M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INFRASTRUCTURE CORPORATION LIMITED, JAIPUR V. ASSISTNAT COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR

ITA 714/JPR/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3959 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 24-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: S K GOGRA
• Keywords: Question of law; TDS
• Section: 43B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH JESK LH0 KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH. C. SHARMA, AM & SHRI VIJAY PA L RAO, JM VK;DJ VIHY LA- @ ITA NO. 713 & 714/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2013-14 & 2014-15 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INFRASTRUCTURE CORP. LTD. OLD WORK WOMEN HOSTEL BUILDING, LAL KOTHI, JAIPUR. CUKE VS. THE ACIT, CIRCLE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AADCR 0095 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI S.K. GOGRA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 23/01/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 05/02/2019 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE TWO SEPARATE ORDERS OF CIT(A), JAIPUR PASSED BOTH DATED 29.03.2018 FOR THE ASSESSMENT YEARS 2013-14 & 2014-15 RESPECTIVELY. TH E ASSESSEE HAS RAISED COMMON GROUNDS IN THESE APPEALS EXCEPT THE V ARIATION OF THE QUANTUM OF ADDITION MADE BY THE AO. THE GROUNDS RAI SED FOR THE ASSESSMENT YEAR 2013-14 ARE REPRODUCED AS UNDER:- ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 2 1. THAT LD. AO HAS ERRED IN DOING ADDITION OF INTE REST ON FDR OF RS. 3,78,34,698/- INTO TOTAL INCOME OF APPELLANT WH EREAS SAME IS HELD FOR AND ON BEHALF OF CENTRAL AND STATE GOVERNM ENT AND FORMING PART OF COST OF VARIOUS PUBLIC WELFARE PROJ ECTS IN ACCORDANCE WITH DIRECTION OF GOR/GOI. THIS INCOME D OES NOT PARTAKE CHARACTER OF INCOME U/S 2(24) OF I.T. ACT, 1961, THUS, LD.AO HAS ERRED IN DOING TAXING OF INTEREST ON THO SE FUNDS WHICH ARE NOT OWNED BY APPELLANT AND KEPT AS CUSTODIAL OF THOSE FUNDS FOR GOR/GOI, MAY PLEASE BE DELETED. 2. THAT LD. AO HAS ERRED IN NOT PROPERLY APPRECIATI NG FACTS OF THE CASE AND ERRONEOUSLY HOLDING THE APPELLANT COMPANY AS COMMERCIAL CONCERN WHEREAS APPELLANT IS A GOVERNMEN T COMPANY. THUS FINDING OF LD. AO MAY PLEASE BE DECLA RED AS ERRONEOUS FINDING. 2. GROUND NO. 1 IS REGARDING THE ADDITION MADE ON A CCOUNT OF INTEREST ON FDRS BY TREADING THE SAME INCOME OF THE ASSESSEE. THE ASSESSEE COMPANY IS A STATE GOVERNMENT COMPANY AND WHOSE ENTIRE SHARE CAPITAL IS BEING HELD THROUGH GOVERNOR OF RAJ ASTHAN AND IS WORKING AS NODAL AGENCY FOR IMPLEMENTATION OF VARIO US CENTRAL/STATE GOVERNMENT SCHEMES FOR WHICH FUNDS ARE PROVIDED BY CENTRAL/STATE GOVERNMENT. THE ASSESSEE IS DISBURSING THE FUNDS FO R IMPLEMENTATION OF VARIOUS WELFARE SCHEMES I.E. ATAL MISSION FOR RE JUVETION AND URBAN TRANSFORMATION (AMRUT), RAJEEV AVAS YOJNA (RAY), JA WAHAR LAL NEHRU NATIONAL URBAN RENEWAL MISSION (JNNURM) AND VARIOUS OTHER SCHEMES FOR THE WELFARE OF STATE. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 3 THE AO NOTED THAT AS PER 26AS THE ASSESSEE RECEIVED RS. 4,80,29,655/- AS INTEREST DURING THE YEAR FROM VARIOUS BANKS. THE TDS MADE ON THIS INTEREST INCOME HAS BEEN CLAIMED BY THE ASSESSEE, H OWEVER, IN THE PROFIT & LOSS ACCOUNT THE ASSESSEE HAS SHOWN THE IN TEREST INCOME OF RS.1,01,94,957/- ONLY. THUS, THE AO ISSUED A SHOW C AUSE NOTICE TO THE ASSESSEE AS TO WHY THE BALANCE AMOUNT, THE INTEREST INCOME LESS SHOWN BY RS. 3,78,34,698/- SHOULD NOT BE ADDED TO THE TOT AL INCOME. IN RESPONSE THE ASSESSEE CONTENDED THAT THE ASSESSEE I S A NODAL AGENCY AND RECEIVING FUNDS FROM THE CENTRAL/STATE GOVERNME NT FOR ALLOCATING THE SAME TO THE VARIOUS SCHEMES/PROJECTS OF PUBLIC WELFARE. THUS, THE ASSESSEE CONTENDED THAT THE SAID AMOUNT WAS KEPT BY THE ASSESSEE IN THE FIDUCIARY CAPACITY AND THE SAME WAS PARKED IN T HE BANK FDR DURING THE PERIOD WHEN THERE IS TIME LEG BETWEEN THE RECEI PT OF FUNDS AND DIRECTION FOR GETTING THEM DISBURSE TO VARIOUS SCHE ME/PROJECTS. THE ASSESSEE FURTHER CONTENDED THAT THE INTEREST ON THE SAID AMOUNT DOES NOT BELONG TO THE ASSESSEE BUT IT IS PART OF THE FU NDS WHICH IS TO BE ALLOCATED ON A PARTICULAR PROJECTS OR SCHEMES. EVEN OTHERWISE THE BALANCE OF DISBURSE FUNDS ALONG WITH INTEREST IS TO BE REFUNDED TO THE CONSOLIDATED FUNDS OR THE FUNDS OF THE STATE GOVERN MENT, THEREFORE, THE ASSESSEE EXPLAIN THAT THIS IS NOT THE INCOME OF THE ASSESSEE. THE AO DID ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 4 NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND TREAT ED THE SAID INTEREST AMOUNTING TO RS. 3,74,78,34,698/- AS INCOME OF THE ASSESSEE AND ADDED TO THE TOTAL INCOME. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE LD. CIT(A) BUT COULD N OT SUCCEED AS THE LD. CIT(A) HAS CONFIRMED THE ADDITION MADE BY THE AO. 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT AS PER THE MEMORANDUM AND ARTICLE ASSOCIATION OF THE ASSES SEE. THE ASSESSEE IS A NON PROFIT COMPANY AND HAS BEEN INCORPORATED W ITH THE OBJECTS TO GIVE SUBSIDY, AID AND ASSISTANCE OF ANY FINANCIAL N ATURE TO ANY OF THE STATE URBAN LOCAL BODIES AND NGOS (NON GOVERNMENT O RGANIZATIONS) AS WELL AS TO WORK AS A NODAL AGENCY ON BEHALF OF THE GOVERNMENT FOR MAINTAINING, MONITORING, MANAGING OR TO CARRY ANY A CTIVITY RELATING TO AND IN RESPECT TO THE RAJASTHAN URBAN DEVELOPMENT F UNDS. THE LD. AR HAS REFERRED TO THE VARIOUS OBJECT CLAUSES OF THE A SSESSEE AS ENUMERATED IN THE MEMORANDUM AND ARTICLES OF ASSOCI ATION AS UNDER:- 3. TO GIVE SUBSIDY, AID AND ASSISTANCE OF ANY FINA NCIAL NATURE TO ANY OF THE STATE URBAN LOCAL BODIES AND NGOS (NON GOVERNME NT ORGANIZATIONS) FOR THE SOCIAL WELFARE, DEVELOPMENT WORKS, COMMERCI AL ACTIVITIES AND OTHER WORKS RELATED DIRECTLY OR INDIRECTLY WITH THE OBJECTS OF THESE AGENCIES AND BODIES. (3A) TO DEPLOY FUNDS/REVERSES /SHARE CAPITAL TOWARD S RAJASTHAN URBAN DEVELOPMENT FUND AND/OR ANY OTHER DEVELOPMENT FUNDS OR OTHER FUNDS ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 5 AS MAY BE CREATED, SETUP AND DIRECTED BY THE GOVERN MENT OF RAJASTHAN AND/OR ANY DEPARTMENT/BODY/AUTHORITY/UNDERTAKING OR THE CASE MAY BE, AS GRANT/CONTRIBUTION/INVESTMENT AND/OR AS DIRECTED BY STATE GOVERNMENT. (8A)TO WORK AS NODAL AGENCY FOR AND/OR ON BEHALF OF THE GOVERNMENT OF RAJASTHAN AND/OR ANY DEPARTMENT /BODY/AUTHORITY/ UNDERTAKING OWNED AND CONTROLLED BY THE GOVERNMENT OF RAJASTHAN FOR MAINTAINING, MONITORING, MANAGING OR TO CARRY ALL/OR ANY ACTIVIT Y RELATED TO AND IN RESPECT TO THE RAJASTHAN URBAN DEVELOPMENT FUND AND /OR ANY OTHER DEVELOPMENT FUNDS OR OTHER FUNDS AS MAY BE CREATED, SETUP AND DIRECTED BY THE GOVERNMENT OF RAJASTHAN AND/OR ANY DEPARTMENT /BODY/AUTHORITY/UNDERTAKING OR THE CASE MAY, FOR TH IS PURPOSE OF INFRASTRUCTURE, HOUSING AND/ OR ANY DEVELOPMENTAL A CTIVITIES RELATED OR INCIDENTAL OR ANCILLARY THERETO OR ANY ACTIVITY OF LIKE NATURE AND FOR THE PURPOSE TO RAISE LOANS, ADVANCES, TO RECEIVE GRANTS OR OTHER MONEYS FROM THE STATE/CENTRAL GOVERNMENT, ANY BANKS OR FIN ANCIAL INSTITUTIONS OR OTHER BODIES/AGENCIES OR ANY OTHER PERSON AS THE CASE MAY BEAND TO PROVIDE LOANS WITH OR WITHOUT INTEREST/TO GIVE GRAN TS/ ADVANCES OR OTHERWISE TO FUND THE PROJECTS/SCHEMES/ANY DEVELOPM ENTAL WORK RELATED THEREWITH OF ALL OR ANY MUNICIPALITIES, ULB S OR/AND ANY LOCAL BODIES OR/ANY PERSON/ORGANIZATION AS MAY BE AUTHORI ZED BY THE AFORESAID AGENCIES. (9) TO ASSIST, CO-ORDINATE, ASSESS TECHNICAL, LEGAL AND FINANCIAL VIABILITY, ARRANGE CONSORTIUM/ALLIANCES, SECURE REGULATORY CLE ARANCES, NEGOTIATE TERMS AND CONDITIONS, APPROACH BANKS AND FINANCIAL INSTITUTIONS FUNDS, BODIES CORPORATE (WHETHER OR NOT INCORPORATED) FOR THE FINANCING THE PROJECT RELATED TO DEVELOPMENT, IMPLEMENTATION, CON STRUCTION, OPERATION, EXPANSION, MODERNIZATION, MAINTENANCE, M ANAGEMENT OF INFRASTRUCTURE FACILITIES, INCLUDING PROVISION OF V ARIOUS GUARANTEES, RE- FINANCE SCHEMES. ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 6 (10)WITHOUT PREJUDICE TO THE PROVISIONS UNDER THE L AW TIME BEING IN FORCE, TO MAKE RECOMMENDATIONS TO THE STATE GOVERNM ENT OR TO ANY LOCAL AUTHORITY, AS THE CASE MAY BE, AS IT ANY OTHE R MATTER REFERRED TO THE CORPORATION IN THE INTEREST OF SOUND MUNICIPAL FINANCE. (11) TO PLAN AND FINANCIALLY MONITOR, ALL TYPES OF PROJECT RELATED TO DEVELOPMENT OF URBAN AREAS IN THE STATE OF RAJASTHA N, FINANCED OR FUNDED, WHOLLY OR PARTLY BY ANY OF THE NATIONAL/INT ERNATIONAL AGENCIES/INSTITUTIONS/BANKS INCLUDING HUDCO, ADB WO RLD BANK BEING IMPLEMENTING BY ANY AGENCY. 14) COST EFFECTIVE TECHNOLOGIES OF CONSTRUCTION A) TO PARTICIPATE IN 'HOUSING THE POOR' PROGRAMME OF T HE GOVERNMENT BY TAKING UP CONSTRUCTION WORKS USING COST EFFECTIV E TECHNOLOGIES FOR URBAN AND RURAL AREAS; B) TO TAKE UP ALL SORTS OF CONSTRUCTION WORKS USING CO ST EFFECTIVE TECHNOLOGIES FOR PROMOTING THE USE OF LOCAL BUILDIN G MATERIALS; C) TO IDENTIFY APPROPRIATE COST EFFECTIVE TECHNOLOGIES FOR DIFFERENT ZONES IN THE COUNTRY FOR WHICH HELP FROM VARIOUS RESEARCH INSTITUTES IN THE COUNTRY AND ABROAD IS SOUGHT TO BE AVAILABLE; D) TO DOCUMENT THE VARIOUS TECHNOLOGIES, HOUSING STYLE S IN USE, IN VARIOUS REGION OF THE COUNTRY AND TO SUGGEST IMPROV EMENT, IF NECESSARY, TO MAKE THE TECHNOLOGIES COST EFFECTIVE AND DURABLE; E) TO DEVELOP RESEARCH AND DEVELOPMENT INSTITUTIONS FO R THE ABOVE; F) TO IDENTIFY, DEVELOP, PRODUCE, PROPAGATE AND SEL L COST EFFECTIVE BUILDING COMPONENTS, BASED ON THE RESEARCH AND DEVE LOPMENT FINDINGS; G) TO DEVELOP NEW INNOVATIVE PLANNING METHOD FOR TH E ECONOMICAL USE OF AVAILABLE LAND; H) TO DEVELOP ALTERNATIVE BUILDING MATERIALS TO WOOD FOR ECOLOGICAL BALANCE AND TO USE WASTE MATERIALS AS BUILDING MATE RIAL THROUGH RESEARCH AND DEVELOPMENT EFFORTS AND PUT UP SUCH PR ODUCTION PLANTS; TO PROPAGATE AND SELL THE SAME. ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 7 3.1 THUS, HE HAS SUBMITTED THAT THE OBJECT OF THE C OMPANY IS TO CREATE AND MAINTAIN A FUND FOR THE DEVELOPMENT OF I NFRASTRUCTURAL ASSETS ON A CONTINUING BASIS AND CHANNELIZE THEM TO THE OBJECTS OF THE CENTRALLY SPONSORED SCHEME OF INFRASTRUCTURAL D EVELOPMENT, WELFARE OF NATION/ STATE IN ACCORDANCE WITH ITS OBJ ECTS. GENERALLY THERE REMAINS A TIME LEG IN BETWEEN OF RECEIPT OF F UNDS AND DIRECTION FOR GETTING THEM DISBURSED TO VARIOUS DLB /ULB'S AND TILL THEN THESE FUNDS ARE PARKED WITH THE BANK SO THAT I T WILL NOT LOSE INTEREST AND FURTHER THIS INTEREST COMPONENT IS FUR THER TO BE IMPLEMENTED/ APPLIED FOR AND IN ACCORDANCE WITH GUI DELINES OF SCHEME. IT IS ALSO CLARIFIED THAT APPELLANT IS NOT ENGAGED IN CARRYING OUT ANY BUSINESS ACTIVITY NOR WORKING WITH ANY PROF IT MOTIVE WHICH IS EXPLICITLY WRITTEN IN MOA/AOA OF COMPANY. THAT L D AO WHILE PASSING THE ASSESSMENT ORDER HAS ERRED IN TREATING THIS INTEREST AMOUNT AS INCOME OF APPELLANT COMPANY WHEREAS THE I NTEREST IS FORMING PART OF FUNDS OVER WHICH IT HAS BEEN RECEIV ED/ CREDITED BY BANK. THE CAPACITY OF APPELLANT COMPANY IS TO BE HO LD THE SAME IN FIDUCIARY CAPACITY/ AS BAILEE AND WILL NEVER USE SA ME ACCORDING TO ITS OWN WISHES AS CAPACITY OF APPELLANT COMPANY TO WORK AS NODEL AGENCY ONLY AND WORK OF NODAL AGENCY IS TO DISBURSE THE FUNDS TO ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 8 THOSE ULB, DEPARTMENTS, FUNDS FOR WHICH THESE ARE B EING RECEIVED BY THEM. THAT FOR LEVY OF TAX UNDER INCOME TAX ACT, 1961 THERE SHOULD BE AN INCOME TO HAVE TAXATION THEREIN AND IN CASE THERE IS NO INCOME THEN SAME CANNOT BE TAXED. THE DEFINITION OF INCOME U/S. 2(24) OF INCOME TAX ACT DOES NOT LAY ANY CLAUS ES WHEREIN THE FUNDS IN FORM OF INTEREST THEREIN FOR AN ON BEHALF OF OTHER PERSON CREATES INCOME. FURTHER INCOME TAX IS LEVIED UPON P ERSON AS DEFINED U/S. 2(31) AND THE CENTRAL/ STATE GOVERNMEN TS ARE OUT FROM PREVIEW OF 'PERSON', THEREFORE THERE IS NO REQ UIREMENT TO HAVE PAN NUMBERS BY GOVERNMENT. THE FUNDS WHICH ARE DISBURSED BY CENTRAL/ STATE GOVERNMENTS ARE DEPLOYED THROUGH NODAL AGENCY (APPELLANT COMPANY) WHICH ARE TO BE IMPLEMENTED UPO N VARIOUS PUBLIC WELFARE PROJECTS OF CENTRAL/ STATE. 3.2 THE LD. AR HAS POINTED OUT THAT THE ASSESSEE HA S ALREADY SHOWN INTEREST INCOME ON THE SHARE CAPITAL WHICH WA S DEPOSITED IN THE BANKS, HOWEVER, THE FUNDS LYING WITH THE COMPAN Y TO BE DEPLOYED ON VARIOUS CENTRAL/STATE GOVERNMENTS SCHEM ES FOR WELFARE OF PUBLIC WOULD NOT GENERATE ANY INCOME TO THE ASSESSEE BUT THE INTEREST OF SUCH FUNDS WILL BE FORMING PART OF THE FUNDS OF A PARTICULAR SCHEME FOR WHICH IT HAS TO BE DEPLOYED . HE HAS FURTHER ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 9 CONTENTED THAT THE ASSESSEE IS SHOWING THE SAID AMO UNT AS A LIABILITY AND NOT AS AN INCOME IN THE BOOKS OF ACCO UNTS. AS PER OFFICE MEMORANDUM OF THE GOVERNMENT OF INDIA ANY FU NDS WHICH REMAINS UNUTILIZED ALONG WITH INTEREST WILL BE BROU GHT BACK TO THE CONSOLIDATED FUNDS OF INDIA. THEREFORE, THE FUNDS A LONG WITH INTEREST EARNED ON A PARTICULAR FUND HAS TO BE DISB URSED FOR A PARTICULAR PROJECT OR OTHERWISE HAS TO BE A RETURN BACK TO THE CONSOLIDATED FUND OF INDIA. HENCE, THE LD. AR HAS S UBMITTED THAT THE INTEREST EARNED ON THE SAID FUND CANNOT BE TREA TED AS INCOME OF THE ASSESSEE BUT THE SAME IS FORMING PART OF THE PARTICULAR FUND TO BE ALLOCATED TO THE PROJECT. IN SUPPORT OF HIS C ONTENTION, HE HAS RELIED UPON THE DECISION OF HONBLE KARNATKA HIGH C OURT IN CASE OF CIT & ANR. VS. KARNATKA URBAN INFRASTRUCTURE DEVELO PMENT & FINANCE CORPORATION 315 ITR 301, DECISION OF HONBL E GUJARAT HIGH COURT IN CASE OF GUJARAT POWER CORPORATION VS. ITO 354 ITR 201 AND DECISION OF COORDINATE BENCH OF THIS TRIBUNAL I N CASE OF RAJASTHAN AVAS VIKAS & INFRASTRUCTURE LTD. VS. DCIT DATED 18.03.2016 IN ITA NO. 247 & 248/JP/2014. 4. ON THE OTHER HAND, LD. DR HAS RELIED ON THE ORD ERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT ONCE THE ASSES SEE IS TAKING ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 10 THE CREDIT OF THE TDS DEDUCTED ON THE SAID INTEREST THEN, THE INCOME ON ACCOUNT OF INTEREST WILL BE ASSESSED IN T HE HANDS OF THE ASSESSEE. FURTHER, THE INTEREST WAS EARNED AND RECE IVED BY THE ASSESSEE AND IT IS NOT A CASE OF DIVERSION OF INCOM E BEFORE IT HAS REACHED TO THE ASSESSEE, THEREFORE, ONCE THE ASSESS EE HAS EARNED AND RECEIVED THE INTEREST THEN SUBSEQUENT USE OF TH E SAID AMOUNT WILL NOT CHANGE THE CHARACTER FROM ASSESSABLE INCOM E TO NO INCOME. THE LD. DR HAS SUBMITTED THAT THE LD. CIT(A ) HAS RELIED ON THE DECISIONS OF HYDERABAD TRIBUNAL IN CASE OF ANDH RA PRADESH HOUSING BOARD VS. DCIT 36 TAXMANN.COM 561 AS WELL A S IN CASE OF A.P. MAHESH COOPERATIVE URBAN BANK LTD. 55 TAXMANN. COM 429. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE A SSESSEE WAS INCORPORATED AS A STATE GOVERNMENT COMPANY TO FUNCT ION AS A NODAL AGENCY FOR THE PURPOSE OF MONITORING AND DI SBURSING FUNDS TO THE VARIOUS WELFARE SCHEMES AND PROJECTS. THE AS SESSEE IS RECEIVING FUNDS FROM THE GOVERNMENT AND THEN DISBUR SING THE SAME TO VARIOUS PROJECTS AND SCHEMES AS IT IS CLEAR LY SPELT OUT IN THE OBJECTS OF THE ASSESSEE. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS RECEIVED INTEREST OF RS. 3,78,34,6 98/- ON THE ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 11 FDRS WHICH WERE MADE TO PARK VARIOUS AMOUNTS WITH T HE BANK. THERE IS NO DISPUTE THAT THE AMOUNT WHICH WAS PUT I NTO THE FIXED DEPOSIT WAS RECEIVED BY THE ASSESSEE FROM THE GOVER NMENT FOR THE PURPOSE OF DISBURSEMENT OF THE SAME IN THE VARIOUS SCHEMES/PROJECTS SPONSORED BY THE GOVERNMENT. THIS FACT HAS NOT BEEN DISPUTED BY THE AUTHORITY BELOW THAT THE ASSES SEE IS WORKING AS A NODAL AGENCY AND IT IS NOT THE ASSESSEE OWN AC TIVITY OF PROVIDING SUCH ACTIVATION OR CARRYING OUT THE ACTIV ITY OF DEVELOPMENT OR INFRASTRUCTURE UNDER THE WELFARE SCH EMES BUT THE ASSESSEE IS ONLY DISBURSING THE FUNDS AS INTERMEDIA RY BETWEEN THE GOVERNMENT AND THE ACTUAL EXECUTION OF THE SCHEME. THEREFORE, THE ASSESSEE IS FUNCTIONING AS A NODAL AGENCY FOR D ISBURSING OF FUNDS AS PER MANDATE OR INSTRUCTIONS GIVEN BY THE G OVERNMENT. THE ASSESSEE HAS BEEN KEEPING THE SAID AMOUNT IN TH E FIXED DEPOSIT FOR EARNING THE MAXIMUM INTEREST AS PER THE MEMORANDUM ISSUED BY THE MINISTRY OF FINANCE DEPARTMENT OF EXP ENDITURE DATED 28.01.2013. IN CASE THE FUND REMAINED UNUTILIZED AL ONG WITH INTEREST HAS TO GO BACK TO THE CONSOLIDATED FUND OF INDIA. OTHERWISE, THE INTEREST WILL BE FORMING PART OF THE FUNDS TO BE ALLOCATED TO A PARTICULAR PROJECTS OR SCHEMES. THER EFORE, EVEN IF ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 12 THE INTEREST AMOUNT IS NOT REFUNDED TO THE CONSOLID ATED FUNDS, THE SAME HAS TO BE ADJUDICATED WHILE ALLOCATING THE SUB SEQUENT FUNDS FOR THE PURPOSE OF UTILIZING ON A SCHEMES OR PROJEC TS. THEREFORE, THE ASSESSEE IS RECEIVING THE FUNDS AND UTILIZING T HE SAME AS PER INSTRUCTIONS/DIRECTIONS OF THE GOVERNMENT AND IN TH E MEAN TIME HOLDING THE SAID FUND IN THE FIDUCIARY CAPACITY AND THE INTEREST IF ANY EARNED IN THE MEAN TIME WOULD NOT BELONG TO THE ASSESSEE BUT IT WILL BE FORMING PART OF THE FUND ITSELF WHICH IS MEANT FOR A PARTICULAR SCHEME(S) OR PROJECT(S). THE ASSESSEE HA S BEEN SHOWING THE INTEREST AS LIABILITIES AND GIVE THE TREATMENT TO THE SAID INTEREST AS THE FUND ITSELF BEING LIABILITY IN THE BALANCE S HEET. THE HONBLE KARNATAKA HIGH COURT IN CASE OF CIT & ANR. VS. KARN ATAKA URBAN INFRASTRUCTURE DEVELOPMENT & FINANCE CORPORATION (S UPRA) WHILE CONSIDERING THE ISSUE OF INTEREST INCOME BROUGHT TO TAX HAS HELD IN PARAS 6 TO 8 AS UNDER:- 6. WE HAVE NO DOUBT IN OUR MIND THAT THE SAID JUDGMENT SQUARELY COVERS THE ISSUE INVOLVED IN THIS APPEAL. IT HAS BE EN HELD BY THE DIVISION BENCH OF THIS COURT IN THE AFORESAID JUDGM ENT IN THE RELEVANT PARAGRAPH AS UNDER (PAGE 584) : 'THE MATERIAL ON RECORD SHOWS THAT THE VERY PURPOSE OF CONSTITUTION OF THE ASSESSEE WAS TO ACT AS A NODAL AGENCY FOR IM PLEMENTATION OF THE MEGA CITY SCHEME WORKED OUT BY THE PLANNING COM MISSION. BOTH THE CENTRAL AND THE STATE GOVERNMENTS ARE EXPE CTED TO ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 13 PROVIDE REQUISITE FINANCES FOR IMPLEMENTATION OF TH E SAID PROJECT. THE FUNDS FROM THE CENTRAL AND STATE GOVERNMENTS WI LL FLOW DIRECTLY TO THE SPECIALISED INSTITUTIONS/NODAL AGENCIES AS G RANT AND THE NODAL AGENCY WILL CONSTITUTE A REVOLVING FUND WITH THE HE LP OF CENTRAL AND STATE SHARES OUT OF WHICH FINANCE COULD BE PROVIDED TO VARIOUS AGENCIES SUCH AS WATER, SEWERAGE BOARDS, MUNICIPAL CORPORATIONS, ETC. THE OBJECTIVE IS TO CREATE AND MAINTAIN A FUND FOR THE DEVELOPMENT OF INFRASTRUCTURAL ASSETS ON A CONTINUI NG BASIS AND, THEREFORE, THE ASSESSEE IS A NODAL AGENCY FORMED/CR EATED BY THE GOVERNMENT OF KARNATAKA AS PER THE GUIDELINES ; THE RE IS NO PROFIT MOTIVE AS THE ENTIRE FUND ENTRUSTED AND THE INTERES T ACCRUED THEREFROM ON DEPOSITS IN BANK THOUGH IN THE NAME OF THE ASSESSEE HAS TO BE APPLIED ONLY FOR THE PURPOSE OF WELFARE O F THE NATION/STATES AS PROVIDED IN THE GUIDELINES ; THE W HOLE OF THE FUND BELONGS TO THE STATE EXCHEQUER AND THE ASSESSEE HAS TO CHANNELISE THEM TO THE OBJECTS OF THE CENTRALLY SPONSORED SCHE ME OF INFRA- STRUCTURAL DEVELOPMENT FOR THE MEGA CITY OF BANGALO RE. FUNDS OF ONE WING OF THE GOVERNMENT ARE DISTRIBUTED TO THE O THER WING OF THE GOVERNMENT FOR PUBLIC PURPOSE AS PER THE GUIDELINES ISSUED. THE MONIES SO RECEIVED, TILL THEY ARE UTILISED, ARE PAR KED IN A BANK. THE FINDING RECORDED BY THE TRIBUNAL CLEARLY SHOWS THAT THE ENTIRE MONEY IN QUESTION IS RECEIVED FOR IMPLEMENTATION OF THE SCHEME WHICH IS FOR A PUBLIC PURPOSE AND THE SAID SCHEME I S IMPLEMENTED AS PER THE GUIDELINES OF THE CENTRAL GOVERNMENT AND , THEREFORE, THE ASSESSEE IS ONLY ACTING AS A NODAL AGENCY OF THE CE NTRAL GOVERNMENT FOR IMPLEMENTATION OF THESE PROJECTS. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE WAS CARRYING ON AN Y BUSINESS OR ACTIVITIES OF ITS OWN WHILE IMPLEMENTING THE SCHEME IN QUESTION. THE UNUTILISED MONEY, DURING WHICH THE PROJECT COULD NO T BE FULLY IMPLEMENTED, IS DEPOSITED IN A BANK TO EARN INTERES T. THAT INTEREST EARNED IS ALSO AGAIN UTILISED FOR THE IMPLEMENTATIO N OF THE MEGA CITY SCHEME WHICH IS ALSO PERMITTED UNDER THE SCHEME. TH EREFORE, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR ANY PREVIOUS YEAR THE INTEREST ACCRUED ON THE BANK DEPOSITS CANNOT BE TREATED AS AN INCOME OF THE ASSESSEE AS THE INTEREST IS EARNED OU T OF THE MONEY ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 14 GIVEN BY THE GOVERNMENT OF INDIA FOR THE PURPOSE OF IMPLEMENTATION OF THE MEGA CITY SCHEME. THEREFORE, WE DO NOT FIND ANY ERROR IN THE CONCLUSI ON REACHED BY THE TRIBUNAL THAT THERE WAS NO INCOME EARNED BY WAY OF INTEREST BY THE ASSESSEE AND SETTING ASIDE THE ORDER OF THE ASS ESSING OFFICER WHICH IS AFFIRMED BY THE FIRST APPELLATE AUTHORITY. THE FINDING GIVEN BY THE TRIBUNAL IS PURELY A QUESTION OF FACT. WE DO NOT FIND ANY SUBSTANTIAL QUESTION OF LAW INVOLVED IN THIS APPEAL AND, THEREFORE, THIS APPEAL IS LIABLE TO BE DISMISSED AT THE STAGE OF ADMISSION ITSELF.'IN THE LIGHT OF THE AFORESAID FINDINGS RECO RDED BY THE DIVISION BENCH OF THIS COURT, WE ARE OF THE CONSIDERED OPINI ON THAT THERE IS NO MERIT OR SUB STANCE IN THIS APPEAL. NO SUBSTANTI AL QUESTION OF LAW ARISES TO BE ANSWERED BY THIS COURT. THUS, THE APPE AL IS HEREBY DISMISSED. 7. AS OBSERVED SUPRA, EXPLANATION 3C HAS NOW IN CLE AR TERMS PROVIDED THAT 7 SUCH CONVERSION OF INTEREST AMOUNT INTO LOAN SHALL NOT BE DEEMED TO BE REGARDED AS ACTUALLY PAID AMO UNT WITHIN THE MEANING OF SECTION 43B. IN VIEW OF CLEAR LEGISLATIV E MANDATE REMOVING THIS DOUBT AND MAKING THE INTENTION OF THE LEGISLATURE CLEAR IN RELATION TO SUCH TRANSACTION, IT IS NOT NO W NECESSARY FOR HIS COURT TO INTERPRET THE UNAMENDED SECTION 43B IN DET AIL, NOR IT IS NECESSARY FOR THIS COURT TO TAKE NOTE OF FACTS IN D ETAIL IS ALSO THE SUBMISSIONS URGED IN SUPPORT OF VARIOUS CONTENTIONS EXCEPT TO PLACE RELIANCE OF EXPLANATION 3C TO SECTION 43B AND ANSWE R THE QUESTION AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. 8. IN VIEW OF THE FORGOING DISCUSSION AND IN THE L IGHT OF EXPLANATION 3C APPENDED TO SECTION 43B, QUOTED SUPRA, WE ANSWER THE QUESTIONS REFERRED TO THIS COURT AGAINST THE ASSESS EE AND IN FAVOUR OF THE REVENUE. THEREFORE, THE HONBLE HIGH COURT HAS UPHELD THE OR DER OF THE TRIBUNAL THAT THERE WAS NO INCOME EARNED BY WAY OF INTEREST BY ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 15 THE ASSESSEE AS THE ENTIRE MONEY WAS RECEIVED FOR I MPLEMENTATION OF THE SCHEME WHICH IS FOR THE PUBLIC PURPOSE THE S AID SCHEME IMPLEMENTED BY THE CENTRAL GOVERNMENT. IT WAS ALSO HELD THAT THE ASSESSEE IS ONLY ACTING AS A NODAL AGENCY FOR THE G OVERNMENT FOR IMPLEMENTATION OF THOSE PROJECTS. THUS, ONCE THE AS SESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY OF ITS OWN WHILE IMPLEMENTING THE SCHEME FLOATED BY THE GOVERNMENT THEN, THE UNUTILIZ ED MONEY DURING WHICH THE PROJECT COULD NOT BE FULLY IMPLEME NTED IS DEPOSITED IN THE BANK TO EARN INTEREST, THE SAME WO ULD NOT BE THE INCOME OF THE ASSESSEE. THE COORDINATE BENCH OF THI S TRIBUNAL IN CASE OF RAJASTHAN AVAS VIKAS & INFRASTRUCTURE LTD. VS. DCIT (SUPRA) WHILE DEALING WITH AN IDENTICAL ISSUE OF NO T GRANTING THE TDS CREDIT IN RESPECT OF THE INTEREST OF SUCH DEPOS IT HAS HELD IN PARA 4.3 AND 5 AS UNDER:- 4.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. IN OUR VIEW THE ISSUE INVOLVED IN THE PRESENT APPEAL HAD ALREADY BEEN ADJUDICATED IN THE MATTER O F CIT VS. RELCOM (2015) 62 TAXMANN.COM 190 (DELHI) WHEREIN IT WAS HELD AS UNDER :- 6. HAVING HEARD THE SUBMISSIONS MADE ON BEHALF OF THE REVENUE AND AFTER A PERUSAL THE ORDERS PASSED BY THE CIT(A) AND THE ITAT, WE ARE OF OPINION THAT THE SAID ORDERS DO NOT CALL FOR ANY INTERFERENCE AND WERE WARRANTED AND JUSTIFIED IN TH E FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE WE PROCEED TO ELA BORATE ON OUR ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 16 REASONS FOR THE SAME, A PERUSAL OF SECTION 199 OF T HE ACT IS NECESSARY. SECTION 199 READS AS FOLLOWS: '199. CREDIT FOR TAX DEDUCTED. (1) ANY DEDUCTION MADE IN ACCORDANCE WITH THE FOREG OING PROVISIONS OF THIS CHAPTER AND PAID TO THE CENTRAL GOVERNMENT SHALL BE TREATED AS A PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WH OSE INCOME THE DEDUCTION WAS MADE, OR OF THE OWNER OF THE SECURITY , OR OF THE DEPOSITOR OR OF THE OWNER OF PROPERTY OR OF THE UNI T-HOLDER, OR OF THE SHAREHOLDER, AS THE CASE MAY BE. (2) ANY SUM REFERRED TO IN SUB-SECTION (1A) OF SECT ION 192 AND PAID TO THE CENTRAL GOVERNMENT SHALL BE TREATED AS THE T AX PAID ON BEHALF OF THE PERSON IN RESPECT OF WHOSE INCOME SUCH PAYME NT OF TAX HAS BEEN MADE. (3) THE BOARD MAY, FOR THE PURPOSES OF GIVING CREDI T IN RESPECT OF TAX DEDUCTED OR TAX PAID IN TERMS OF THE PROVISIONS OF THIS CHAPTER, MAKE SUCH RULES AS MAY BE NECESSARY, INCLUDING THE RULES FOR THE PURPOSES OF GIVING CREDIT TO A PERSON OTHER THAN TH OSE REFERRED TO IN SUB-SECTION (1) AND SUB-SECTION (2) AND ALSO THE AS SESSMENT YEAR FOR WHICH SUCH CREDIT MAY BE GIVEN.' 7. THE REVENUE RELIES ON THE PHRASE 'SHALL BE TREATED AS A PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOSE INCOME TH E DEDUCTION WAS MADE' TO CONTEND THAT THE ASSESSEE'S TDS CLAIM CANNOT BE BASED ON THE RECEIPTS OF M/S REPL. HOWEVER, THE ASS ESSEE FAIRLY ADMITTED THROUGHOUT THE PROCEEDINGS FOR ITS TDS CLA IM OF RS. 1,20,73,097/- THAT THE BENEFIT OF SUCH CLAIM HAS NO T BEEN AVAILED BY M/S. REPL. THEREFORE, THE REVENUE, HAVING ASSESSED M/S REPL'S INCOME IN RESPECT TO SUCH TDS CLAIM CANNOT NOW DENY THE ASSESSEE'S CLAIM ON THE MERE TECHNICAL GROUND THAT THE INCOME IN RESPECT OF THE SAID TDS CLAIM WAS NOT THAT OF THE A SSESSEE, GIVEN THAT M/S RELCOM (THE ASSESSEE) AND M/S REPL ARE SIS TER CONCERNS AND M/S REPL HAS NOT RAISED ANY OBJECTION WITH REGA RD TO THE ASSESSEE'S TDS CLAIM OF RS. 1,20,73,097/-. ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 17 8. THIS COURT'S REASONING IS SUPPORTED BY A RULING OF THE DIVISION BENCH OF THE ANDHRA PRADESH HIGH COURT IN CIT V. BH OORATNAM & CO. [2013] 357 ITR 396/216 TAXMAN 6/29 TAXMANN.COM 275 WHERE THE COURT NOTED AS FOLLOWS: 'IN OUR VIEW, THE CIT (APPEALS) AND THE TRIBUNAL HA VE RIGHTLY HELD THAT THE ASSESSEE IS ENTITLED TO THE CREDIT OF THE TDS MENTIONED IN THE TDS CERTIFICATES ISSUED BY THE CONTRACTOR, WHET HER THE SAID CERTIFICATE IS ISSUED IN THE NAME OF THE JOINT VENT URE OR IN THE NAME OF A DIRECTOR OF THE ASSESSEE COMPANY. THEY HAVE CO NSIDERED THE TERMS OF THE AGREEMENT DATED 12-03-2003 AMONG THE P ARTIES TO THE JOINT VENTURE AND HELD THAT CREDIT FOR TDS CERTIFIC ATES CANNOT BE DENIED TO THE ASSESSEE WHILE ASSESSING THE CONTRACT RECEIPTS MENTIONED IN THE SAID CERTIFICATES AS INCOME OF THE ASSESSEE. THE INCOME SHOWN IN THE TDS CERTIFICATES HAS EITHER TO BE TAXED IN THE HANDS OF THE JOINT VENTURE OR IN THE HANDS OF THE I NDIVIDUAL CO-JOINT VENTURER. AS THE JOINT VENTURE HAS NOT FILED RETURN OF INCOME AND CLAIMED CREDIT FOR TDS CERTIFICATES AND THE TDS CER TIFICATES HAVE NOT BEEN DOUBTED, CREDIT HAS TO BE GRANTED TO THE TDS M ENTIONED THEREIN FOR THE ASSESSEE. ** ** ** THE REVENUE CANNOT BE ALLOWED TO RETAIN TAX DEDUCTE D AT SOURCE WITHOUT CREDIT BEING AVAILABLE TO ANYBODY. IF CREDI T OF TAX IS NOT ALLOWED TO THE ASSESSEE, AND THE JOINT VENTURE HAS NOT FILED A RETURN OF INCOME, THEN CREDIT OF THE TDS CANNOT BE TAKEN B Y ANYBODY. THIS IS NOT THE SPIRIT AND INTENTION OF LAW.'(EMPHASIS S UPPLIED) 9. AT THIS STAGE, IT IS ALSO RELEVANT TO NOTE THE PRO VISIONS OF RULE 37BA OF THE INCOME TAX RULES, 1962, WHICH ENVISIONS GRANT OF TDS CREDIT TO ENTITIES OTHER THAN THE DEDUCTEE (HEREIN, M/S REPL). WE MUST CLARIFY THAT WE ARE NOT OBLIVIOUS OF THE FACT THAT RULE 37BA IS NOT DIRECTLY APPLICABLE IN THE FACTS OF THIS CASE. THE RELIANCE PLACED ON RULE 37BA IS MERELY TO DEMONSTRATE THAT IN NOT A LL CIRCUMSTANCES IS TDS CREDIT GIVEN TO THE DEDUCTEE. ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 18 IN THE PRESENT CASE THE AMOUNT WAS DEPOSITED AS FDR S BY THE ASSESSEE ON BEHALF OF STATE OF RAJASTHAN WITH THE B ANK OF RAJASTHAN AND ON THE FDRS DEPOSIT THE INTEREST HAS BEEN ACCR UED . THE TDS WAS DEDUCTED BY THE BANK ON THE INTEREST ACCRUED ON THE FDRS. IN OUR VIEW, THE REVENUE IS TAKING THE HYPER TECHNICAL PLEA OF NOT RETURNING THE TDS TO THE ASSESSEE ON THE PRETEXT TH AT THE AMOUNT HAS BEEN DEPOSITED WITH THE BANK ON BEHALF OF STATE OF RAJASTHAN. SINCE THE STATE OF RAJASTHAN IS NOT A TAXABLE ENTIT Y, THEREFORE, REFUND OF TDS CANNOT BE GIVEN TO THE STATE OF RAJAS THAN. IT IS NOT DISPUTED THAT THE ASSESSEE AFTER REALIZING THE INTE REST INCOME FROM THE BANK HAS GIVEN BACK THE AMOUNT TO THE STATE OF RAJASTHAN . SIMILARLY IT IS ALSO UNDISPUTED THAT THE REFUND OF TDS HAS NOT BEEN CLAIMED BY THE THE STATE OF RAJASTHAN AND IS ONLY C LAIMED BY THE ASSESSEE BEING THE NODAL AGENCY OF THE STATE OF RAJ ASTHAN FOR THIS PROJECT . IN OUR VIEW, NO PREJUDICE WILL BE CAUSED TO ANY PERSON IF THE TDS IS REFUNDED TO THE ASSESSEE BEING THE NODAL AGENCY WITH THE UNDERTAKING TO RETURN THE AMOUNT TO THE STATE O F RAJASTHAN AVAS VIKAS & INFRASTRUCTURE LTD. VS. DCIT RAJASTHAN . IN VIEW OF THEREOF AND ALSO IN VIEW OF THE JUDGMENT REFERRED H EREINABOVE, THE TDS DEDUCTED BY THE INCOME TAX DEPARTMENT IS DIRECT ED TO BE PAID TO THE ASSESSEE AND WE ACCORDINGLY HOLD THE SAME. I N THIS VIEW OF THE MATTER, THE APPEAL OF THE ASSESSEE IS ALLOWED. 5. SIMILAR GROUND IS RAISED IN THE ASSESSEES APPEAL IN ITA NO. 248/J P/2014 FOR THE ASSESSMENT YEAR 2010-11. SINCE WE HAVE DECIDED THE ASSESSEES APPEAL IN ITA NO. 247/JP/2014 IN ITS FAVOUR, ON THE SAME REASONING WE DECIDE THE APPEAL OF THE ASSESSEE FOR THE A.Y. 2 010-11 IN FAVOUR OF THE ASSESSEE. THE COORDINATE BENCH HAS AGAIN CONSIDERED THE ISSUE OF NON GRANT OF TDS CREDIT IN CASE OF RAJASTHAN AVAS VIKAS & INF RASTRUCTURE LTD. VS. ACIT IN ITA NO. 391 & 392/JP/2016 VIDE ORDER DA TED 12.05.2017 HAS HELD IN PARA 2.2 TO 2.5 AS UNDER:- ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 19 2.2 AT THE OUTSET, THE LD. AR DRAWN OUR ATTENTION TO THE DECISION PASSED BY THE COORDINATE BENCH IN ITA NO. 247 & 248 /JP/2014 DATED 18.3.2016 IN ASSESSEES OWN CASE FOR A.Y 2009 -10 AND 2010-11 AND SUBMITTED THAT ISSUE WAS DECIDED IN FAV OUR OF THE ASSESSEE BY THE SAID DECISION PASSED BY THE COORDIN ATE BENCH AND HENCE, THE SAME SHOULD BE FOLLOWED IN RESPECT O F IMPUNGED MATTERS BEFORE US. 2.3 THE ISSUE UNDER CONSIDERATION BEFORE THE COORD INATE BENCH FOR FOR A.Y 2009-10 AND 2010-11 ARE AS UNDER:- ITA NO. 247/JP/2014 (ASSESSMENT YEAR 2009-10): IN THE FACT S AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER (APPEALS) HAS ERRED IN NOT ALLOWING CREDIT OF TDS OF RS. 4502 798, DEDUCTED BY OUR BANK ON INTEREST AND DEPOSITED TO THE INCOME TAX DEPARTMENT AND HOLDING THAT THE INTEREST BELONGS TO POLICE DEPARTMENT AND THE PROVISIONS OF SECTION 199 ARE AP PLICABLE. ITA NO. 248/JP/2014 (ASSESSMENT YEAR 2010-11) IN THE F ACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER (APPEALS) HAS ERRED IN NOT ALLOWING CREDIT OF TDS OF RS. 1741 463, DEDUCTED BY OUR BANK ON INTEREST AND DEPOSITED TO THE INCOME TAX DEPARTMENT AND HOLDING THAT THE INTEREST BELONGS TO POLCE DEPARTMENT AND THE PROVISIONS OF SECTION 199 ARE AP PLICABLE. THE FACTS UNDER CONSIDERATION BEFORE THE COORDINATE BEN CH WERE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DE POSITED FUNDS RECEIVED FROM HUDCO IN FDRS WITH THE BANK AS THE SA ME WERE LYING IDLE AND GOT THE INTEREST OF RS. 2,18,15,365 AND ON THE SAID INTEREST THE BANK OF RAJASTHAN HAD DEDUCTED TDS OF RS. 45,02,798. THE ASSESSEE DID NOT OFFER THE INTEREST INCOME OF RS. 2,18,15,365 FOR THE PURPOSE OF TAX IN THE RETURN OF INCOME AS THE ASSESSEE WAS MERELY ACTING AS A NODAL AGENCY FOR TH E STATE OF RAJASTHAN AND HAS DEPOSITED THE AMOUNT WITH THE BAN K FOR AND ON BEHALF OF STATE OF RAJASTHAN. IT WAS ALSO THE CA SE OF THE ASSESSEE THAT THE INTEREST INCOME ACCRUED ON THE FD RS WAS NOT TAXABLE. THE ASSESSEE HAS SUBMITTED THAT THE ASSESS EE IS ENTITLED TO THE REFUND OF ENTIRE AMOUNT OF RS. 45,02,798 IN THE ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 20 ASSESSMENT YEAR 2009-10. IN THE CONTEXT OF ABOVE FA CTS, THE COORDINATE BENCH RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. RELCOM (2015) 234 TAXMAN 6 93 (DELHI) AND ITS RELEVANT FINDINGS ARE AS UNDER:- IN THE PR ESENT CASE THE AMOUNT WAS DEPOSITED AS FDRS BY THE ASSESSEE ON BE HALF OF STATE OF RAJASTHAN WITH THE BANK OF RAJASTHAN AND O N THE FDRS DEPOSIT THE INTEREST HAS BEEN ACCRUED. THE TDS WAS DEDUCTED BY THE BANK ON THE INTEREST ACCRUED ON THE FDRS. IN OU R VIEW, THE REVENUE IS TAKING THE HYPER TECHNICAL PLEA OF NOT R ETURNING THE TDS TO THE ASSESSEE ON THE PRETEXT THAT THE AMOUNT HAS BEEN DEPOSITED WITH THE BANK ON BEHALF OF STATE OF RAJAS THAN. SINCE THE STATE OF RAJASTHAN IS NOT A TAXABLE ENTITY, THE REFORE, REFUND OF TDS CANNOT BE GIVEN TO THE STATE OF RAJASTHAN. IT I S NOT DISPUTED THAT THE ASSESSEE AFTER REALIZING THE INTEREST INCO ME FROM THE BANK HAS GIVEN BACK THE AMOUNT TO THE STATE OF RAJA STHAN. SIMILARLY IT IS ALSO UNDISPUTED THAT THE REFUND OF TDS HAS NOT BEEN CLAIMED BY THE STATE OF RAJASTHAN AND IS ONLY CLAIM ED BY THE ASSESSEE BEING THE NODAL AGENCY OF THE STATE OF RAJ ASTHAN FOR THIS PROJECT. IN OUR VIEW, NO PREJUDICE WILL BE CAU SED TO ANY PERSON IF THE TDS IS REFUNDED TO THE ASSESSEE BEING THE NODAL AGENCY WITH THE UNDERTAKING TO RETURN THE AMOUNT TO THE STATE OF RAJASTHAN. IN VIEW OF THEREOF AND ALSO IN VIEW OF T HE JUDGMENT REFERRED HEREINABOVE, THE TDS DEDUCTED BY THE INCOM E TAX DEPARTMENT IS DIRECTED TO BE PAID TO THE ASSESSEE A ND WE ACCORDINGLY HOLD THE SAME. IN THIS VIEW OF THE MATT ER, THE APPEAL OF THE ASSESSEE IS ALLOWED 2.4 THE FACTS OF THE INSTANT CASE ARE PARI MATERIA TO THE FACTS OF THE CASE BEFORE THE COORDINATE BENCH IN RESPECT OF ASSESSEES OWN CASE FOR A.YS 2009-10 AND 2010-11. THE REVENUE HAS NOT BROUGHT TO OUR NOTICE ANY CONTRARY AUTHORITY ON THE SAID ISSUE. HENCE, WE DO NOT SEE A REASON TO DEVIATE FROM THE V IEW TAKEN BY THE COORDINATE BENCH IN ASSESSEES OWN CASE. ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 21 2.5 UNDISPUTEDLY, THE INTEREST INCOME HAS NOT BEEN BROUGHT TO TAX BY THE REVENUE ACCEPTING THE ASSESSEES CONTENT ION THAT THE RECEIPT OF FUNDS AND INTEREST THEREON IS IN THE FUD ICIARY CAPACITY ON BEHALF OF THE STATE OF RAJASTHAN. THE STATE OF R AJASTHAN BEING NOT A TAXABLE ENTITY, THERE SHOULD NOT BE ANY TDS A T FIRST PLACE. FOR REASONS BEST KNOWN TO THE ASSESSEE AND THE BANK , THE TDS HAS BEEN DEDUCTED. GIVEN THAT INTEREST INCOME IS NO T TAXABLE EITHER IN THE HANDS OF THE ASSESSEE OR THE STATE OF RAJASTHAN, THE TDS HAS TO BE REFUNDED. SINCE THE ASSESSEE IS ACTIN G AS THE NODAL AGENCY AND ALL FUNDS HAVE BEEN ROUTED THROUGH IT, T HE REFUND OF TDS HAS TO BE ROUTED THROUGH IT TO THE STATE OF RAJ ASTHAN. ACCORDINGLY, WE DIRECT THE REVENUE TO REFUND THE TD S OF RS. 38440/- TO THE ASSESSEE WITH THE UNDERTAKING TO RET URN THE SAID AMOUNT TO THE STATE OF RAJASTHAN. THUS, IT IS NOW SETTLED PRECEDENT THAT THE INTEREST EARNED BY THE ASSESSEE ON THE FIXED DEPOSIT OF THE AMOUNT WHICH I S RECEIVED FROM THE GOVERNMENT FOR DISBURSEMENT TO THE VARIOUS SCHEMES/PROJECTS FOR WHICH THE ASSESSEE IS A NODAL AGENCY TO IMPLEMENT SUCH PROJECTS/SCHEMES SUCH INTEREST WILL NOT BE THE INCOME OF THE ASSESSEE. ACCORDINGLY, FOLLOWING THE DECISIONS OF HONBLE KARNATAKA HIGH COURT AS WELL AS COORDINATE BENCH OF THIS TRIBUNAL (SUPRA) WE HOLD THAT THE INTEREST RECEIVED BY THE ASSESSEE IS NOT ASSESSABLE TO TAX BUT IT WAS RECEIVED ON BEH ALF OF THE GOVERNMENT AND WILL BE FORMING PART OF THE FUNDS TO BE DISBURSED FOR IMPLEMENTATION OF VARIOUS SCHEMES AND PROJECTS FOR PUBLIC WELFARE. HENCE, THE ADDITION MADE BY THE ASSESSEE I S DELETED. THIS ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 22 ISSUE IS COMMON FOR BOTH THE YEARS, THEREFORE, IT S TANDS ADJUDICATED FOR ASSESSMENT YEARS 2013-14 & 2014-15. 6. GROUND NO. 2 IS REGARDING THE STATUS OF THE ASSE SSEE IS A GOVERNMENT COMPANY. AS WE HAVE ALREADY DISCUSSED TH E FACTS AND MEMORANDUM OF ASSOCIATION WHEREIN THE OBJECTS OF TH E ASSESSEE HAS BEEN SET OUT. FROM THE OBJECTS AND PURPOSE OF C REATING THE ASSESSEE IT IS CLEAR THAT THE STATE GOVERNMENT IS H ELPING MORE THAN 98% SHARES OF THE ASSESSEE, THEREFORE, THIS ISSUE T HOUGH IS ONLY ACADEMIC IN NATURE, HOWEVER, ONCE THE GOVERNMENT IS HOLDING MORE THAN 98% SHARES THEN THE ASSESSEE COMPANY IS A GOVERNMENT COMPANY. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSES SEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/02/2019 SD/- SD/- JESK LH0 KEKZ FOT; IKY JKO (RAMESH. C. SHARMA) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 05/02/2019. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INFRASTRUCTURE CORP. LTD., JAIPUR. ITA NO. 713 &714/JP/2018 M/S RAJASTHAN URBAN DRINKING WATER SEWERAGE AND INF RASTRUCTURE CORPORATION LTD. VS. ACIT 23 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE-6, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 713 &714/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR