Dy. Commissioner of Income Tax (Exemption), Lucknow V. M/s Rajeev Gandhi Institute of Petroleum Technology,

ITA 281/LKW/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1138 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 28-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K BAR
• Keywords: Capital asset; Charitable institution; Question of law; Capital receipt; Capital expenditure
• Section: 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. A. D. JAIN, VICE PRESIDENT AND SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 281/LKW/2017 ASSESSMENT YEAR: 2013 - 14 DCIT (EXEMPTIONS) LUCKNOW V. M/S RAJEEV GANDHI INSTITUTE OF PETROLEUM TECHNOLOGY BAHADURPUR, MUKHETIA MORE AMETHI, U.P. T AN /PAN : AAAJR0834R (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI A. K. BAR, CIT (DR) DATE OF HEARING: 20 11 201 8 DATE OF PRONOUNCEMENT: 30 11 2 01 8 O R D E R PER T.S.KAPOOR , A .M : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 14/2/2017. REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: - 1. LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND FACTS BY ALLOWING THE ASSESSEE TO TAKE THE AMOUNT OF RS.23,85,00,000/ - LACS IN COMPUTATION OF INCOME AS CAPITAL EXPENDITURE, IGNORING THE FACT THAT THE ASSESSEE HAS CLAIMED THIS CAPITAL GRANTS OF R S. 23,85,00,000/ - LACS AS EXEMPT U/S 11(1 )(D) OF THE I.T. ACT AND IS NOT TAKEN IN THE COMPUTATION OF CURRENT YEAR. 2. LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND FACTS BY ALLOWING THE ASSESSEE'S INCOME FOR ACCUMULATION U/S 11 [2] OF THE I.T. ACT, 1961 WITHOUT FILING FORM NO. 10 IN TIME. ITA NO.281/LKW/2017 PAGE 2 OF 14 3. THE ORDER OF LD. CIT(A) BE CANC ELLED AND THE ORDER OF THE A.O. RESTORED. 4. APPELLANT CRAVES LEAVE TO MODIFY/AMEND OR ADD ANY ONE OR MORE GROUNDS OF APPEAL. 2 . AT THE OUTSET, LD. A.R. OF THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT Y EAR 2012 - 13 AND SUBMITTED THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY SUCH ORDER AND EVEN THE GROUNDS OF APPEAL ARE SIMILAR EXCEPT DIFFERENCE IN AMOUNT . 3 . THE LD. D.R. , HOWEVER, RELIED ON THE ORDER OF THE ASSESSING OFFICER . 4 . WE HAVE HEARD THE RIVAL PARTIES AND GONE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT DURING ASSESSMENT YEAR 2012 - 13 VIDE ORDER DATED 31/10/2018 TRIBUNAL ON AN APPEAL FILED BY THE REVENUE HAD ADJUDICATED THE FOLLOWING GROUNDS OF APPEAL: - 1. LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND FACTS BY ALLOWING THE ASSESSEE TO TAKE THE AMOUNT OF RS.19,90,000/ - LAKHS IN COMPUTATION OF INCOME AS CAPITAL EXPENDITURE, IGNORING THE FACT THAT THE ASSESSEE HAS CLAIMED THIS CAPITAL GRAN TS OF RS.19,90,000/ - LACS AS EXEMPT U/S 11(1)(D) OF THE I.T. ACT AND IS NOT TAKEN IN THE COMPUTATION OF CURRENT YEAR. 2. LD. COMMISSIONER OF INCOME TAX(A) HAS ERRED IN LAW AND FACTS BY ALLOWING THE ASSESSEE'S INCOME FOR ACCUMULATION U/S 11(2) OF THE I.T. A CT, 1961 WITHOUT FILING FORM NO. 10 IN TIME. 3. THE ORDER OF LD. CIT(A) BE CANCELLED AND THE ORDER OF THE A.O. RESTORED. 4. APPELLANT CRAVES LEAVE TO MODIFY/AMEND OR ADD ANY ONE OR MORE GROUNDS OF APPEAL. ITA NO.281/LKW/2017 PAGE 3 OF 14 5 . WE FIND THAT SIMILAR GROUNDS OF APPEAL HAVE BEEN TA KEN IN THE PRESENT YEAR. THEREFORE THE ISSUES RAISED BY THE REVENUE IN THIS APPEAL ARE SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. 6 . THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INSTITUTE CREATED BY RAJIV GANDHI INSTITUTE OF PETROLEUM & TECHNOLOGY AC T, 2007 PASSED BY THE GOVERNMENT OF INDIA VIDE G.O. NOTIFICATION DATED 28/5/2008. ASSESSEE INSTITUTE IS ALSO APPROVED UNDER SECTION 10(23C) OF THE INCOME - TAX ACT, 1961 VIDE ORDER DATED 24/8/2011 APPROVED BY THE CHIEF COMMISSIONER OF INCOME TAX, LUCKNOW. R ETURN OF INCOME WAS FILED ON 15/2/2014 DECLARING NIL INCOME AND ASSESSMENT WAS FRAMED ON A TOTAL INCOME OF RS.13,93,32,959/ - . WHILE FRAMING THE ASSESSMENT, ASSESSING OFFICER HAS HELD THAT CAPITAL GRANT RECEIVED BY THE ASSESSEE IS TAXABLE. ASSESSING OFFIC ER WAS OF THE VIEW THAT EXPENDITURE INCURRED BY THE ASSESSEE ON CAPITAL ASSETS SHOULD HAVE BEEN SET OFF AGAINST CAPITAL GRANTS RECEIVED AND CANNOT BE CLAIMED TOWARDS INCOME APPLIED AGAINST THE INCOME OF CURRENT YEAR. THE CLAIM OF THE ASSESSEE WAS THAT CAP ITAL GRANT WAS FOR SPECIFIC PURPOSE AND CANNOT BE UTILIZED OR APPLIED FOR ANY OTHER PURPOSE. THE LD. CIT(A) HAS ALLOWED RELIEF TO THE ASSESSEE BY HOLDING AS UNDER: - 5.2 THE UNDISPUTED FACTS ARE THAT THE APPELLANT I.E. RAJIV GANDHI INSTITUTE OF PETROL EUM TECHNOLOGY (RGIPT) HAS BEEN ESTABLISHED BY RAJIV GANDHI INSTITUTE OF PETROLEUM TECHNOLOGY ACT, 2007, VIDE GOVT. OF INDIA'S NOTIFICATION DATED 28.05.2008. IT IS ALSO AN ADMITTED FACT THAT THE INSTITUTE IS APPROVED UNDER SECTION 10(23C)(VI) OF THE IT ACT , 1961 VIDE ORDER DATED 24.08.2011 APPROVED BY THE CHEF COMMISSIONER OF INCOME TAX, LUCKNOW. IT IS AN INSTITUTE OF NATIONAL IMPORTANCE. COPY OF THE GAZETTEE OF INDIA EXTRAORDINARY DATED 20.12.2007 AS FILED BY THE APPELLANT IS ON RECORD. THE OBJECTS OF THE INSTITUTE AS PER CLAUSE 9 OF. THE ACT IS TO (I) NURTURE AND PROMOTE QUALITY AND EXCELLENCE IN EDUCATION AND ITA NO.281/LKW/2017 PAGE 4 OF 14 RESEARCH IN THE AREA OF PETROLEUM AND HYDROCARBONS; (II) PROVIDE FOR PROGRAMMES AND COURSES OF INSTRUCTION AND RESEARCH LEADING TO THE AWARD OF THE BACHELORS, MASTERS AND DOCTORAL DEGREES IN ENGINEERING AND TECHNOLOGY, MANAGEMENT, SCIENCE AND ARTS IN THE AREA OF PETROLEUM AND HYDROCARBONS AND (III) GRANT, SUBJECT TO SUCH CONDITIONS AS THE INSTITUTE MAY DETERMINE, DEGREES, DIPLOMAS, CERTIFICATES OR OTH ER ACADEMIC DISTINCTIONS OR TITLES AT VARIOUS ACADEMIC LEVELS TO CANDIDATES WHO HAVE ATTAINED THE PRESCRIBED STANDARD OF PROFICIENCY AS JUDGED ON THE BASIS OF EXAMINATION OR ON ANY OTHER BASIS OF TESTING AND EVALUATION AND TO WITHDRAW ANY SUCH DEGREES, DIP LOMAS, CERTIFICATES OR OTHER ACADEMIC DISTINCTIONS OR TITLES FOR GOOD AND SUFFICIENT REASONS, IN ADDI TION TO SEVERAL OTHER OBJECTS. 5.3 THE APPELLANT FILED ITS RETURN OF INCOME ON 15.02.2014 DECLARING NIL INCOME. THE AO HAS FRAMED THE ASSESSMENT DETERM INING THE APPELLANTS INCOME AT RS. 13,93,32,959/ - . AS PER THE FACTS AVAILABLE ON RECORD, THE APPELLANT HAD RECEIVED CERTAIN AMOUNTS FROM THE GOVT. OF INDIA AS GRANTS WITH SPECIFIC PURPOSE. THE AO HAS TREATED THESE GRANTS AS REVENUE IN NATURE AND HAS INCLUD ED THE SAME IN THE INCOME AND EXPENDITURE ACCOUNT. THE APPELLANT HAS FILED A COPY OF BALANCE SHEET AS ON 21.02.2012. IT IS NOTICED, THAT THE INSTITUTE WAS ESTABLISHED WITH A CORPUS/CAP ITAL FUND OF RS. 50 CRORES, WHICH WAS LATER ON INCREASED BY ANOTHER RS. 3 6 CRORES. THE APPELLANT HAS RECE IVED INTEREST ON THE SAID CORPUS FUNDS. THE A PPELLANT HAD RECEIVED 'GRANTS' CREDITED UNDER THE HEAD CAPITAL FUNDS FOR ASSAM PROJECT AMOUNTING TO RS. 15.66 CRORES IN AN PRECEDING YEAR AND ANOTHER RS. 2 CRORES DURING THE F.Y . PERTAINING TO AY 2012 - 13. THESE CAPITAL FUNDS ARE PROVIDED BY SIX(6) LIMITED COMPANIES, NAMELY, OIL & NATURAL GAS COR PORATION LTD., MUMALIGARH REFINERY LTD., INDIA OIL CORPORATION LTD, GAS AUTHORITY OF INDIA LTD, OIL INDIA LTD. AND OIL INDUSTRY DEVELOPMENT BOARD. IN ADDITION TO THE ABOVE, THE APPELLANT RECEIVED SPECIFIC SUM AS CORPUS FUNDS FOR SETTING UP ASSAM CENTRE. THE AO WHILE FRAMING THE ASSESSMENT, HAS TREATED ITA NO.281/LKW/2017 PAGE 5 OF 14 THE GRANTS CREAT ED UNDER THE HEAD CAPITAL FUNDS AS INCOME FOR THE YEAR U NDER CONSIDERATION, AND HAS DEDUCTED THE SAME AS AMOUNT NOT APPLIED FOR CHARITABLE PURPOSES OUT OF THE REVENUE RECEIPTS FOR THE YEAR UNDER CONSIDERATION. IN OTHER WORDS, THE AO WHILE FRAMING THE ASSESSMENT HAS TAKEN INTO CONSIDERATION THE AMOUNT APPLIED BY THE APPELLANT TOWARDS THE OBJECTS, INCLUSIVE OF CAPITAL EXPENDITURE AND OUT OF THE SAME HAS REDUCED THE SAME BY RS. 23.85 CRORES, HOLDING THAT THE SAME BEING A CAPITAL GRANT, THE SAME TO BE SET OFF AGAINST THE CAPITAL EXPENDITURE. THE CASE OF THE APPELLAN T IS THAT THE CAPITAL GRANT RECEIVED IS NOT TAXABLE AND CANNOT BE MADE PART OF THE INCOME EXPENDITURE ACCOUNT. IF THE SAME IS EXCLUDED, THE SURPLUS LEFT WOULD BE FAR LESS THAT 15% OF THE TOTAL RECEIPTS. IN SIMPLE TERMS, OUT OF THE TOTAL INCOME FOR THE YEAR UNDER CONSIDERATION, IF THE AMOUNT APPLIED TOWARDS THE OBJECTS, BOTH ON REVENUE AND CAPITAL ACCOUNT IS DEDUCTED, THE SURPLUS LEFT WOULD BE FAR LESS THAT 15% OF THE GROSS INCOME. THE AO BY HOLDING THE CAPITAL GRANT OF RS. 23.85 CRORES TO BE SET OFF AGAINST CAPITAL EXPENDITURE HAS WORKED OUT THE SURPLUS OF RS. 21.46 CRORES. THE APPELLANT HAS FILED COPIES OF THE NOTIFICATIONS AS ISSUED BY THE GOVERNMENT OF INDIA FROM TIME TO TIME, (WHICH WERE FILED BY THE APPELLANT BEFORE THE AO) IN WHICH IT HAS BEEN SPECIFIC ALLY LAID DOWN, THAT THE GRANTS ARE FOR SPECIFIC PURPOSES AND ONLY THE INTEREST EARNED ON THE SAME IS TO BE USED/ APPLIED FOR THE PURPOSES OF THE OBJECTS OF THE INSTITUTE. THE AMOUNTS ARE RECEIVED IN GRANTS HAVE TO BE HELD IN DEPOSITS AND ONLY THE INTEREST EARNED ON THE SAME IS TO BE APPLIED TOWARDS THE OBJECTS OF THE INSTITUTE. THE GRANT AS SUCH CANNOT BE APPLIED OR UTILIZED. 5.4 I HAVE GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE, AS ALSO THE PAPER BOOK FILED BY THE APPELLANT. THE APPELLANT HAS FI LED THE TAX AUDIT REPORT, AS FILED ALONG WITH THE RETURN OF INCOME AS WELL AS THE COPIES OF NOTIFICATIONS, IN WHICH IT HAS BEEN SPECIFICALLY LAID DOWN THAT THE GRANTS ARE FOR PURPOSE SPECIFIC AND CANNOT BE USED/APPLIED AS SUCH. IT IS ONLY THE INTEREST EARN ED ON THE GRANTS RECEIVED, THAT HAS TO BE APPLIED. THE AO WAS NOT ITA NO.281/LKW/2017 PAGE 6 OF 14 JUSTIFIED IN TREATING THE CAPITAL GRANTS AS INCOME. THERE IS NO DISPUTE THAT THE INTEREST EARNED IN THE GRANTS HAS BEEN ACCOUNTED FOR BY THE APPELLANT IN ITS INCOME. THE NOTIFICATIONS READ AS UNDER: - 5.5 LETTER DATED 9TH OCTOBER 2006 ISSUED FROM MINISTRY OF PETROLEUM AND NATURAL GAS, GOVT. OF INDIA, SHASTRI BHAWAN, NEW DELHI. 3. THE PRESIDENT OF THE INTERIM BOARD OF TRUSTEES OF THE RGIPT SOCIETY, SHRI D.M. REDDY, EXECUTIVE DIRECTOR (MR S), PBCL HAS INFORMED THAT IT WOULD BE PRUDENT TO HAVE SOME FUNDS AT THE DISPOSAL OF THE SOCIETY TO MEET INCIDENTAL EXPENDITURE AS THE SOCIETY IS SIMULTANEOUSLY PURSUING OUTLET ACTIVITIES SUCH AS STARTING OF ACADEMIC ACTIVITIES, DEVELOPMENT OF CURRICULUM, IDENTIFICATION OF TEMPORARY FACILITIES, PLANNING OF INFRASTRUCTURE DEVELOPMENT, ETC. FOR WHICH THE SOCIETY NEEDS SOME FUNDS AT ITS DISPOSAL. MOREOVER, IT IS ONE OF THE PREREQUISITE FOR SUBMISSION OF APPLICATION FOR ACQUISITION OF LAND TO HAVE ADEQUATE FUND S AT THE DISPOSAL OF THE SOCIETY. IN VIEW OF THIS, THE PRESIDENT OF THE INTERIM BOARD OF TRUSTEES OF THE RGIPT SOCIETY HAD PROPOSED THAT THE FIRST INSTALLMENT, TOTALING RS. 50 CRORES, TOWARDS CREATION OF AN ENDOWMENT FUND OF RS. 250 CRORE MAY NOW BE CONTRI BUTED BY THE PROTECTING OIL PSUS. IT MAY BE KINDLY RECALLED THE INTEREST EARNED FROM THE ENDOWMENT FUND OF RS. 250 CRORE IS TO BE UTILIZED FOR MEETING RECURRING EXPENDITURE FOR THE PROJECT. LETTER DATED 7TH OCTOBER 2009 ISSUED FROM GOVT. OF INDIA, MINISTRY OF PETROLEUM AND NATURAL GAS, SHASTRI BHAWAN, NEW DELHI. 5. THE ENDOWMENT FUND AMOUNTING TO RS. 182 CRORE MAY BE MET OUT OF CONTRIBUTION BY THE PROMOTING OIL PSUS. THE SHARE OF EACH OIL PSUS MAY AGAIN BE WORKED OUT IN THE RATIO OF THEIR PROFIT AFTER TAX ( PSAT) DURING THE LAST FINANCIAL YEAR. ITA NO.281/LKW/2017 PAGE 7 OF 14 5.6 THUS, IN LIGHT OF THE ABOVE NOTIFICATIONS, IT IS CLEAR, THAT THE GRANTS ARE CAPITAL RECEIPTS FOR SPECIFIC PURPOSE, AND THEY CANNOT BE TREATED AS INCOME OF THE APPELLANT. THE APPELLANT HAS RELIED UPON THE FOLLOW ING CASE L AWS: CROOK VS. SEAHAM HARBOUR DOCK COMPANY 16 TC 333 (HL) 1931,48TLR (HR) CIT VS. HANDICRAFTS AND HANDLOOMS EXPORT CORPN. OF INDIA LTD. DELHI. A SIMILAR ISSUE WAS ADJUDICATED UPON BY HON'BLE ITAT CHAND IGARH CHIEF ADMINISTRATOR, HARYANA RU RAL D EVELOPMENT A UTHORITY VS. DCIT, PANCHKULA REPORTED IN 44 TAX MA NN.COM 233 (2014). IT WAS HE LD THAT WHEN ASSESSEE AUTHORITY HAS BEEN CONSTITUTED BY GOVERNMENT FOR SPECIFIC PURPOSES OF CARRYING ON ACTIVITIES OF GOVERNMENT AND WHERE GRANTS AND ADVANCES IOR LO ANS ARE DISBURSED BY GOVERNMENT TO ASSESSEE, SUCH GRANTS AND ADVANCES CANNOT BE HELD TO BE INCOME OF ASSESSEE. 5.7 A SIMILAR ISSUE OF ASSESSABILITY OF GRANTS AROSE BEFORE THE HON'BLE PUNJAB A N D HARYANA HIGH COURT IN CASE OF CIT VS. STATE URBAN DEVELOPMENT SOCIETY (IT APPEAL NO. 2010 OF 2011 DATED 19.10.2011) WHEREIN THE HON' BLE HIGH COURT HELD AS UNDER: - 'THE TRIBUNAL HELD THAT THE SOCIETY IS ACTING AS A NODAL AGENCY RECEIVING GRANT FROM GOVERNMENT OF INDIA AND STATE GOVERNMENTS AND DISTRIBUTES TO DISTRIC T AUTHORITIES FOR IMPLEMENTATION OF VARIOUS SCHEMES OF GOVERNMENT OF INDIA AND SUPERVISING THE EXECUTION OF SCHEMES. IT HAS NO DISCRETION TO UTILIZE THE AMOUNT AS PER OWN REQUIREMENTS. IT ALSO FOUND THAT IN CASE OF NON - UTILIZATION AT TJHE CLOSE OF THE SCHE ME, THE FUNDS ARE TO BE REFUNDED ALONG WITH INTEREST TO THE GOVERNMENT OF INDIA AND STATE GOVERNMENTS. THE GRANTS RECEIVED BY FJHE ASSESSEE DO NOT BELONG TO THE ASSESSEE SOCIETY. THE GRANTS DO NOT FORM CORPUS OF THE ASSESSEE NOR IT IS INCOME OF THE ASSESSE E UNDER SECTION 11 OF THE APT. SUCH GRANTS ARE NOT THE DONATIONS OR VOLUNTARY CONTRIBUTIONS UNDER SECTION J12 OF THE ACT. THUS, THE GRANTS RECEIVED BY THE ASSESSEE SHOULD NOT ITA NO.281/LKW/2017 PAGE 8 OF 14 BE CONSIDERED EITHER AS INCOME OR FOR ASCERTAINING THE AMOUNT EXPANDED OR AMOUNT TO B>E ACCUMULATED. PROVISIONS OF SECTION 11 AND 12 OF THE ACT ARE NOT APPLICABLE FOR GRANTS RECEIVED BY THE ASSESSEE UNDER THE SCHEMES. IT FURTHER HELD THAT THE ASSESSEE IS STATUTORILY REQUIRED TO FILE ITS INTENTION OF EXPANDING THE ACCUMULATED FUNDS IN F UTURE BY WAY OF FORM NO. 10. THE ARGUMENT THAT THE ASSESSEE HAS SHOWN THE ENTIRE AMOUNT AS ITS INCOME IN THE PROFIT AND LOSS ACCOUNT AS NOT DETERMINATIVE OF NATURE AS THE MERE ENTRIES IN THE BOOKS OF ACCOUNT DO NOT DECIDE THE NATURE OF RECEIPT AND ITS TAXA BILITY. THE TRIBUNAL ALSO HELD THAT EVEN IF THE AMOUNT IS NOT DISBURSED DUE , TO IMPOSITION OF MODEL CODE OF CONDUCT BY THE ELECTION COMMISSION, THE SURPLUS AT THE END OF THE YEAR CANNOT BE INCLUDED A S INCOME UNDER SECTIONS 11 AND 12 OF THE ACT. IF THE GRA NT IS NOT INCLUDABLE AS INCOME THE SURPLUS AT THE END OF THE YEAR REMAINING UNSPENT IS NOT OF ANY RELEVANCE. IN RESPECT OF THE BANK INTEREST, THE TRIBUNAL FUND THAT THE ASSESSEE HAS TO KEEP FUNDS IN SEPARATE ACCOUNTS AND SUCH INTEREST IS TREATED AS PART OF THE GRANTS UNDER RESPECTIVE SCHEMES TO WHICH SAID FUNDS RELATE. HENCE, WITH THE SAID FINDINGS, THE ORDERS OF THE ASSESSING OFFICER AND COMMISSIONER OF INCO ME TAX (APPEALS) WAS SET ASIDE. LEARNED COUNSEL FOR THE APPELLANT VEHEMENTLY ARGUED THAT THE SOCIETY ITSELF HAS REFLECTED THE GRANTS RECEIVED FROM CENTRAL AND STATE GOVERNMENTS AS INCOME. THEREFORE, IT IS NOT OPEN TO THE ASSESSEE TO TAKE A STAND THAT SUCH GRANTS ARE NOT THE INCOME. THE SAD ASPECT HAS BEEN CONSIDERED BY THE TRIBUNAL, WHEREIN, IT HAS BEEN HELD THA T REFLECTION IN THE PROFIT A ND LOSS ACCOUNT TOWARDS THE INCOME IS NOT DETERMINATIVE. THE ENTRIES IN THE BOOKS OF ACCOUNT DO NOT DECIDE THE NATURE OF RECEIPTS. SINCE, THE GRANTS HAVE BEEN RECEIVED BY THE ASSESSEE FOR DISBURSEMENT AND KEEPING IN VIEW THE FACT THAT THE SAME CANNOT BE UTILIZED FOR ANY OTHER PURPOSE SUCH AS DISTRIBUTION FOR THE POVERTY IN FURTHERANCE TO THE OBJECT OF THE SCHEMES, IT CANNOT BE TREATED AS INCOME OF THE ITA NO.281/LKW/2017 PAGE 9 OF 14 ASSESSEE. AS PER THE FINDING OF FACT RECORDED BY THE TRIBUNAL, NO SUBST ANTIAL QUESTION OF LAW ARISES IN THE PRESENT PETITIO N. ' A SIMILAR ISSUE OF ASSESSABILITY OF GRANTS IN AID AROSE BEFORE HON'BLE ITAT DELHI IN CASE OF ADDL. CIT VS. IMS COMMITT E ES, MUZZAFARNAGAR IN ITA NO. 1541/DEL./2008 FOR A.Y. 2006 - 07. THE HON'BLE ITAT V IDE ORDER DATED 04.04.2012 HELD AS UNDER - WE HAVE HEARD THE LD. AR AND GONE THROUGH THE FACTS OF THE CAFE. INDISPUTABLY, THE ANSH DAN AND FUND FOR NIRMAN YOJNA, WERE GIVEN TO THE ASSESSEE BY THE STATE GOVERNMENT & SUGAR FACTORIES FOR SPECIFIC PROJECTS, OF ROAD CONSTRUCTION AND AS POINTED OUT BY THE LD. CIT(A), THESE FUNDS HAVE BEEN SPENT ALSO FOR THOSE SPECIFIC PROJECTS. THERE IS NOTHING TO SUGGEST THAT THE ASSESSEE IS CARRYING ON ANY BUSINESS ACTIVITIES, GENERATING INCOME. ACCORDINGLY, THE LD. CIT(A) CO NCLUDED THE THERE WAS NO SURPLUS WITH THE ASSESSEE AND THEREFORE, THERE WAS NO QUESTION OF ANY TAXABLE INCOME. ADMITTEDLY, THE GRANT - IN - AID IN QUESTION IS A FINANCIAL AID OR SUBSIDY GIVEN BY THE STATE GOVERNMENT OF UP & SUGAR FACTORIES FOR THE SPECIFIC PUR POSE OF CONSTRUCTION OF ROADS. IN SECTION 2(24) OF THE ACT, IT IS DECLARED THAT 'INCOME 'INCLUDES' VARIOUS ITEMS WHICH ARE ENUMERATED THEREIN IN CLAUSES (I) TO (XV). IN THE SAID SECTION 2(24), SUCH A GRANT IN AID HAS NOT BEEN SPECIFICALLY INCLUDED AS AN IN COME OR A REVENUE RECEIPT. THEREFORE, CONSIDERING THE USE OF THE WORD 'INCLUDE' IN SECTION 2(24) THE WORD 'INCOME' SHALL BE CONSTRUED AS COMPREHENDING NOT ONLY THESE ITEMS WHICH SAID SECTION DECLARES THAT THESE SHALL INCLUDE BUT ALSO SUCH ITEMS AS IT SIGNI FIES ACCORDING TO ITS NATURAL IMPORT. SINCE, SECTION 2(24) HAS NOT DECLARED THAT SUCH A GRANT IN AID SHALL BE INCLUDED IN THE INCOME. THE WORD 'REVENUE' SHALL BE CONSTRUED AS COMPREHENDING WHAT IT SIGNIFIES ACCORDING TO ITS NATURAL IMPORT. IN RELATION TO A BUSINESS UNDERTAKING, THE WORD 'REVENUE' CONNOTES INCOMINGS OF THE UNDERTAKING WHICH ARE PRODUCTS OF THE NORMAL WORKING OF THE UNDERTAKING WHICH ARE PRODUCTS OF THE NORMAL WORKING OF THE UNDERTAKING. THE GIVING OF FINANCIAL AID OR ITA NO.281/LKW/2017 PAGE 10 OF 14 SUBSIDY TO THE AFORESAID COMMITTEE, WHICH ADMITTEDLY IS NOT CARRYING ON ANY BUSINESS, IS AT THE DISCRETION OF THE GOVERNMENT OF SUGAR FACTORIES. THUS, THE GRANT IN AID IN QUESTION WAS NOT A PRODUCT OF THE NORMAL BUSINESS ACTIVITIES OF THE ASSESSEE COMMITTEE, ASSESSED BY THE AO AS A LOCAL AUTHORITY. THEREFORE, SUCH A GRANT IN AID COULD NOT BE TERMED AS A REVENUE RECEIPT SO AS TO FORM PART OF THE TOTAL INCOME. F4S ALREADY POINTED OUT, THE LD. CIT(A) CONCLUDED THAT THE AFORESAID FUNDS RECEIVED BY THE ASSESSEE FROM STATE GOVERNMENT AN D SUGAR FACTORIES HAVE BEEN SPENT ONLY FOR THOSE SPECIFIC PROJECTS AND THERE WAS NO SURPLUS WITH THE ASSESSEE. SINCE, THE REVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL, CONTRO VERTING THESE FINDINGS OF FACTS RECORDED BY THE LD. CIT(A) SO AS TO ENABLE US T O TAKEN A DIFFERENT VIEW IN THE MATTER, THERE IS NO BASIS TO INTERFERE WITH HIS FINDINGS. CONSEQUENTLY, GROUND NOS. 1 TO 3 N THE APPEAL RE DISMISSED.' A SIMILAR ISSUE REGARDING ASSESSABILITY OF FUNDS RECEIVED FOR SPECIFIC PURPOSES WAS DECIDED BY HON'BLE PA TNA HIGH COURT IN CASE OF BIHAR AGRICULTURAL PRODUCE VS. CIT REPORTED IN 205 TAXMAN 378. THE HON'BLE COURT HELD AS UNDER: - 'APPLYING THE RATIO OF THE JUDGMENT TO THE PRESENT SITUATION, IT APPEARS TO US THAT THE BOARD'S FUND WAS MEANT FOR SPECIFIC PURPOSES, NAMELY, TO MEET THE EXPENSES FOR ESTABLISHMENT OF THE BOARD AND THOSE INCURRED IN THE INTEREST OF THE MARKET COMMITTEE. THE AIMS AND OBJECTS OF THE MARKET COMMITTEE, AND THE PURPOSE FOR WHICH THE COMMITTEE ITSELF COULD USE THE FUNDS, ARE LAID DOWN IN SECT ION 30 OF THE LOCAL ACT. IN SUCH A SITUATION, IT IS A STATUTORY COMPULSORY CONTRIBUTION BY THE MARKET COMMITTEE TO THE BOARD'S FUND, MEANT FOR SPECIFIED STATUTORY PURPOSES, WHICH CANNOT BE USED FOR ANY PURPOSE THAT THE BOARD DESIRES, AND SURELY CANNOT BE U SED FOR COMMERCIAL ACTIVITIES, OR TRADE AND BUSINESS. IT DOES NOT PERMIT ANY PROFIT MOTIVE. IT IS APPARENT FROM THE AIMS AND OBJECTS OF THE ACT THAT THE FUNCTIONS OF THE BOARD ARE ENTIRELY STATUTORY SPECIFIED, AND TO ALLEVIATE THE SITUATION AFFECTING PLIGH T OF ITA NO.281/LKW/2017 PAGE 11 OF 14 AGRICULTURIST IN THE STATE OF BIHAR. IN SUCH A SITUATION, IT IS NOT A REVENUE RECEIPT AND THEREFORE, CANNOT BE TAXED. WE MUST ALSO NOTICE THE DEFINITION OF 'INCOME', OCCURRING IN SUB - SECTION (24) OF SECTION 2 OF THE ACT IT IS QUITE CLEAR IN OUR MINDS THAT THE BOARD'S FUND RECEIVED UNDER SECTION 33 - C OF THE LOCAL ACT IS NOT AN INCOME FOR PROFIT AND GAINS, IS NOT DIVIDEND, IS NOT VOLUNTARY CONTRIBUTION, NOR IS IT COVERED BY ANY ONE OF THE REMAINING CLAUSES OF SUB - SECTION (24) OF SECTION 2 OF THE ACT. WE, THEREFORE, CONCLUDE THAT THE BOARD'S FUND RECEIVED AND COLLECTED UNDER THE PROVISIONS OF SECTION 33C OF THE ACT IS NOT INCOME WITHIN THE MEANING OF SUBSECTION ((24) OF SECTION 2 OF THE ACT, AND IS BEYOND THE PURVIEW OF THE ACT.' IN THE PRESENT CASE THE GR ANTS WERE RECEIVED BY THE APPELLANT FROM GOVERNMENT OF INDIA FOR SPECIFIC PURPOSE. AS PER THE NOTIFICATIONS ISSUED BY GOVERNMENT OF INDIA IT HAS BEEN SPECIFICALLY LAID DOWN THAT THESE GRANTS ARE FOR SPECIFIC PURPOSES AND ONLY THE INTEREST EARNED ON THE SAM E IT TO BE USED/APPLIED FOR THE PURPOSES OF THE OBJECTS OF APPELLANT INSTITUTE. THE AMOUNTS RECEIVED IN GRANTS HAVE TO BE HELD AS DEPOSITS AND ONLY INTEREST EARNED THEREIN IS TO BE APPLIED TOWARDS OBJECTS OF INSTITUTE. THE GRANTS AS SUCH CANNOT BE APPLIED OR UTILIZED. THE APPELLANT HAS ACCOUNTED THE INTEREST EARNED ON THE GRANTS AS ITS INCOME. IN VIEW OF THE FACTS MENTIONED IN PARA 5.2 TO 5.7 OF THIS ORDER AND THE JUDGEMENTS OF HON'BLE HIGH COURT AND HON'BLE ITAT'S AS OUTLINED IN PART 5.7 OF THIS ORDER, THE GRANTS SO RECEIVED BY THE APP ELLANT FROM THE GOVER NM ENT TO TIE UTILIZED FOR SPECIFIC PURPOSE CANNOT BE HELD TO BE INCOME OF THE APPELLANT. THE GROUNDS OF APPEAL NO. 1,3 , 4,6,7,8, 10 AND 12 ARE ALLOWED. THE G ROUNDS OF APPEAL NO. 2,5,9,11,13 AND 14 ARE CONSEQ UENTIAL IN NATURE AND DO NOT REQUIRE SEPARATE ADJUDICATION. ALTERNATIVELY, THE APPELLANT HAS ALSO PLEADED, THAT THE ENTIRE SURPLUS WOULD BE EXEMPT FOR THE REASONS THAT THE APPELLANT HAD PASSED A RESOLUTION ACCUMULATING THE SURPLUS, IF ANY, TO BE ITA NO.281/LKW/2017 PAGE 12 OF 14 APPLIED T OWARDS THE OBJECTS OF THE INSTITUTE. FORM NO. 10 HAS BEEN FILED BEFORE ME DURING THE APPELLATE PROCEEDINGS. IT IS CLAIMED BY THE APPELLANT THAT FORM NO. 10 CAN BE FILED ANY TIME EVEN DURING THE APPELLATE PROCEEDINGS. RELIANCE IS ALSO PLACED ON THE JUDGEMEN T OF HON'BLE GUJRAT HIGH COURT IN THE CASE OF CIT VS MAYUR FOUNDATION, JUDGEMENT OF HON'BLE ITAT, AGRA IN CASE OF SEWA EDUCATION TRUST VS. DEPTT. OF INCOME TAX IN ITA NO. 157/AGRA 2013 AND JUDGEMENT OF HON'BLE JURISD ICTI ONAL ITAT IN THE CASE OF BARROWS BLU E BELL SCHOOL DATED 31.08.2016 IN ITA 358/LKW/2016. RESPECTFULLY FOLLOWING THESE DECISIONS, ON THIS COUNT ALSO, THE SURPLUS, IF ANY, CANNOT BE TREATED AS INCOME FOR THE YEAR. THE SURPLUS IS TO BE ACCUMULATED FOR A PERIOD OF FIVE YEARS AND TO BE APPLIED TOW ARDS THE OBJECT OF THE INST IT UTE IN SUBSEQUENT YEARS. 7 . WE FIND THAT TRIBUNAL HAS DISMISSED THE APPEAL OF THE REVENUE ON SIMILAR FINDINGS OF LD. CIT(A). TRIBUNAL IN PARA 6 OF ITS ORDER FOR ASSESSMENT YEAR 2012 - 13 HAS MADE THE FOLLOWING FINDINGS: - 6 . WE HA VE PERUSED THE CASE RECORD, HEARD THE RIVAL CONTENTIONS AND ANALYSED THE FACTS OF THE CASE AND IT IS CRYSTAL CLEAR FROM RECORD THAT GRANTS RECEIVED BY THE ASSESSEE FROM GOVERNMENT OF INDIA WAS FOR SPECIFIC PURPOSE. AS PER NOTIFICATIONS ISSUED BY THE GOVER NMENT OF INDIA, IT HAS BEEN SPECIFICALLY LAID DOWN THAT THESE GRANTS ARE FOR SPECIFIC PURPOSE AND ONLY INTEREST EARNED ON THE SAME IS USED FOR THE PURPOSE OF OBJECTS OF THE ASSESSEE INSTITUTE. THE AMOUNTS RECEIVED IN GRANT HAVE TO BE HELD AS DEPOSIT AND O NLY INTEREST EARNED THEREIN TO BE APPLIED FOR OBJECTS OF THE INSTITUTE, BUT GRANTS AS SUCH CANNOT BE APPLIED OR UTILIZED. ASSESSEE HAS ACCOUNTED INTEREST EARNED ON THE GRANTS AS ITS INCOME. GRANTS SO RECEIVED BY THE ASSESSEE FROM GOVERNMENT TO BE UTILIZE D FOR SPECIFIC PURPOSE, CANNOT BE HELD TO BE INCOME OF THE ASSESSEE, ESPECIALLY IN VIEW OF THE JUDICIAL PRONOUNCEMENTS BY HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. STATE URBAN DEVELOPMENT SOCIETY IN I.T APPEAL NO. 2010 OF 2011 ITA NO.281/LKW/2017 PAGE 13 OF 14 DATED 19.1 0.2011; HON'BLE PATNA HIGH COURT IN CASE OF BIHAR AGRICULTURAL PRODUCE VS. CIT, 205 TAXMAN 378 AND ITAT DELHI BENCH IN THE CASE OF ADDL. CIT VS. IMS COMMITTEES, MUZZAFARNAGAR IN ITA NO. 1541/DEL./2008 FOR A.Y. 2006 - 07. IN ALL THESE CASES UNANIMOUS VIEW T AKEN SEEMS TO BE THAT ONCE A GRANT IS RECEIVED FROM GOVERNMENT AGENCY WITH CERTAIN CONDITIONS AND STIPULATIONS PROVIDED THEREIN AND IT IS ALSO SPECIFIED FOR WHICH PURPOSES SUCH GRANT HAS TO BE UTILIZED, THEN THAT GRANT CANNOT BE THE INCOME OF THE ASSESSEE. IF SUCH GRANT IS NOT UTILIZED FOR SPECIFIC PURPOSE, THEN AUTOMATICALLY IT HAS TO BE REFUNDED BACK AGAIN TO THE GOVERNMENT AGENCY. LD. CIT(A) WHILE PROVIDING RELIEF TO THE ASSESSEE IN THIS CASE HAS RELIED ON THE AFORESAID JUDICIAL PRONOUNCEMENTS AND WE F IND NO INFIRMITY WITH THE FINDINGS OF THE LD. CIT(A) AND RELIEF PROVIDED TO THE ASSESSEE IS, THEREFORE, SUSTAINED. 8 . FOLLOWING THE ABOVE JUDICIAL DECISION, WE DISMISS THE APPEAL FILED BY THE REVENUE. 9 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 / 11 / 201 8 . SD/ - SD/ - [ A. D. JAIN ] [ T.S. KAPOOR ] VICE PRESIDEN ACCOUNTANT MEMBER DATED: 30 TH NOVEMBER , 201 8 JJ: 2011 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ITA NO.281/LKW/2017 PAGE 14 OF 14 BY ORDER ASSISTANT REGISTRAR 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE OR DER 9. DATE OF DESPATCH OF THE ORDER