING CENTRE (CITC), KOLKATA WILL HAVE TO EXECUTE E BOND IN THE PR ESCRIBED FORMAT BINDING THEMSELVES JOIN TLY AND SERVER A LLY TO ABIDE BY THE CONDITIONS OF GRANT I N AID, IN THE EVENT OF FAILING TO COMPLY WITH THE CONDITIONS OF THE BOND, THE SIGNATORIES OF THE BOND SHALL BE JOINTLY AND SEVERALLY LIABLE TO REFUND TO THE PRESIDENT OF INDIA. THE WHOLE OR PERT AMOUNT OF THE GRANT WITH I.NTUES1 AT TEN PER CENT PER ANNUM THEREON OR THE SUM SPECIFIED UNDER THE BOND. OR 10 ITA NO. 1684/KOL/2017 ITO, E, W 1(1) KOL VS. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 10 # CENTRAL TOOL ROOM & TRAINING CENTRE (CITC). KOLKATA HAS B EEN EXEMPTED FROM EXECUTION OF THE BOND. CENTRAL TOOL ROOM & TRAINING CENTRE (C T TC), KOLKATA SHALL, HOWEVER, FURNISH AN UNDERTAKING THAT IT WILL COMPLY WITH ALL THE TE R MS AND CONDITION STIPULATED IN THE SANCTION ORDER. (XVII) CENTRAL TOOL ROOM &. TRAINING CENTRE (CITC), KOLKATA SHOULD SEND PRE RECEIPTED BILL TO TH IS MINISTRY FOR PAYMENT OF THE AMOUNT DRAWN AGAINST THIS SANCTION . (XVIII) IN NO CASE THE GRANT RELEASED UNDER THIS SANCTION WILL BE UTILIZED FOR ANY PURPOSE OTHER THAN THOSE INDICATED IN THE SANCTION. THE GRANTEE SHALL NOT DIVERT THE GRANTS AND ENTRUST EXECUTION OF THE SCHEME OR WORK CONCERNED TO ANOTHER INSTITUTION OR ORGANIZATION AND SHELL ABIDE BY THE TERMS & CONDITIONS OF THE GRANT AND FOLLOW/ADHERE TO ALL THE RELEVANT PROVISIONS OF GFR REGARDING GRANTS IN AID. IF THE GRANTEE FAILS TO UTILIZE THE GRANT FOR THE PURPOSE FOR WHICH THE SAME HAS BEEN SANCTIONED OR DOES NOT ADHERE TO THE TERMS & CONDITION OF GRANT AND GFR PROVISIONS, THE GRANTEE/INSTITUTION SHALL BE REQUIRED TO REFUN D THE GRANT WITH INTEREST @10% PER ANNUM. (XIX) NOTED AT SERIAL NO. 04 IN THE RESISTER OF GRANTS. (XX) SHRI HARPAL DESWAL, 000 OF THE OFFICE OF DC, MSME WILL ACT AS DRAWING AND DISBURSING OFFICER FOR THIS SANCTION, 3. IT IS CERTIFIED THAT 'NO UTILIZ ATION CERTIFICATE DUE FOR RENDITION IS PENDING FROM CTTC,KOLKATA. 4. THE TOTAL RELEASE UNDER THIS OBJECT HEAD. INCLUDING THE PRESENT SANCTION WOULD BE RS. 241..56 .LAKH DURING THE CURRENT FINANCIAL YEAR AS AGAINST THE BUDGET PROVISION OF RS. 1000.00 L AKH FOR THE FINANCIAL YEAR 2013 14. 5. THE EXPENDITURE OF IS DUBITABLE TO: MAJOR HEAD '2851' VILLAGE AND SMALL INDUSTRIES MINOR HEAD '00.102' SMALL SCALE INDUSTRIES SUB HEAD 77 INFRASTRUCTURE DEVELOPMENT AND CAPACITY BUILDING (ERSTWHILE MSMB CLUSTER DEVELOPMENT PROGRAMME AND MSME GROWTH POLES) 77.00.35 GRANT IN AID FOR CREATION OF CAPITAL ASSETS IN GRANT NO. '66' MINISTRY OF MSME FOR THE YEAR 2013 14 6. THE BANK DETAILS OF THE GRANTEE INSTITUTION FOR MAKING PAYMENT ARE AS BELOW ; 11 ITA NO. 1684/KOL/2017 ITO, E, W 1(1) KOL VS. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 11 NAME OF THE BENEFICIARY NAME OF BANK A/C OF ORG. HELD ADDRESS/CODE OF BANK BRANCH A/C NO. MICR CODE AND IFSC CODE CENTRAL TOOL ROOM & TRAINING CENTRE (CTTC), KOLKATA STATE BANK OF INDIA BONHOOGHLY INDUSTRIAL ESTATE, KOLKATA 10471732068 700002150 AND SBIN0002029 7. THIS ISSUES WITH THE CONCURRENCE OF INTEGRATED FINANCE WING VIDE THEIR DY. NO. 151/F 1/13 DATED 07.06.2013. SD/ (JAIPAL SINGH) DY. DIRECTOR (TR II) COPY TO: 1. GENERAL MANAGER, CITC, KOLKATA WITH REFERENCE TO HIS LETTER NO. CTTC/L3 VOL.XVLLI13 14 DATED 04.05.2013. 2. IF WING, (FJ SECTION), W.R.T THEIR DY.NO. MENTIONED ABOVE. 3. ACCOUNTANT GENERAL, KOLKATA, WEST BENGAL. 4. PLANNING DIVISION, OFFICE OF DC(MSME), NEW DELHI. 5. CASH SECTION, OFFICE OF DC{MSM), NEW DELHI. 6. 0/0 PRINCIPAL DIRECTOR (AUDIT), ECONOMIC &. SERVICE MINISTRIES, AGCR BUILDING. LP. ESTATE, NEW DELHI I 10002 7. SECTION/GUARD FILE SD/ (JAIPAL SINGH) DY. DIRECTOR (TR II) [NOTE: THE APPELLANT INSTITUTION. DURING THE RELEVANT YEAR. RECEIVED 4 GOVERNMENT GRANTS COMPRISING OF RS. 2,4 I CRORE (PRINTED ABOVE). RS.3.80 CRORE, ~ 1.00 CRORE, AND RS. 1.00 CRORE. ALL THE SE 4 GRANTS TOTAL TO THE IMPUGNED RS. 8,21,56,0001 ]. THE ABOVE LETTER OF RELEASE OF GRANT EXPLAINS ALL: THE GENERAL FINANCIAL RULES, 2005 ARE TO BE COMPLIED. UTILIZATION TARGETS. SEPARATE BANK ACCOUNT TO BE MAINTAINED. TARGET SPECIFIED FOR UTILIZATION PERIOD FOR UTILIZATION AUDIT BY THE C&AG THE GOVERNMENT HEADS OF ACCOUNT TO BE DEBITED. BANK ACCOUNT OF THE APPELLANT INSTITUTION. 12 ITA NO. 1684/KOL/2017 ITO, E, W 1(1) KOL VS. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 12 SANCTION OF THE RELEASE BY THE INTEGRATED FINANCE WING (UNDER THE MINISTRY OF FINANCE) ENDORSEMENT OF THE LETTER TO VARIOUS CONCERNED GOVT. DEPARTMENT: ACCOUNTANT GENERAL, ETC. 8.3 FUNDAMENTAL BASIC POINT TO BE MADE HERE IS THE GRANT IS GOVERNMENT FUND. IT IS SUBJECTED TO GOVERNMENT RULES, PROCEDURE, SANCTION, AND AUDIT. THE EN TIRE MACHINERY OF THE GOVERNMENT OF INDIA HAVE TO COMPLY TO THE GENERAL FINANCIAL RULES, 2005. SO, THE SPECIFIC MENTION(S) OF GFR PROVISIONS IN THE RELEASE LETTER ITSELF. 8.4 WHICH REITERATES MY DISCUSSION AT PARA 7 PRECEDING THAT THE APPELLANT INST ITUTION BEING OF THE GOVERNMENT, IS NOT ASSESSABLE TO INCOME TAX AT ALL IN THE FIRST PLACE. 8.5 ANYWAY, EVEN THAT I HAVE HELD THAT THE APPELLANT INSTITUTION IS NOT ASSESSABLE TO INCOME TAX AT ALL IN THE FIRST PLACE AND FURTHER TOO THAT THE FUNDS ARE GOVE RNMENT FUNDS FOR SPECIFIC TARGET PURPOSE, THE APPELLANT INSTITUTION HAS UTILIZED THE GRANTS THE 'UTILIZATION CERTIFICATE' TO THE MINISTRY AS MANDATED UNDER RULE 212 OF THE GENERAL FINANCIAL RULES [GFR]. THE UTILIZATION CERTIFICATE IN THE GFR PRESCRIBED FOR M NO. 19A, IS HEREUNDER: 13 ITA NO. 1684/KOL/2017 ITO, E, W 1(1) KOL VS. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 13 14 ITA NO. 1684/KOL/2017 ITO, E, W 1(1) KOL VS. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 14 9. SUCH GOVERNMENT GRANTS ARE REGULAR HAD BEEN IN EARLIER YEARS, AS ALSO IN SUBSEQUENT YEARS. A PERTINENT POINT IS THAT SUCH GOVERNMENT GRANTS HAD BEEN IN EARLIER YEARS, AS ALSO IN LATER YEAR OBVIOUSLY, AS THE APPELLANT INSTITUTION IS A GOVERNMENT INSTITUTION. I HAVE GONE THROUGH THE BALANCE SHEET AS ON 31.03.2013, AND, 31.03.2015, AND SUCH GRANTS ARE THERE, AND WITH THE SAME ACCOUNTING TREATMENT. SO THE SAME ACCOUNTING TREATMENT HAD BEEN DONE IN ALL THE YEARS CREDITING THE GRANTS DIRECTLY TO THE BALANCE SHEET. IT DOES NOT SEEM THAT THE AO(S) HAD EVER QUESTIONED THE ACCOUNTING TREATMENT. PER SE, AS REGARDS THE ACCOUNTING TREATMENT, I CONCUR WITH THE APPELLANT. THE GOVERNMENT GRANT IS NOT INCOME. IT IS GRANT FOR SPECIFIC TARGET/ SCHEME USE. THOUGH IT IS NOT CAPITAL RECEIPT IN THE STRICT SENSE, BUT IT IS PARLIAMENT VOTED SPECIFICALLY EAR MARKED FUNDS FOR SPECIFIC TARGET/SCHEME USE. THE GOVERNMENT RULES APPLY; NOT THE INCOME TAX ACT. THE FUNDS ARE OUTSIDE THE PURVIEW OF THE INCOME TAX (SAVE M AYBE FOR TDS PROVISIONS AT THE TIME OF EXPENDING FROM OUT OF THE FUND, IF AND WHERE APPLICABLE). 10. WHEN APPELLANT BEING GOVERNMENT INSTITUTION IS NOT LIABLE TO BE ASSESSABLE TO INCOME TAX, THE GRANTS ARE GOVERNMENT SPECIFIC FUNDS THEN HOW THE IMPUGN ED ASSESSMENT, ETC ... THE ROOT CAUSE IS OBVIOUS IT IS THE PERMANENT ACCOUNT NUMBER [PAN]. THE APPELLANT INSTITUTION HAD BEEN ESTABLISHED WAY BACK IN THE YEAR 1978. BUT THE GRANT' OF REGISTRATION U/S 12A WAS ONLY UNTIL THE YEAR 2001; I.E., IT HAD A PPLIED FOR REGISTRATION U/S 12A ONLY AROUND THE YEAR 2001. THE YEARS AROUND 2001 WERE THE PAN FEVER YEARS. PAN HAD JUST BEEN INTRODUCED WITH GUSTO AND ALL OUT REACH. PAN WAS COMPULSORY TO OPEN BANK ACCOUNT. THE APPELLANT INSTITUTION HAS TO HAVE BANK ACCOUNT; MORE SO, THE GRANTS ARE TO BE CREDITED TO SPECIFIC BANK ACCOUNT. SO HAVING GOT PAN THE COMMON PERCEPTION IS THAT, NOW THAT YOU ARE IN THE TAX NET, AND SO YOU ARE TO FURNISH RETURN OF INCOME. SO THE APPELLANT MUST HAVE APPLIED FOR REGISTRATION U /S. 12A AS A EDUCATIONAL INSTITUTION TO GET THE EXEMPTION U/S.11. THE REGISTRATION WAS GRANTED. THINGS WENT FINE UNTIL THIS IMPUGNED ASSESSMENT ORDER. 11. ON THE GROUNDS OF APPEAL, PER SE 15 ITA NO. 1684/KOL/2017 ITO, E, W 1(1) KOL VS. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 15 THOUGH I HAVE SUO MOTO HELD THAT THE APPELLANT INSTITUTION IS NOT LIABLE TO BE ASSESSABLE TO INCOME TAX IN THE FIRST PLACE, BEING A GOVERNMENT EDUCATIONAL INSTITUTION. I WILL HEREUNDER BRIEFLY TO THROUGH THE GROUNDS OF APPEAL, AND GIVE MY DECISION THEREON. GROUND NO. GROUND SUBJECT MATTER DECISION/REMARKS 1 GENERAL 2 ITO,AO TREATING THE GOVERNMEN6T GRANT AS INCOME ALLOWED .GOVERNMENT GRANT IS NO INCOME. THE GRANT IS PARLIAMENT VOTED GRANT OUT O THE CONSOLIDATED FUND OF INDIA AS PER ARTICLE 113 OF THE CONSTITUTION OF INDIA. . THE GRANT IS TARGET USE SPECIFIC . THE GR ANT IS SUBJECTED TO THE GOVERNMENT FINANCIAL RULES. . THE GRANT IS GOVERNMENT FUND. THE GRANT IS NOT INCOME U/S. 11(1)(A); NOR IS IT CONTRIBUTION TO CORPUS U/S, 11(1)(D) OR 12(1). . THE GRANT IS OUTSIDE THE SCOPE OF THE INCOME TAX ACT. 3 ITO, AO NOT ALLOWING TOWARDS APPLICATION OUT OF THE GRANT [AS GROUND NO. 2 ABOVE IS ALLOWED, THIS GROUND BECOMES INFRUCTIOUS. EVEN SO, THE UTILIZATION SHOULD HAVE BEEN ALLOWED.] 4 THAT THE GRANTS ARE CAPITAL GRANTS[AS 12] TREATED AS ALLOWED .THOUGH IN THE STRICT SENSE, THE GRANTS ARE NOT PER SE SO AS TO BE CAPITAL GRANTS FOR THE SPECIFIED TARGET USE IS FOR TRAINING OF TRAINEES AND UNITS BENEFITTED, BUT AS THE GRANTS ARE NOT INCOME, THEY CANNOT BE CREDITED THROUGH THE I & E A/C AND SO SO HAVE TO BE CREDITE D DIRECTLY TO THE BALANCE SHEET. 5. UTILIZATION CERTIFICATE THE APPLICATION SHOULD HAVE BEEN ALLOWED. [SAME AS IN GROUND NO. 3 ABOVE] 6 GENERAL SAVINGS GROUND 16 ITA NO. 1684/KOL/2017 ITO, E, W 1(1) KOL VS. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 16 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY CONTENDS DURING THE COURSE OF HEARING THAT THE CIT(A) HAS ERRED IN LAW AS WELL AS IN FACTS IN TREATING THE ASSESSE TO BE AN PERSON WITHIN THE MEANING OF SECTION 2(31) OF THE ACT T HEREBY DELETING THE IMPUGNED ADDITION OF RS.8,21,56,000/ - AS GRANT RECEIVED FROM GOVT. OF INDIA. THE DEPARTMENT SEEKS TO REITERATE THAT ASSESSE E HAS NOWHERE PLACED ON RECORD THE DONOR S SPECIFIC DIRECTION ABOUT UTILIZATION OF THE IMPUGNED SUM AS CORPUS FUND. IT THEREFORE SEEKS TO RESTORE T HE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NON APPLICATION OF THE IMPUGNED SUM UPTO STATUTORY LIMIT OF 85% U/S. 11 OF THE ACT. THE ASSESSE ON THE OTHER HAND STRONGLY SUPPORTS THE CIT(A)S ACTION DELETING THE IMPUGNED ADDITION VIDE ABOVE EXTRACTING REASONING. 8. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE RIVAL CONTENTIONS. WE FIND NO MERIT IN REVENUES INSTANT ARGUMENTS. T HE ASSESSEE ADMITTEDLY IS A TRAINING C ENTRE ENJOYING SECTION 12A REGISTRATION SINCE 12 - 06 - 2001. IT RECEIVES GOVT. OF INDIAS GRANT AS PER SPECIFIC DIRECTION S . COPY OF ONE SUCH DIRECTION FORMS PART OF RECORD VIDE LETTER DT. 10 - 06 - 2018 COMING FROM MINISTRY OF MICRO, SMALL & MEDIUM ENTERPRISES MAK ES IT CLEAR THAT THE GRANT IN ISSUE WAS TO BE UTILIZED FOR CREATING CAPITAL ASSET IN A GIVEN RATIO . THE IMPUGNED GRANT ALSO CAME THROUGH THE SPECIFIED CHANNEL. THIS ASSESSEES UTILIZATION ACTIVITY IS VERY WELL RECORDED AS PER FORM 19A PRESCRIBED IN GFR (GENERAL FINANCE RULES). N ECESSARY UTILIZATION CERTIFICATE TO THIS EFFECT DATED 23 - 05 - 2014 HAS BEEN TAKEN INTO CONSIDERATION . THE CIT(A) HAS REPRODUCED THE SAME IN HIS LOWER APPELLATE ORDER IN PRECEDING PARAS. WE OBSERV E THAT IN TH ESE PECULIAR FACTS THE REVENUE HAS FAILED TO REBUT THAT ASSESSEES GRANT - IN - AID HAD COME WITH SPECIFIC DIRECTIONS AND THE SAME HAS ALSO BEEN UTI LIZED AS PER PRESCRIBED PURPOSE S . IT TRANSPIRES DURING THE COURSE OF HEARING THAT ASSESSING OFFICER HAS ACCEPTED THE VERY FACTUAL POSITION IN ALL PRECEDING AND SUCCEEDING ASSESSMENT YEARS . C OUPLED WITH THIS, VARIOUS DECISIONS/JUDICIAL PRECEDENTS NAMELY HON BLE PUNJAB & HARYANA HIGH COURT IN ITA NO. 210/ 11 CIT V/S. STATE URBAN 17 ITA NO. 1684/KOL/2017 ITO, E, W 1(1) KOL VS. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA 17 DEVELOPMENT SOCIETY DECIDED ON 9 - 10 - 1 , T HE TRIBUNALS ORDERS CHIEF ADMINISTRATOR RURAL DEVELOPMENT AUTHORITY V/S. ACIT 2014 162 TTJ CHD. 749, ITA NOS. 505 - 506/PUNE 2014 ARUNAVA V/S ITO DECIDED ON 22 - 5 - 2017 DIT V/S. SOCIETY FOR DEVELOPMENT (2012) 205 TAXMANN H O LD THAT G OVERNMENT G RANT S DO NOT ACQUIRE TAXABLE INCOMES STATUS IN SUCH CASES. WE CONCLUDE IN THIS PECULIAR FACTS AND CIRCUMSTANCES THAT THE CIT(A) HAS RIGHTLY REVERSED THE ASSESSMENT FINDINGS MAKING THE IMPUGNED ADDITION OF RS. 8.21 CRORES I N ISSUE ON BOTH COUNTS. 9. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 10 - 05 - 2019 SD/ - S D/ - [ DR. ARJUN LAL SAINI ] [ S.S.GODARA ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 10 - 05 - 2019 **PRADIP, SR. PS C OPY OF THE ORDER FORWARDED TO: 1 . APPELLANT/ DEPARTMENT: SHRI KRISHNENDU SENGUPTA, ITO, W - 1(1), KOL 10B, MIDDLETON ROW, 5 TH FL., KOLKATA - 71. 2 . RESPONDENT/ ASSESSEE: M/S. CENTRAL TOOL ROOM & TRAINING CENTRE, KOLKATA, BONHOOGHLY INDUSTRIAL AREA, KOLKATA - 108. 3..C.I.T (A) . - 4. C.I.T. - KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR H.O.O/D.D.O KOLKATA