ITO, Panchkula V. M/s State Urban Development Society Haryana, Panchkula

ITA 260/CHANDI/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 8391 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-10-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 12-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: N K SAINI
• Keywords: Question of law
• Section: 12A; 12; 154; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCES A CHANDIGARH BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 274/CHD/2010 ASSESSMENT YEAR: 2002-03 M/S STATE URBAN DEVELOPMENT SOCIETY, VS. THE ITO, WARD-2, CHANDIGARH PANCHKULA PAN NO. AFGPG1243Q & ITA NO. 260/CHD/2010 ASSESSMENT YEAR: 2002-03 THE ITO, WARD-2, VS. M/S STATE URBAN DEVELOPMENT S OCIETY, PANCHKULA CHANDIGARH PAN NO. AFGPG1243Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY JAIN RESPONDENT BY: SHRI N.K.SAINI ORDER PER SUSHMA CHOWLA, JM THE CROSS APPEALS BY THE ASSESSEE AND REVENUE ARE A GAINST THE ORDER OF CIT(A), PANCHKULA DATED 30.12.2009 RELATING TO A SSESSMENT YEAR 2002- 03 AGAINST THE ORDER PASSED UNDER SECTION 154 OF TH E I.T. ACT. 2. BOTH THE APPEAL OF THE ASSESSEE AND THE REVENUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER FOR THE SAKE OF CONVENIENCE. 2 3. THE LEARNED AR FOR THE ASSESSEE AT THE OUTSET ST ATED THAT THE ISSUES RAISED IN THE PRESENT APPEALS ARE COVERED BY THE OR DER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 17/CHD/2009 AND C.O. 19/CHD/2009 RELATING TO ASSESSMENT YEAR 2005-06 VIDE ORDER DATE D 30.7.2010. 4. THE GROUND NO.1 RAISED BY THE ASSESSEE IS AS UND ER:- 1. THAT THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ORDER PASSED U/S 154 AND WITHOUT APPRECIATING THE F ACT THAT THE REGISTRATION HAS BEEN GRANTED BY CIT PANCHKULA AND WRONGLY TAKEN THE DATE OF REGISTRATI ON AS 28/03/2003 INSTEAD OF 12.3.1992. 5. THE GROUND NO.1 RAISED BY THE ASSESSEE IS NOT PR ESSED, HENCE DISMISSED AS NOT PRESSED. 6. THE ISSUE RAISED IN GROUND NO.2 IS AS UNDER;- THAT THE LEARNED CIT(A) HAS WRONGLY TREATED THE INTEREST EARNED BY APPELLANT AS INCOME OF THE SOCIE TY WITHOUT APPRECIATING THE FACT THAT INTEREST EARNED IS INTEGRAL PART OF THE GRANT IN AID OF THE CONCERNED SCHEMES. 7. THE ISSUE RAISED IN GROUND NO.2 STAND COVERED BY THE ORDER OF THE TRIBUNAL IN ITA NO. 17/CHD/2009 RELATING TO ASSESSM ENT YEAR 2005-06 ORDER DATED 30.7.2010 IN ASSESSEES OWN CASE. THE TRIBUNAL VIDE ORDER DATED 30.7.2010, HELD AS UNDER:- 39. THE GROUND NO.1 RAISED BY THE REVENUE AND THE GROUND NO.2 RAISED IN THE CROSS OBJECTION BY THE AS SESSEE ARE AGAINST THE TREATMENT OF INTEREST INCOME AS INC OME FROM PROPERTY HELD UNDER TRUST AND CLAIM OF EXEMPTION U/ S 11 OF THE ACT. THE ASSESSEE AS PER THE DIRECTIONS OF TH E CENTRAL & STATE GOVERNMENT IS TO KEEP THE FUNDS IN SEPARATE A CCOUNTS WITH BANK AND INTEREST EARNED ON SUCH DEPOSITS WAS TREATED AS PART OF THE GRANTS UNDER THE RESPECTIVE SCHEMES TO WHICH THE SAID FUNDS RELATE. THE INSTRUCTIONS ISSUED BY THE CENTRAL GOVT. WHILE FORMULATING THE SCHEME ALSO PROVIDE THA T THE INTEREST EARNED ON SUCH DEPOSITS SHALL BE ACCUMULAT ED AS PART OF GRANTS RELEASED UNDER THE SCHEME AND IN CAS E OF THEIR NON-UTILIZATION THE SAME WILL FORM PART OF THE OPEN ING 3 SCHEME MONEY OF THE SUCCEEDING YEAR. THE ASSESSEE HAD CLAIMED SUCH INTEREST EARNED ON BANK DEPOSITS AS EX EMPT FROM THE PURVIEW OF SECTION 11 OF THE ACT. WE FIN D THAT THE HON'BLE KARNATAKA HIGH COURT IN CIT VS. KARNATAKA U RBAN INFRASTRUCTURE DEVELOPMENT & FINANCE CORPORATION, 2 84 ITR 582 (KAR) HAD HELD THAT INTEREST INCOME OF A GOVERN MENTAL NODAL AGENCY SET UP FOR DEVELOPMENT ACTIVITIES ON F UNDS PROVIDED BY CENTRAL GOVERNMENT BUT PARKED IN BANKS FOR THE PERIOD OF NON-UTILISATION IS NOT INCOME CHARGEABLE TO TAX. THE ISSUE IS ALSO COVERED BY THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. HARY ANA C.M. RELIEF FUND, 309 ITR 275 (P&H). IN LINE WITH THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIG H COURT AND KARNATAKA HIGH COURT WE HOLD THAT THE INT EREST INCOME EARNED BY THE ASSESSEE SOCIETY IS EXEMPT FRO M THE PROVISIONS OF SECTION 11 OF THE ACT. THE GROUND N O.1 RAISED BY THE REVENUE IS THUS DISMISSED AND GROUND NO.2 RA ISED BY THE ASSESSEE IN CROSS OBJECTION IS ALLOWED. 8. FOLLOWING THE ABOVE SAID RATIO, WE ALLOW THE CLA IM OF THE ASSESSEE IN RESPECT OF INTEREST EARNED, WHICH IS NOT TO BE TREATED AS INCOME OF THE ASSESSEE SOCIETY. THE GROUND OF APPEAL NO.2 RAISED BY ASSESSEE IS THUS ALLOWED. 9. THE GROUND NO.3 RAISED BY THE ASSESSEE IS AS UND ER:- THAT THE LEARNED CIT(A) HAS WRONGLY UPHELD THE ADDITION OF RS. 4,55,728/- ON ACCOUNT OF EXCESS OF INCOME OVER EXPENDITURE WITHOUT APPRECIATING THE FA CT THAT THE SURPLUS IS ONLY ON ACCOUNT OF GRANT IN AID OVER THE EXPENSES ACTUALLY INCURRED AND ALSO IGNORED THE FACT THAT THE GIA IS NOT AN INCOME IN VIEW OF JURISDICTIONAL HIGH COURT JUDGEMENT IN THE CASE OF PUNJAB STATE SPORTS COUNCIL. 10. AS REGARDS GROUND NO.3 WE FIND THAT SIMILAR IS SUE AROSE BEFORE THE TRIBUNAL RELATING TO ASSESSMENT YEAR 2005-06 (SUPR A), WHEREIN IT WAS HELD AS UNDER:- 29. THE PERUSAL OF THE MATERIAL ON RECORD REFLECTS THAT THE ASSESSEE WAS CONSTITUTED AS A NODAL AGENCY TO RECEIVE THE GRANTS FROM GOVERNMENT OF INDIA AND STA TE GOVERNMENT UNDER THE RESPECTIVE SCHEMES FORMULATED 4 FOR THE STATE OF HARYANA AND DISBURSE THE SAME TO VARIOUS DISTRICT AUTHORITIES. THE FUNCTIONING OF T HE NODAL AGENCY IS GOVERNED BY THE VARIOUS GUIDELINES AND INSTRUCTIONS ISSUED FROM TIME TO TIME. THE SEC OND ROLE OF THE ASSESSEE IS TO SUPERVISE THE EXECUTION OF FUNDS FOR THE SCHEMES AND FURNISH THE UTILIZATION CERTIFICATES FOR THE GRANTS RELEASED. THE ASSESSEE SOCIETY HAS NO DISCRETION TO UTILIZE THE GRANTS REC EIVED FROM GOVERNMENT OF INDIA AND STATE GOVERNMENT AS PER OWN REQUIREMENTS EXCEPT THE AMOUNT EARMARKED FOR MEETING ITS EXPENDITURE UNDER A&OE AND IEC. THE UNSPENT GRANTS ALLOCATED BY THE GOVERNMENT OF INDIA / STATE GOVERNMENT AT THE CLOSE OF THE YEAR A RE TO BE TREATED AS OPENING GRANTS UNDER THE RESPECTIV E SCHEMES AT THE START OF THE SUCCEEDING YEAR. IN C ASE OF THEIR NON UTILIZATION AT THE CLOSE OF THE SCHEME , THE FUNDS ARE TO BE REFUNDED ALONGWITH INTEREST TO THE GOVERNMENT OF INDIA / STATE GOVERNMENT. SUCH GRAN TS RECEIVED BY THE ASSESSEE FOR FURTHER DISBURSEMENT T O DISTRICT AUTHORITIES DO NOT BELONG TO THE ASSESSEE SOCIETY. THE GRANTS DO NOT FORM CORPUS OF THE ASSES SEE NOR IT IS INCOME OF THE ASSESSEE UNDER SECTION 11 OF THE ACT. THE SAID GRANTS ARE NOT DONATIONS OR VOLUNTARY CONTRIBUTIONS U/S 12 OF THE ACT, WHICH AR E RECEIVED WITHOUT ANY CONDITIONS AND CAN BE UTILIZED IN ANY MANNER. THE ASSESSEE IN PRESENT SET UP IS THE TRUSTEE OF THE GRANTS GIVEN BY THE GOVERNMENT OF IN DIA / STATE GOVERNMENT UNDER THE VARIOUS SCHEMES FLOATE D FOR THE STATE OF HARYANA, WHICH IS IN THE NATURE OF SPECIAL FUND ENTRUSTED TO THE ASSESSEE FOR FURTHER DISBURSEMENT TO DISTRICT AUTHORITIES. ACCORDINGLY, THE GRANTS RECEIVED BY THE ASSESSEE ARE NOT TO BE CONSIDERED EITHER AS INCOME OR FOR ASCERTAINING TH E AMOUNT EXPANDED OR THE AMOUNT TO BE ACCUMULATED. THE PROVISIONS OF SECTION 11 AND 12 OF THE ACT ARE NOT APPLICABLE TO THE GRANTS RECEIVED BY THE ASSESSEE UNDER THE SJSRY SCHEME OR NSDP SCHEME. IN VIEW OF THE SAME, THE ASSESSEE IS NOT OBLIGED TO FILE ANY CERTIFICATE OF UTILIZATION OF ACCUMULATED FUNDS BY WAY OF FORM NO.10. 30. HOWEVER, THE AMOUNT ALLOCATED UNDER THE A&OE AND IEC ACCOUNT EARMARKED TO BE UTILIZED FOR MEETIN G THE ADMINISTRATIVE AND OTHER EXPENSES OF THE ASSESS EE SOCIETY IS INCOME OF THE FINANCIAL YEAR AND PROVISI ONS OF SECTION 11 OF THE ACT ARE APPLICABLE. THE ASSES SEE IS TO APPLY 85% OF THE INCOME FOR SUCH PURPOSES AND IF THERE IS SHORTFALL IN ITS APPLICATION DURING THE FI NANCIAL YEAR, THEN THE SAME AS PER THE PROVISIONS OF THE AC T MAYBE ACCUMULATED FOR EXPENDITURE IN FUTURE AS PER THE PROVISIONS OF THE ACT. THE ASSESSEE THUS IS STATU TORILY REQUIRED TO FILE ITS INTENTION OF EXPANDING THE ACCUMULATED FUNDS IN FUTURE BY WAY OF FORM NO.10. 5 37. THE SECOND OBJECTION OF REVENUE WAS NON- DISBURSEMENT OF FUNDS UNDER NSDP SCHEME. AS ELABORATELY DEALT BY US IN THE PARAS HEREINABOVE, T HE ASSESSEE IS A NODAL AGENCY IN RECEIPT OF GRANTS FRO M GOVERNMENT OF INDIA & STATE GOVERNMENT AND SUCH GRANTS ARE TO BE DISTRIBUTED TO VARIOUS DISTRICT AUTHORITIES AND SURPLUS REMAINING IF ANY HAS TO BE SURRENDERED TO THE GOVERNMENT OF INDIA / STATE GOVERNMENT. WE HAVE REFERRED TO VARIOUS NOTIFICATI ONS ISSUED BY THE GOVERNMENT OF INDIA IN CONNECTION WIT H THE SJSRY SCHEME, IN THE PARAS HEREINABOVE AND THE LEARNED AR POINTS OUT THAT SIMILAR NOTIFICATIONS AR E RECEIVED UNDER NSDP SCHEME. THE ONLY POINT OF DISTINCTION WAS THAT THE ASSESSEE HAD DISBURSED THE FUNDS TO VARIOUS DISTRICT AUTHORITIES UNDER SJSRY SCHEME BUT WITH REGARD TO THE GRANTS RECEIVED UNDER NSDP SCHEM E, THE SAME WERE ALLOCATED BUT WERE NOT DISBURSED DUE TO THE IMPOSITION OF MODEL CODE OF CONDUCT BY ELECTION COMMISSION OF INDIA IN STATE OF HARYANA. IN VIEW O F OUR HOLDING, THE GRANTS BEING NOT INCOME OF THE ASSESSE E SOCIETY, ITS ALLOCATION BUT NON DISBURSAL DUE TO TH E ELECTION CODE OF CONDUCT WOULD NOT CHANGE THE NATUR E OF RECEIPTS IN THE HANDS OF THE ASSESSEE. RESPECT FULLY FOLLOWING THE VARIOUS CASE LAWS REFERRED TO ABOVE, WE HOLD THAT THE GRANTS RECEIVED BY THE ASSESSEE FROM GOVERNMENT OF INDIA AND STATE GOVERNMENT UNDER DIFFERENT SCHEMES IS NOT TO BE INCLUDED AS INCOME U /S 11 OR 12 OF THE INCOME TAX ACT. ONCE THE GRANT IS NOT INCLUDABLE AS INCOME, THE SURPLUS AT THE END OF THE YEAR REMAINING UNSPENT IS NOT OF ANY RELEVANCE VIS-A-VIS IT BEING CHARGEABLE TO TAX . 38. THE ASSESSEE IN ITS CROSS OBJECTION BY GROUND NO.1 HAS RAISED THE ISSUE IN RESPECT OF THE GRANTS RECEIVED FROM THE CENTRAL AND STATE GOVERNMENT FOR THE DISBURSEMENT TO DISTRICT AUTHORITIES AS NOT BEING I TS INCOME. IN LINE WITH OUR DISCUSSION IN THE PARAS HEREINABOVE, WE ALLOW THE GROUND NO.1 RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION. THE SAID GRANTS A RE NOT TO BE INCLUDED AS INCOME OF THE SOCIETY U/S 11 & 12 OF THE ACT AND CONSEQUENTLY, THE ASSESSEE IS NOT TO AP PLY OR ACCUMULATE THE SAID GRANTS FOR ITS OBJECTS AND HENC E, NO REQUIREMENT OF FURNISHING THE REVISED FORM NO.10 IN RESPECT OF THE BALANCE NON-APPLIED GRANTS RECEIVED UNDER THE TWO SCHEMES. HOWEVER, AS THE RECEIPTS O N ACCOUNT OF A&OE AND I.E.C. ARE HELD TO BE INCOME U/ S 11 OF THE ACT IN THE HANDS OF THE ASSESSEE, IN CASE OF ITS NON-APPLICATION TOWARDS THE OBJECTS, THE ASSESSEE I S TO FURNISH ITS INTENTION OF EXPANDING THE SAME IN FUTU RE BY WAY OF FORM NO.10 UNDER RULE 17 OF I.T. RULES. THE ASSESSEE IN THE PRESENT CASE HAS FURNISHED ON RECOR D FORM NO.10 IN RESPECT OF THE BALANCE NON-APPLIED GR ANTS ALONG WITH THE RETURN OF INCOME AND IN VIEW THEREOF , SUCH INCOME IS NOT INCLUDIBLE IN THE HANDS OF THE 6 ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THE GRO UND NO.3 RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION IS THUS ALLOWED AS INDICATED HEREINABOVE . 11. THE LEARNED DR FOR THE REVENUE POINTED OUT THAT THE REGISTRATION U/S 12A OF THE ACT HAS BEEN DENIED BY THE CIT(A) IN THE SAID ORDER PASSED U/S 154 OF THE ACT, AGAINST WHICH ASSESSEE IS NOT IN AP PEAL. HENCE, SURPLUS ON ACCOUNT OF INCOME OVER EXPENDITURE IS TAXABLE IN TH E HANDS OF THE ASSESSEE. THE LD. AR FOR THE ASSESSEE PLACED RELI ANCE ON THE ORDER OF THE TRIBUNAL RELATING TO ASSESSMENT YEAR 2005-06 AND PO INTED OUT THAT THE AMOUNT REMAINING SURPLUS ON ACCOUNT OF INCOME OVER EXPENDITURE IS TO BE REMITTED BACK TO THE STATE GOVERNMENT WHO HAD DISTR IBUTED THE FUNDS AND DOES NOT FORM INCOME OF THE ASSESSEE. THE LD. AR FAIRLY CONCEDED THAT THE ISSUE MAY BE RESTORED BACK TO THE FILE OF ASSES SING OFFICER TO VERIFY THE STAND OF THE ASSESSEE VIS-A-VIS THE NATURE OF R ECEIPTS AND ITS FATE IN CASE THE SAME IS NOT UTILIZED. 12. WE FIND THAT SIMILAR ISSUE IN RESPECT OF THE NA TURE OF GRANTS RECEIVED BY THE ASSESSEE AS A NODAL AGENCY HAS BEEN ELABORAT ELY CONSIDERED BY US IN ASSESSMENT YEAR 2005-06 (SUPRA) VIDE ORDER DATED 30 .7.2010. THE UNSPENT AMOUNT ALLOCATED BY THE GOVERNMENT OF INDIA AT THE CLOSE OF THE YEAR ARE TO BE TREATED AS OPENING GRANTS UNDER THE RESPECTIV E SCHEMES AT THE START OF THE SUCCEEDING YEAR. IN CASE OF THEIR NON UTILIZA TION AT THE CLOSE OF THE SCHEME, THE FUNDS ARE TO BE REFUNDED ALONGWITH INTE REST TO THE GOVERNMENT OF INDIA / STATE GOVERNMENT. SUCH GRANTS RECEIVED BY THE ASSESSEE FOR FURTHER DISBURSEMENT TO DISTRICT AUTHORITIES DO NOT BELONG TO THE ASSESSEE SOCIETY. IN VIEW OF OUR DECISION VIDE ORDER DATED 30.7.2010, WE HOLD THAT THE GRANTS DO NOT FORM CORPUS OF THE ASSESSEE NOR IT IS INCOME OF THE ASSESSEE UNDER SECTION 11 OF THE ACT. THE SAID GRA NTS ARE NOT DONATIONS OR 7 VOLUNTARY CONTRIBUTIONS U/S 12 OF THE ACT, WHICH AR E RECEIVED WITHOUT ANY CONDITIONS AND CAN BE UTILIZED IN ANY MANNER. HOWE VER, FROM THE PERUSAL OF RECORD, WE FIND THAT THE NATURE OF EXCESS OF INC OME OVER EXPENDITURE TOTALING RS. 4,55,728/- ON ACCOUNT OF GRANT RECEIVE D BY THE ASSESSEE SOCIETY FROM THE GOVERNMENT OF INDIA / SATE GOVERNM ENT OR OTHERWISE IS NOT APPARENT FROM RECORD. IN THE INTEREST OF JUSTI CE, WE DEEM IT FIT TO REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSING O FFICER TO VERIFY THE NATURE OF RECEIPTS AND FATE OF THE SURPLUS FUNDS RE MAINING WITH THE ASSESSEE AND IN CASE THE ASSESSEE IS ABLE TO SATISF Y ITS CLAIM OF REMISSION OF UNSPENT AMOUNT TO THE GOVERNMENT OF INDIA / STAT E GOVERNMENT, THEN SUCH SURPLUS IS NOT TO BE INCLUDED IN THE HANDS OF THE ASSESSEE AS THE SAME DO NOT BELONG TO THE ASSESSEE SOCIETY AS OBSERVED B Y US IN OUR ORDER DATED 30.7.2010. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER AFFORDING A REASONABLE OPPORTUNITY O F HEARING TO ASSESSEE. THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 13. THE GROUND NO.(I) RAISED BY THE REVENUE IS AS U NDER:- I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) IS RIGHT IN HOLDING THAT RECEIPTS OF THE ASSESSEE BE TAKEN AT 497.06 LACS INSTEAD OF RS. 959 .06 LACS WHEN THE ASSESSEE IS FOLLOWING MERCANTILE SYST EM OF ACCOUNTING AND NO REGISTRATION U/S 12A WAS AVAILABL E TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. 14. THE ISSUE RAISED BY THE REVENUE VIDE GROUND NO.(I) IS LINKED TO THE ISSUE RAISED BY THE ASSESSEE VIDE GROUND NO.3 I.E. THE NATURE OF GRANTS RECEIVED BY THE ASSESSEE. FOLLOWING OUR DECISION I N ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2005-06 VIDE ORDER DATE D 30.7.2010, WE HAVE REMITTED THE LIMITED ISSUE OF VERIFYING THE NATURE OF RECEIPTS RECEIVED BY 8 THE ASSESSEE TO THE FILE OF THE ASSESSING OFFICER. IN CASE THE RECEIPTS IN QUESTION ARE IN THE NATURE OF GRANTS RECEIVED FROM GOVERNMENT OF INDIA OR STATE GOVT FOR FURTHER DISTRIBUTION UNDER THE VARIO US SCHEMES THEN THERE IS NO MERIT IN INCLUDING ANY PART OF SUCH GRANTS AS IN COME OF THE ASSESSEE SOCIETY FOR THE YEAR UNDER CONSIDERATION. THE ASSE SSING OFFICER IS DIRECTED TO VERIFY THE NATURE OF THE TOTAL RECEIPTS AND DECIDE THE ISSUE IN LINE WITH OUR DIRECTION VIDE ORDER DATED 30.7.2010 IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2005-06. A REASONABLE O PPORTUNITY OF HEARING SHALL BE AFFORDED TO THE ASSESSEE. THE GROUND NO.(I ) RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 15. THE GROUND NO.(II) RAISED BY THE REVENUE IS AS UNDER:- II) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) IS RIGHT IN HOLDING THAT ANY SURPLUS FROM THE GRANTS IS MADE PART OF THE NEW SCHEME I.E. SURPLUS RETURNED TO GOVT. WHEN THERE IS NO EVIDENCE PRODUCED BY THE ASSESSEE THAT IT HAS EVER RETURNED BACK THE SURPLUS TO THE GOVT. OR HAS BEEN ALLOWED TO CAR RY IT OVER TO THE SUCCEEDING YEAR FORMING PART OF NEW SCHEME. 16. THE ASSESSING OFFICER ON THE PERUSAL OF RECORD HAD TAKEN THE RECEIPTS FROM GOVERNMENT OF INDIA AND ASA AT RS. 95 9.06 LACS INSTEAD OF RS. 497.06 LACS. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD RECEIVED RECEIPTS OF OF RS. 497.06 LACS I.E.. RS. 4 0.41 LACS IN SJSRY AND RS. 452.65 LACS IN NSDP SCHEME, AS AGAINST THE SANC TIONED GRANT OF RS. 952.10 LACS. THE PLEA OF THE ASSESSEE BEFORE THE A SSESSING OFFICER WAS THAT THE BALANCE AMOUNT OF RS. 455.04 LACS WAS RECE IVED AFTER 31.3.2002. THE ASSESSING OFFICER HOWEVER, ADOPTED THE RECEIPTS AT RS. 959.06 LACS. THE CIT(A) VIDE PARA 5 HELD AS UNDER:- 9 5. THE SECOND GROUND OF APPEAL IS THAT THE ASSESSI NG OFFICER HAS WRONGLY TAKEN THE RECEIPTS FROM GOVT O F INDIA AND ASA AT 959.06 LACS INSTEAD OF RS. 497.06 LACS. THE COUNSEL ARGUED THAT THE APPELLANT WAS SANCTIONED TOTAL GRANTS OF RS. 952.01 LACS BUT ACTU ALLY RECEIVED AN AMOUNT OF RS. 497.06 LACS AND THE BALAN CE AMOUNT OF RS. 455.04 LACS WAS RECEIVED IN THE NEXT YEAR. THIS WAS SUBMITTED BEFORE THE ASSESSING OFFI CER WHO IGNORED THE SAME. THE COUNSEL HAS FILED DETAILS OF FUNDS SANCTIONED AND DISBURSED DURING THE FINANCIAL YEAR 2001-02 AS PER WHICH THE APPELLANT RECEIVED FUNDS OF RS. 497.06 LACS DURING THE YEAR. THE CONTENTION OF THE COUNSEL IS CORRECT. THE ASSESSING OFFICER IS DIRECTED TO TAKE THE RECEIPTS AS RS. 497 .06 LACS INSTEAD OF RS. 959.06 LACS. THIS GROUND OF AP PEAL IS ALLOWED. 17. IN LINE WITH OUR DIRECTION IN PARAS HEREINABOVE WHILE DECIDING THE GROUND NO.3 RAISED BY THE ASSESSEE, WE HAVE REMITT ED THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER TO VERIFY THE NATURE OF GRANTS AND THE FATE OF SURPLUS, IF ANY. IN LINE WITH OUR DIRECTIONS IN TH E PARAS-HEREIN ABOVE, THIS ISSUE OF THE FATE OF SURPLUS BEING RETURNED TO THE GOVERNMENT SHALL ALSO BE VERIFIED BY THE ASSESSING OFFICER AND IN CASE THE S URPLUS IS EITHER RETURNED TO THE GOVERNMENT OR FORMS PART OF THE OPENING BALA NCE OF THE SAME SCHEME OF THE SUCCEEDING YEAR THEN THE SAME IS NOT TO BE INCLUDED IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AFTER AFFORDING AS REASONABLE OPPORTUNITY OF HEARING TO T HE ASSESSEE. 18. THE REVENUE HAS RAISED ADDITIONAL GROUND OF APP EAL WHICH IS AS UNDER:- WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) WAS RIGHT IN REDUCING THE INCOME LES SER THAN THE TOTAL INCOME DECLARED BY THE ASSESSEE ITSE LF IN ITS RETURN OF INCOME. 19. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE ISSUE RAISED VIDE ADDITIONAL GROUND OF APPEAL BEING A QUESTION OF LAW BE ADMITTED. WE FIND 10 THAT THE ISSUE RAISED VIDE THE GROUND OF APPEAL DOE S NOT REQUIRE ANY ADJUDICATION ON THE FACTS OF THE CASE AND THE QUEST ION RAISED BEING PURELY LEGAL IS ADMITTED FOR ADJUDICATION. 20. THE GRIEVANCE OF THE REVENUE VIDE THIS ADDITION AL GROUND OF APPEAL IS THAT THE ORDER OF CIT(A) IS NOT RIGHT AS HE HAS COMPUTED THE INCOME LESS THAN THE TOTAL INCOME DECLARED BY THE ASSESSEE ITSELF IN ITS RETURN OF INCOME. THE PLEA OF THE LD. DR WAS THAT THE ASSESS EE HAD FILED RETURN OF INCOME AT RS. 959.06 LACS AGAINST WHICH IT HAD CLAI MED DEDUCTION U/S 11 OF THE ACT, WHICH WAS WITHDRAWN VIDE ORDER PASSED U /S 154 OF THE ACT. THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THE S AID WITHDRAWAL AND IS NOT ENTITLED TO THE DEDUCTION U/S 11 OF THE ACT. BEFORE THE TRIBUNAL, THE PLEA OF THE ASSESSEE IS THAT TOTAL RECEIPTS OF THE YEAR ARE NOT TAXABLE, WHICH CANNOT BE ADMITTED BEING A NEW PLEA. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT FROM THE PERUSAL OF THE ASSESSMENT ORDER IT IS APPARENT THAT THE ASSESSEE HAD FILED THE RETURN OF INCOME AT NIL. THE ASSESSEE BEFORE THE TRIBUNAL IS AT LIBERTY TO RAISE AN ARGUM ENT IN SUPPORT OF THE ASSESSIBILITY OF ITS INCOME AT NIL ON ANY GROUND OT HER THAN THE DEDUCTION CLAIMED U/S 11 OF THE ACT. THE ALTERNATE PLEA OF T HE ASSESSEE WAS THAT THE GRANTS RECEIVED BY THE ASSESSEE SOCIETY WERE NOT IN COME IN THE HANDS OF THE ASSESSEE. THE LD. AR FOR THE ASSESSEE PLACED R ELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT V RAMCO INTERNATIONAL [221 CTR (P&H) 491] THAT EVEN WHERE N O CLAIM WAS MADE IN THE RETURN OF INCOME, THE ASSESSEE CAN CLAIM FOR A DEDUCTION U/S 80- IB OF THE ACT BY WAY OF APPLICATION FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 11 21. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD FI LED ITS RETURN OF INCOME ON 4.12.2006 DECLARING NIL TAXABLE INCOME. THE INCO ME WAS CLAIMED AT NIL AFTER CLAIMING THE DEDUCTION U/S 11 OF THE INCOME T AX ACT. THE SAID DEDUCTION HAS BEEN WITHDRAWN VIDE ORDER PASSED BY T HE ASSESSING OFFICER U/S 154 OF THE ACT, WHICH HAS BEEN CONFIRMED BY THE CIT(A) AGAINST WHICH THE ASSESSEE IS NOT IN APPEAL. HOWEVER, THE SECON D PLEA OF THE ASSESSEE IS THAT ITS INCOME IS NOT EXIGIBLE TO TAX AS THE GRANT S RECEIVED BY THE ASSESSEE SOCIETY ARE NOT INCOME IN THE HANDS OF THE ASSESSEE . WE FIND NO MERIT IN THE ADDITIONAL GROUND OF APPEAL RAISED BY THE REVEN UE IN THIS REGARD AS THE ASSESSEE HAD FILED THE RETURN OF INCOME SHOWING NIL INCOME. MERE DENIAL OF THE CLAIM U/S 11 OF THE ACT DOES NOT CHANGE NATU RE OF RECEIPTS IN THE HANDS OF THE ASSESSEE WHICH HAS BEEN ELABORATELY CO NSIDERED BY US IN OUR ORDER DATED 30.7.2010 AND IT HAS BEEN HELD THAT GRA NTS ARE NOT INCOME OF THE ASSESSEE EITHER U/S 11 OR 12 OF THE ACT. IN TH E AFORESAID FACTS AND CIRCUMSTANCES, WE FIND NO MERIT IN THE ADDITIONAL G ROUND OF APPEAL RAISED BY THE REVENUE AND THE SAME IS DISMISSED. 22. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AND REVENUE ARE PARTLY ALLOWED. SD/- (G.S.PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : NOVEMBER, 2010 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 12 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF NOVEMBER, 2010. SD/- SD/- (N.BARATHVAJA SANKAR) (SUSHMA CHOWLA) VICE PRESIDENT JUDICIAL MEMBER DATED : 30 TH NOVEMBER, 2010 13