Gujarat State Disaster Management Authority, Gandhinagar V. The Jt. CIT, Gandhinagar Range, Gandhinagar

ITA 876/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8869 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 25-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.876/AHD/2014 (ASSESSMENT YEAR:2009-10) GUJARAT STATE DISASTER MANAGEMENT AUTHORITY, 6 TH FLOOR, BLOCK-11, UDHYOG BHAVAN, SECTIOR 11, GANDHNINAGAR 382017 APPELLANT VS. THE JT. CIT, GANDHINAGAR RANGE, GANDHINAGAR RESPOND ENT PAN: AAALG0094J /BY ASSESSEE : SHRI M. K. PATEL, A.R. /BY REVENUE : SHRI S. L. MEENA,CIT D.R. /DATE OF HEARING : 23.03.2017 /DATE OF PRONOUNCEMENT : 24.03.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10 ARISES AGAINST THE CIT(A), GANDHINAGAR, AHMEDABADS ORDER DATED 11.12. 2013, PASSED IN APPEAL NO. CIT(A)/GNR/314/2012-13, UPHOLDING ASSESS ING OFFICERS ACTION MAKING ADDITION OF INTEREST PAYABLE TO GOVERNMENT O F GUJARAT AMOUNTING TO RS.23,37,91,644/- AS ITS INCOME, IN PROCEEDINGS U/S . 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. ITA NO. 876/AHD/2014 [GUJARAT STATE DISASTER MANAGE MENT AUTHORITY VS. JT.CIT] A.Y. 2009-10 - 2 - 2. RELEVANT FACTS ARE IN A VERY NARROW COMPASS. TH IS ASSESSEE I.E. THE GUJARAT STATE DISASTER MANAGEMENT AUTHORITY IS A NO DAL AGENCY OF THE GUJARAT EMERGENCY EARTHQUAKE REHABILITATION RECONST RUCTION PROGRAMME SINCE VERY BEGINNING. IT RECEIVED FUNDS FROM GUJAR AT GOVERNMENT, WORLD BANK AND ASIAN DEVELOPMENT BANK FOR THE PURPOSE OF IMPLEMENTING THE EARTHQUAKE REHABILITATION AND RECONSTRUCTION PROGRA MME. THE SAID FUNDS GAVE RISE TO THE ABOVESTATED INTEREST AMOUNT. THE ASSESSEE TREATED THE SAME AS CURRENT LIABILITY PAYABLE TO GUJARAT GOVERNMENT. THERE DOES NOT APPEAR TO BE ANY DISPUTE THAT THE ASSESSING OFFICER HAD TAXED IDENTICAL INTEREST AMOUNT AS ASSESSEES INCOME IN ASSESSMENT YEARS 2005-06 & 2006-07. THE ASSESSEE HOWEVER SUCCEEDED IN THIS TRIBUNAL FOR THE SAID ASS ESSMENT YEARS. THE ASSESSING OFFICER OBSERVED IN HIS ORDER DATED 20.12 .2011 THAT THE ABOVE DECISIONS HAD NOT ATTAINED FINALITY. HE THEREFORE TREATED THE INTEREST AMOUNT IN QUESTION PAYABLE TO GUJARAT GOVERNMENT AS ASSESSEE S INCOME. THE CIT(A) UPHOLDS ASSESSING OFFICERS ACTION. 3. WE HAVE HEARD BOTH THE PARTIES STRONGLY REITERAT ING THEIR RESPECTIVE STANDS. THE SHORT QUESTION BEFORE US IS AS TO WHET HER THE ASSESSEES INTEREST INCOME PAYABLE TO GOVERNMENT OF GUJARAT OF RS.23.37 CRORES IS LIABLE TO BE ASSESSED AS ITS INCOME OR NOT. WE NOTICE THAT THIS ISSUE HAS NOT ARISEN IN ASSESSEES CASE FOR THE FIRST TIME. IT HAS ALREADY COME ON RECORD THAT THIS TRIBUNAL HAS ALREADY ACCEPTED SIMILAR ISSUE IN ASSE SSMENT YEARS 2005-06 & 2006-07 AGAINST THE REVENUE. LEARNED COUNSEL FILES BEFORE US COPY OF CO- ORDINATE BENCHS ORDER IN ITA NO.946/AHD/2011 FOR A SSESSMENT YEAR 2007-08 DECIDED ON 16.05.2014 FOLLOWS EARLIER ORDER FOR ASS ESSMENT YEAR 2006-07 AS UNDER: 4. HEARD BOTH THE SIDES. BEFORE US AN ORDER OF ITA T AHMEDABAD 'C' BENCH FOR A.Y.2006-07 TITLED AS 'GUJARAT STATE DISASTER MANAG EMENT AUTHORITY VS. ACIT, GANDHINAGAR CIRCLE, GANDHINAGAR BEARING ITA NO.949/ AHD/2009, DATED 5TH JUNE, 2009 IS CITED WHEREIN AN ORDER OF HON'BLE GUJARAT H IGH PRONOUNCED IN THE CASE OF GUJARAT MUNICIPAL FINANCE BOARD, 221 ITR 317 IS CIT ED AND THEREAFTER HELD AS UNDER: ITA NO. 876/AHD/2014 [GUJARAT STATE DISASTER MANAGE MENT AUTHORITY VS. JT.CIT] A.Y. 2009-10 - 3 - 'THE AFORESAID JUDGMENT OF THE HON'BLE JURISDICTION AL HIGH COURT SUPPORTS THE ASSESSEE ALSO IN ITS CONTENTION THAT THE INTERE ST WAS DIVERTED AT SOURCE BY AN OVERRIDING TITLE IN FAVOUR OF THE STATE GOVER NMENT. BECAUSE OF THE DIRECTIVE FROM THE STATE GOVERNMENT, IN THE CITED C ASE THE INTEREST WAS HELD NOT TO AMOUNT AS INCOME OF THE GUJARAT MUNICIPAL FI NANCE BOARD AND IT WAS HELD THAT THE INTEREST WAS DIVERTED TO THE STAT E GOVERNMENT BY AN OVERRIDING TITLE. THE STATE GOVERNMENT COULD TREAT THE INTEREST ALSO AS PART OF THE GRANT ONLY BECAUSE IT HAD FULL CONTROL AND D OMINION OVER THE INTEREST BY REASON OF THE OVERRIDING TITLE CREATED IN ITS FA VOUR BY ITS DIRECTIVE TO THE GUJARAT MUNICIPAL FINANCE BOARD. SIMILARLY IN THE P RESENT CASE, AS WE HAVE ALREADY SEEN, THERE WAS A LETTER 31-12-2004 WR ITTEN BY THE FINANCE DEPARTMENT OF THE STATE GOVERNMENT TO THE ASSESSEE DIRECTING THE ASSESSEE TO DEPOSIT THE INTEREST TO THE CREDIT OF THE CONSOL IDATED FUND OF THE STATE. THIS DIRECTIVE WAS REITERATED IN THE CERTIFICATE IS SUED BY THE PRINCIPAL SECRETARY. THESE DIRECTIVES CREATED AN OVERRIDING T ITLE IN FAVOUR OF THE STATE GOVERNMENT SO FAR AS THE INTEREST ELEMENT WAS CONCE RNED. THUS, ON THIS POINT ALSO, NAMELY, THE CREATION OF OVERRIDING TITL E, THE JUDGMENT IS IN FAVOUR OF THE ASSESSEE. 10. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON' BLE GUJARAT HIGH COURT (SUPRA) WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSES SEE AND HOLD THAT THE INTEREST OF RS.9,82,70,573/- CANNOT BE ASSESSED AS THE ASSESSEE'S INCOME. IN THE VIEW WE HAVE TAKEN IT IS NOT NECESSARY TO EXAMI NE THE ALTERNATIVE CONTENTION TO THE EFFECT THAT THE AMOUNT OF INTERES T CREDITED TO THE ACCOUNT OF THE STATE GOVERNMENT SHOULD BE TREATED AS APPLIC ATION OF THE INCOME FOR THE PURPOSE OF SECTION 11(1)(A) OF THE ACT, ON COMM ERCIAL CONSIDERATION. THUS GROUND NO.1 IS ALLOWED.' LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO INDIC ATE ANY DISTINCTION ON FACTS OR LAW. WE THUS ACCEPT ASSESSEES SOLE SU BSTANTIVE GROUND. 4. THIS ASSESSEES APPEAL IS ALLOWED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF MARCH, 2017.] SD/- SD/- ( MANISH BORAD ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD: DATED 24/03/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ITA NO. 876/AHD/2014 [GUJARAT STATE DISASTER MANAGE MENT AUTHORITY VS. JT.CIT] A.Y. 2009-10 - 4 - ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0