M/s Cane Development Council, Bahraich V. The Income Tax Officer-I, Bahraich

ITA 56/LKW/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9126 (ITAT-LUCKNOW)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-01-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 31-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIRAJNISHYADAV
• Assessee Lawyers: SHRISHUBHAMRASTOGI
• Keywords: Opportunity of being heard; Principle of natural justice; Condonation of delay
• Section: 6; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.56/LKW/2014 ASSESSMENT YEAR : 2009-10 M/S. CANE DEVELOPMENT COUNCIL, NANPARA, BAHRAICH. VS THE INCOME TAX OFFICER-I BAHRAICH. PAN NO.AAALG0413H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRISHUBHAMRASTOGI, C.A. RESPONDENT BY : SHRIRAJNISHYADAV, D.R. DATE OF HEARING: 15 01 2015 DATE OF PRONOUNCEMENT: 23 01 2015 O R D E R PER SUNIL KUMAR YADAV : THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT (A), INTER ALIA ON FOLLOWING GROUNDS :- 1. THE LD. C.I.T. (APPEALS)-II, LUCKNOW ERRED ON FACTS AND IN LAW IN UPHOLDING THE ORDER OF THE LD. A.O. WITHOUT APPRECIATING THE FACTS, CIRCUMSTANCES, RULES, REGULATIONS AND MATERIAL ON RECORD. --2-- 2. THE LD. C.I.T. (A) DID NOT APPRECIATED THE EFFECT OF STATUTORY PROVISION OF U.P. SUGAR CANE (REGULATION OF SUPPLY AND PURCHASE) ACT, 1953 AND THE RULES MADE THERE UNDER, THE RECEIVING ARE NOT INCOME U/S 2(24) OF THE I.T. ACT. IN ACCORDANCE TO THESE PROVISIONS TOTAL RECEIVING CANNOT BE TREATED AS INCOME. 3. THE LD. C.I.T. (A) DID NOT APPRECIATED THAT AS PER THE SUGAR CANE (REGULATION OF SUPPLY AND PUCHASE) ACT, 1953 AND THE RULES MADE THERE UNDER, IT IS MANDATORY ON THE ASSESSEE TO UTILIZE THE ENTIRE AMOUNT OF CONTRIBUTION IN THE FORM OF COMMISSIONRECEIVED FROM SUGAR MILLS AND CO- OPERATIVE CANE GROWERS SOCIETY AND GRANTS, RECEIVED FROM STATE GOVERNMENT AND CENTRAL SUGAR CANE COMMITTEES FOR SPECIFIED PURPOSED BEING CONSTRUCTION OF ROAD AND OTHERDEVELOPMENT WORKS IN THE ASSIGNED AREA EITHER DURING THE YEAR OF RECEIPT OR IN SUBSEQUENT YEAR/S AND NOT OTHERWISE. ACCORDINGLY, THE ENTIRE RECEIVING CANNOT BE TREATED AS INCOME UNDER SECTION 2(24) OF I.T. ACT. 4. THE LD. C.I.T. (APPEALS), DID NOT APPRECIATED THAT APPELLANT HAS RECEIVED CONTRIBUTION IN THE FORM OF COMMISSION AND GRANTS IN ACCORDANCE WITH THE ACT AND RULES MADE BY STATE GOVERNMENT TO BE UTILIZED ONLY FOR SPECIFIC PROJECTS OR WORK AND THERE IS NO PROVISION UNDER THE SAID ACT/RULE AUTHORIZING THE ASSESSEE TO DO ANY BUSINESS ACTIVITY WITH PROFIT MOTIVE. --3-- 5. THAT AS PER SAID ACT/RULE, ASSESSEE IS MERELY A FUND MANAGEMENT BODY WITHOUT ANY RIGHT OF ABSOLUTE OWNERSHIP OVER THE FUND PLACE AT ITS DISPOSAL. FOR THE ROAD CONSTRUCTION AND DEVELOPMENT WORK ALSO BELONGS TO THE GOVERNMENT AS ABSOLUTE OWNER. 6. THAT THERE IS NO PROVISION UNDER THE AFORESAID ACT/RULES MADE THERE UNDER AUTHORIZING THE APPELLANT TO UTILIZE THE RECEIVING TO DISTRIBUTE IT OR ANY PART OF IT TO ANYBODY AS PROFIT/INCOME. 7. THAT THERE IS NO FINDING BY LOWER AUTHORITY THAT THE ASSESSEE HAS UTILIZED THE COMMISSION AMOUNT AND OTHER GRANT IN AIDS FOR ANY OTHER PRUPOSE. 8. THE LD. C.I.T. (APPEALS) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADHOC DISALLOWANCE BEING 50% OUT OF EXPENSES DEBITED AND CLAIMED BY THE ASSESSEE OTHER THAN ADMINISTRATIVE EXPENSES WITHOUT BRINGING ANY CONTRARY MATERIAL ON RECORD. 9. THE ADDITIONS UPHELD ARE HIGHLY EXCESSIVE, CONTRARY TO THE FACTS, LAW, RULES, REGULATIONS AND PRINCIPLE OF NATURAL JUSTICE WITHOUT PROVIDING SUFFICIENT OPPORTUNITY TO HAVE ITS SAY ON THE REASONS RELIED UPON BY HIM. 1. DURING THE COURSE OF HEARING, IT HAS BEEN POINTED OUT THAT THE APPEALS ARE FILED LATE BY 56 DAYS FOR WHICH APPLICATION FOR CONDONATION OF DELAY IS FILED BY THE ASSESSEE STATING THEREIN THAT THE CONCERNED OFFICER WAS NOT AVAILABLE AT THE RELEVANT POINT OF TIME. THEREFORE, THERE WAS A DELAY IN FILING OF THE APPEAL. --4-- 2. BEING CONNENCED WITH THE EXPLANATION FOR THE DELAY IN FILING OF THE APPEAL, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 3. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO MOVED AN APPLICATION FOR ADMISSION OF NEW GROUNDS THAT THE RECEIVING OF THE BODY ARE GOVERNMENT GRANTS FOR SPECIFIC PURPOSES, HENCE THEY CANNOT BE CONSIDERED AS INCOME U/S 2(24) OF INCOME TAX ACT (HEREINAFTER CALLED AS AN ACT). HAVING CAREFULLY EXAMINED THE ORIGINAL GROUNDS RAISED BYTHE ASSESSEE AND THE NEW GROUND, WE FIND THAT ALL THE GROUNDS RELATE TO THE SOLE CONTROVERSY, WHETHER THE RECEIPTS RECEIVED BY THE ASSESSEE FROM THE GOVERNMENT EITHER IN THE FORM OF GRANTS FROM THE CENTRE OR STATE GOVERNMENT AND CONTRIBUTION IN THE FORM OF COMMISSION BEING CESS FROM SUGAR FACTORIES OR CANE GROWERS SOCIETIES IS IN THE NATURE OF INCOME UNDER SECTION 2 (24) OF THE I.T. ACT? WE, THEREFORE, ADJUDICATE THIS ISSUE HAVING ADMITTED THE NEW GROUND ALSO. 4. BRIEF FACTS OF THIS CASE ARE THAT ARE THAT THE ASSESSEE, THE CANE DEVELOPMENT COUNCIL WAS CONSTITUTED BY CANE COMMISSIONER, UNDER SECTION 5 OF U.P. SUGAR CANE (REGULATION OF SUPPLY AND PURCHASE) ACT 1953. THE ASSESSEE COUNCIL HAS BEEN CONSTITUTED TO PERFORM THE FUNCTIONS AS LAID DOWN IN SECTION 6 OF THE ACT. THE FUND OF THE COUNCIL CONSISTS OF GRANTS IF ANY MADE BY THE INDIAN SUGARCANE COMMITTEE, GRANTS IF ANY MADE BY THE STATE GOVERNMENT OR CENTRAL GOVERNMENT AND CONTRIBUTION IN THE FORM --5-- OF COMMISSION BEING CESS MADE BY THE SUGAR FACTORIES AND CANE GROWERS.THE ASSESSEE HAS FILED THE RETURN OF INCOME AND CLAIMED DEDUCTION U/S 80P (2) OF THE ACT, WHICH WAS DENIED BY THE ASSESSING OFFICER AS ASSESSEE WAS NOT REGISTERED AS A CO-OPERATIVE SOCIETY. 5. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) BUT DID NOT FIND FAVOUR WITH HIM. THE CIT (A) REJECTED THE CLAIM OF ASSESSEE U/S 80P (2) AND U/S 11 OF THE ACT. 6. NOW, THE ASSESSEE IS BEFORE THE TRIBUNAL AND HAS TAKEN ALTOGETHER A NEW PLEA OR GROUND THAT THE RECEIPTS OF THE ASSESSEE CANNOT BE TREATED AS INCOME U/S 2 (24) OF THE ACT AS IT WAS MERELY A GRANT FROM THE GOVERNMENT AND THE COMMISSION FOR THE SUGAR FACTORIES FOR SPECIFIC PURPOSE. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE PROVISIONS OF SECTION 5 AND 6 OF THE U.P. SUGAR CANE (REGULATION OF SUPPLY AND PURCHASE) ACT 1953 AND THE ORDER OF THE CIT (A) DT. 18.02.2014 IN THE CASE OF M/S. CANE DEVELOPMENT COUNCIL, ROZAGAON, FAIZABAD AND THE ORDERS OF THE TRIBUNALIN THE FOLLOWING CASES:- (I) ADDITIONAL CIT VS. N.S. COMMITTEE IN ITA NO. 1541/DEL/2008. (II) ITO VS CANE DEVELOPMENT COUNSEL IN ITA NO.5602, 5603/DEL/2011 & 3209/DEL/2012. --6-- (III) ACIT VS WATER AND SANITATION MANAGEMENT ORGANIZATION IN ITA NO.2804/AHD/2009. RELINACEWAS ALSO PLACED UPON THE JUDGMENT OF HONBLE ALLAHABADHIGH COURT IN THE CASE OF CIT VS U.P. UPBHOKTASAHKARISANGH LIMITED REPORTED IN 288 ITR 106. THE COPY OF THE AFORESAID ORDERS ARE PLACED ON RECORD. 7. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT SINCE THE RECEIPTS WERE RECEIVED FOR SPECIFIC PURPOSE EITHER FROM THE GOVERNMENT OR ANY OTHER AGENCY, IT WOULD NOT PARTAKE THE CHARACTER OF INCOME U/S 2 (24) OF ACT. 8. THE LD. D.R. SIMPLY PLACED THE RELIANCE UPON THE ORDER OF THE CIT (A). 9. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES AND JUDGMENTS FILED BEFORE US IN THE LIGHT OF RIVAL SUBMISSIONS, WE ARE OF THE CONSIDERED VIEW THAT SINCE THE ABOVE GRANTS OR RECEIPTS ARE RECEIVED BY THE ASSESSEE EITHER FROM THE GOVERNMENT OR ANY OTHER AGENCY FOR A PARTICULAR PURPOSE AND ASSESSEE HAS NO INDEPENDENT RIGHT OVER IT, IT WOULD NOT PARTAKE THE CHARACTER OF INCOME U/S 2 (24) OF THE ACT. THOUGH, THIS ARGUMENT WAS NOT RAISED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES AND THE ASSESSEE HAD BEEN CLAIMING DEDUCTION U/S 80P (2) OF THE ACT OR EXEMPTION U/S 11 OF THE ACT, BUT THE GROUND OR ARGUMENT RAISED BEFORE US IS PLAUSIBLE AND LEGAL. THEREFORE, IT REQUIRE THE PROPER ADJUDICATION. --7-- 10. IN THE AFORESAID ORDER OF THE TRIBUNAL, IT HAS BEEN HELD THAT THE GRANT IN AID OR ANY OTHER RECEIPT WHICH WERE NOT PRODUCT OF NORMAL BUSINESS ACTIVITY OF THE ASSESSEE, IT COULD NOT BE TERMED AS REVENUE RECEIPT, SO AS TO FORM PART OF THE TOTAL INCOME. 11. IN THE CASE OF ITO VS CANE DEVELOPMENT COUNCIL (SUPRA), THE SIMILARISSUE WAS RAISED ON SIMILAR FACTS AND FINDING FORCE IN THE CONTENTION OF THE ASSESSEE, THE TRIBUNAL HAS RESTORED THE MATTER TO THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE ASSESSEE IN LIGHT OF THESE SUBMISSIONS. THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL IS EXTRACTED AS UNDER :- 9. CONSIDERING THE WRITTEN SUBMISSIONS FILED BEFORE THE BENCH, IT WAS SEEN THAT ON BEHALF THE ASSESSEE IT HAS BEEN CANVASSED THAT THE ASSESSEE COMPANY HAS BEEN ESTABLISHED BY AN ORDER DATED 06.04.1989 PASSED BY THE CANE COMMISSIONER OF U.P. IN EXERCISE OF POWERS U/S 5 OF THE U.P. SUGAR CANE (REGULATION OF SUPPLY AND PURCHASES) ACT 1953 R/W RULE 8 OF THE U.P. SUGAR CANE (REGULATION OF SUPPLY AND PURCHASES) RULES 1954. ON DIVISION OF THE U.P. STATE AND FORMATION OF UTTRAKHAND STATE LATER ON, THESE ACT AND RULES HAVE BEEN ADOPTEAD BY THE UTTRAKHAND STATE ALSO AS IT. THE FUNCTIONING AND ACTIVITIES OF THE ASSESSEE ARE STATED TO BE GOVERNED BY THE PROVISIONS MADE UNDER THIS ACT AND RULES. IT HAS ALSO BEEN SUBMITTED THAT AS PER SECTION 6 OF THE SAID ACT, THE FUNCTIONS OF THE ASSESSEEE ARE THAT IT CARRIES OUT ONLY THE DEVELOPMENT ACTIVITIES IN THE AREA ASSIGNED TO IT BY THE CANE COMMISSIONER OF THE STATE. IT WAS ALSO SUBMITTED IN THE WRITTEN SUBMISSIONS THAT THERE IS NO PROVISION UNDER THE SAID-ACT/RULE AUTHORIZING THE APPELLANT TO DO ANY BUSINESS ACTIVITY WITH PROFIT MOTIVE OR TO EARNANY INCOME/PROFIT AND THE APPELLANT CARRIES OUT THE DEVELOPMENT ACTIVITITES AS SPECIFIED UNDER AFORESAID ACT ON NO PROFIT NO LOSS BASIS. THE APPELLANT --8-- IS MERELY A FUND MANAGEMENT BODY WITHOUT ANY RIGHT OF ABSOLUTE OWNERSHIP OVER THE FUNDS PLACED AT ITS DISPOSAL. IT IS FURTHER MENTIONED HERE THAT THE SAID ROADS, CULVERTS, ETC. ARE CONSTRUCTED BY THE APPELLANT ON THE LAND BELONGING TO THE GOVT. AND CONSTRUCTIONS MADE BY THE APPELLANT THERE ON ALSO BELONGS TO THE GOVT. AS ABSOLUTE OWNER AND NOT TO THE APPELLANT OR ANYBODY ELSE. THE FUNDS RECEIVED BY THE ASSEESSEE ARE EITHER BY WAY OF (A) VOLUNTARY GRANT FROM THE CENTRAL OR STATE GOVT. OR (B) CONTRIBUTION IN THE NAME OF COMMISSION FROM THE SUGAR MILLS, AS PROVIDED U/S 8 OF THE AFORESAID ACT. AS PER RULE 49 OF THE AFORESAID RULES, THIS CONTRIBUTION AMOUNT IN THE NAME OF COMMISSION IS WORKED OUT THE SUGAR MILL WITH REFERENCE TO THE AMOUNT OF PURCHASE OF THE SUGAR CANE BY IT FROM THE CANE GROWERS ARE THE CANE GROWERS COOPERATIVE SOCIETY. ADDRESSING THE AMOUNT THE COMMISSION, IT IS STATED THAT IT IS WORKED OUT AND PAID BY THE SUGAR MILL TO THE APPELLANT, IS NOT SOLD/SUPPLIED BY THE APPELLANT TO THE SUGAR MILL NOR ANY SERVICE IS RENDERED BY THE APPELLANT TO THE SUGAR MILL PAYING AMOUNT IN THE NAME OF COMMISSION TO THE APPELLANT AS THERE IS NO PROVISION UNDER THE AFORESAID ACT AND RULE FOR IT, HENCE THE AMOUNT PAID BY THE SUGAR MILL TO THE APPELLANT THOUGHT IS IN THE NAME OF COMMISSION BUT, IN FACT, IT IS JUST A CONTRIBUTION AMOUNT. REFERRING TO THE MANDATORY PROVISION MADE UNDER RULE 49A, THE ENTIRE AMOUNT OF SAID COMMISSION, WHICH IS, IN FACT, JUST A CONTRIBUTION AMOUNT, IS REQUIRED TO BE UTILIZED ON SPECIFIC PURPOSE OF CONSTRUCTION OF ROAD ETC. AND OTHER DEVELOPMENT ACTIVITIES ARE ASSIGNED TO THE APPELLANT AND NOT OTHERWISE. IT IS FURTHER SUBMITTED THAT THERE IS NO PROVISION UNDER AFORESAID ACT/RULES MADE THERE UNDER AUTHORIZING THE APPELLANT TO UTILIZED THE SAID AMOUNT OF SAID CONTRIBUTION PAID IN THE NAME OF COMMISSION FOR ANY PURPOSE OR TO DISTRIBUTE IT OR ANY PART OF IT TO ANYBODY AS PROFIT/INCOME. IT IS ALSO BEEN SUBMITTED THAT IN THE PRESENT CASE THE ASSESSEE HAS NEITHER DISTRIBUTED THE SAID CONTRIBUTION AMOUNT RECEIVED IN THE NAME OF COMMISSION TO ANYBODY NOT UTILIZED IT FOR ANY PURPOSE OTHER THAN THAT FOR WHICH IT HAS BEEN PAID TO THE APPELLANT. IT HAS --9-- ALSO STATED THAT THERE IS NO FINDING BY ANY LOWER AUTHORITIES THAT THE ASSESSEE HAS UTILIZED THE COMMISSION AMOUNT FOR ANY PURPOSE SIMILARLY THE SURPLUS NOT SPEND IS FULLY COVERED BE THE ORDER OF THE DELHI BENCH IN N.S. COMMITTEE, VILLAGE THANABHAWAN, TEHSIL SHAMIL, DISTT.- MUZAFFARNAGAR ORDER COPY FILED. 10. IN THE LIGHT OF WRITTEN SUBMISSIONS ADVANCED BY THE ASSESSEE QUA THE DEPARTMENTAL GROUNDS AND GROUNDS OF THE ASSESSEE WHEREIN SUBMISSION ON BEHALF OF THE REVENUE HAVE ALREADY BEEN ADDRESSED IN THE EARLIER PART OF THIS ORDER. WE ARE THE VIEW THAT GROUND NO. 1, 2 & 3 IN THE APPEALS OF THE ASSESSEE DESERVES TO BE DISMISSED AS THE SAME HAVE NOT BEEN ADDRESSED IN THE WRITTEN SUBMISSION AND IT IS PRESUMED THAT THE ASSESSEE HAS NOTHING TO SAY. THE FINDING OF THE CIT(A) REPRODUCED IN THE EARLIER PART OF THIS ORDER AS SUCH ARE CONFIRMED. QUA THE GROUNDS 4, 5 & 6 OF THE ASSESSEE AND DEPARTMENTAL GROUNDS 1 & 2, THE FINDINGS ARRIVED AT IN PARA 6.6, THE SAME IS MODIFIED AND THE ISSUE IS RESTORED TO THE FILE OF THE AO WITH THE DIRECTION TO ADDRESS THE SPECIFIC PROVISIONS TO THE EXTENT THAT THE AO SHALL LOOK INTO THE SPECIFIC RULES AND SECTIONS WHICH THE ASSESSEE WANTS THE CANVASS IN SUPPORT ITS CLAIM FOR THE SAID PURPOSE, ASSESSEE HAS RELIED ON THE ORDER OF CO ORDINATE BENCH IN ITA NO.154/DEL/2008 IN THE CASE OF CIT VS N.S. COMMITTEE, VILLAGE THANABHAWAN, TEHSIL SHAMLI, DISTT. MUZAFFARNAGAR WHEREIN THE DEPARTMENTAL GROUNDS AGITATING THE ISSUE OF ANSHDAN AND NIRMANYOGNA FUND HAS TAKEN A VIEW IN PARA 6 WHICH READS AS UNDER :- WE HAVE HEARD THE LD. DR AND GONE THROUGH FACTS ON THE CASE INDISPUTABLY, THE ANSH DAN AND FUND FOR NIRMANYOJNA, WHERE GIVEN TO THE ASSESSEE BY THE STATE GOVERNMENT & SUGAR FACTORIES FOR SPECIFIC PROJECTS OF THE ROAD CONSTRUCTION AND AS POINTED OUT BY THE LD.CIT(A) THIS FUNDS HAVE BEEN SPEND ALSO FOR THOSE SPECIFIC PROJECT. THERE IS NOTHING TO SUGGEST THAT THE ASSESSEE IS CARRYING ON ANY BUSINESS ACTIVITIES, GENERATING INCOME. ACCORDINGLY, THE LD. CIT(A) CONCLUDED THAT THERE WAS NO SURPLUS WITH THE ASSESSEE AND --10-- 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 AND SUGAR FACTORIES FOR THE SPECIFIC PURPOSE 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 INCOME OR A REVENUE RECEIPT. THEREFORE, CONSIDERING THE USE FOR THE WORKED INCLUDE IN SECTION 2(24), THE WORD INCOME SHALL BE CONSTRUED AS COMPREHENDING NOT ONLY THOSE ITEMS WHICH SAID SECTION DECLARED THAT THESE SHALL INCLUDE BUT ALSO SUCH ITEMS WHICH SAID SECTION DECLARES THAT THESE SHALL INCLUDE BUT ALSO SUCH ITEMS AS IT SIGNIFIED 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 SIGNIFIED 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. THE GIVING OF FINANCIAL AID OR SUBSIDY TO THE AFORESAID COMMITTEE, WHICH ADMITTEDLY IS NOT CARRYING ON ANY BUSINESS, IS AT THE DISCRETION OF THE GOVERNMENT OR SUGAR FACTORS. 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. AS ALREADY POINTED OUT, THE LD CIT(A) CONCLUDED THAT THE AFORESAID FUNDS RECEIVED BY THE ASSESSEE FROM STATE GOVERNEMENT AND SUGAR FACTORIES HAVE BEEN SPEND ONLY FOR THOSE SPECIFIC PROJECTS AND THERE WAS NO SURPLUS WITH THE ASSESSEE. SINCE THE REVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL, CONTROVERTING THESE FINDINGS OF FACTS RECORDED BY THE LD. CIT(A) SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, THERE IS NO BASIS TO INTERFERE WITH HIS FINDINGS. CONSEQUENTLY, GROUND NO. 1 TO 3 IN THE APPEAL IS DISMISSED. --11-- ACCORDINGLY THE AO SHALL DECIDE THE ISSUE IN ACCORDANCE WITH LAW QUA GROUND NO-4, 5 & 6 OF THE ASSESSEE AND GROUND NO-W & 2 OF THE REVENUE IN LINE WITH THE ORDER OF THE CO-ORDINATE BENCH. NEEDLESS TO SAY THAT THE ASSESSEE SHALL BE AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD. 12. IN THE CASE OF CIT VS U.P. UPBHOKTASAHKARISANGH LTD. (SUPRA), THE HONBLE ALLAHABAD HIGH COURT HAS HELD THAT WHERE THE AMOUNT WAS GIVEN BY THE STATE GOVERNMENT FOR SPECIFIC PURPOSE, IT DID NOT PARTAKE OF THE NATURE OF THE ASSESSEE. EVEN IF IT WAS TREATED AS AN INCOME, IT WOULD NOT BE LIABLE TO TAX AS IT WAS STATED THAT THERE WAS DIVERSIONOF THE INCOME BY WAY OF OVERRIDING TITLES ON THE SAID AMOUNT BY THE WAY OF CONDITION. 13. IN THE CASE OF DIT VS. SOCIETY FOR DEVELOPMENT ALTERNATIVES IN ITA NOS.12 OF 2012 AND 18 OF 2012, THE HONBLE HIGH COURT OF DELHI HAS ALSO DEALT WITH SIMILAR ISSUE AND HAS HELD THAT WHERE ASSESSEERECEIVED GRANTS FOR SPECIFIC PURPOSES FROM THE GOVERNMENT, NON GOVERNMENT AND FOREIGN INSTITUTION ETC. AND THESE GRANTS WERE TO BE SPENT AS PER TERMS& CONDITIONS OF THE PROJECT GRANT AND THE AMOUNT REMAINED UNSPENT AT THE END OF THE YEAR,GOT SPILLED OVER TO THE NEXT YEAR, IT WAS NOT AN INCOME OF THE ASSESSEE. 14. SIMILAR IS THE POSITION IN THE INSTANT CASE AS THE ASSESSEE HAS NO INDEPENDENT RIGHT TO USE THE GRANT IN A MANNER IN WHICH IT LIKES. IT HAS TO BE UTILIZED FOR A PARTICULAR PURPOSE IN TERMS OF GRANTS. SINCE THESE ARGUMENTS ARE RAISED FIRST TIME BEFORE THE TRIBUNAL, WE ARE OF THE VIEW THAT THIS ASPECT SHOULD BE EXAMINED BY THE --12-- ASSESSING OFFICER WHILE ASSESSING THE INCOME OF THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) & RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO THE REEXAMINE THE CLAIM OF THE ASSESSEE IN THE LIGHT OF THE NEW ARGUMENT. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- (A.K. GARODIA) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23 RD JANUARY, 2015 COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR