Gujarat State Road Development Corpn. ... vs Department Of Income Tax

सम ी जी.डी.अ वाल, उपा य (अहम. े ) एवं ी कुल भारत, या यक सद य । BEFORE SHRI BEFORE SHRI G.D. AGARWAL,VICE PRESIDENT (AZ) And SHRI KUL BHARAT, JUDICIAL MEMBER

आयकर अपील सं./I.T.A. No. 417/Ahd/2012 ( नधा रण वष / Assessment Year : 2008-09) Asst.CIT बनाम/ Gujarat State Road Gandhinagar Circle Vs. Development Corpn.Ltd. Gandhinagar Nirman Bhavan Sector-10A Gandhinagar-3820 10 थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AACFG 5706 B (अपीलाथ( /Appellant) .. ()*यथ( / Respondent)

अपीलाथ( ओर से / Appellant by : Shri O.P. Vaishnav, CIT-DR )*यथ( क, ओर से/Respondent by : -none-

ु वाई क, तार/ख / सन Date of Hearing 27/05/2015 घोषणा क, तार/ख /Date of Pronounce ment 29/05/2015

आदे श / O R D E R

PER SHRI KUL BHARAT, JUDICIAL MEMBER :

This appeal by the Revenue is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-Gandhinagar, ('CIT(A)' in short) dated 15/11/2011 pertaining to Assessment Year (AY) 2008-09. The Revenue has raised the following grounds of appeal:-

1. The learned CIT(Appeals) has erred in law and on facts in deleting the addition of Rs.38,63,38,000/- made by the A.O. on account of ITA No.417/Ahd/2012 ACIT vs. Guj.State Road Development Corp.Ltd.

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unspent grant even though the assessee has full authority to plan and utilize the grants for different projects and thus the same are in the nature of receipts in the hands of the assessee.

2. On the facts and circumstances of the case the Ld.CIT(A) ought to have upheld the order of the Assessing Officer.

3. It is therefore prayed that the order of the learned CIT(Appeals) may be set aside and that of the A.O. be restored to the above extent.

2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 09/12/2010, thereby the Assessing Officer (AO in short) made addition of Rs.38,63,38,000/- on account of unspent grant for different projects. Against the said assessment order, the assessee preferred an appeal before the ld.CIT(A), who after considering the submissions of the assessee deleted the said addition. Aggrieved by the order of the ld.CIT(A), now the Revenue is in appeal before us.

3. Apropos to ground No.1 of Revenue's appeal, the ld.CIT-DR supported the order of the AO and submitted that the ld.CIT(A) was not justified in deleting the addition.

3.1. None appeared on behalf of the respondent-assessee. However, a letter dated 26/05/2015 is placed on record. The relevant contents of the letter read as under:-

ITA No.417/Ahd/2012 ACIT vs. Guj.State Road Development Corp.Ltd.

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"We would like to bring the kind notice of the Hon. Tribunal that the only Ground of Appeal filed by the Dept. is regarding deletion of the addition of Rs.38,63,38,000/- by the Id. CIT(A) the addition was made by the Id. AO on a/c. of un-spent grant for different projects. The Id. CIT(A) held that the unutilized grant cannot be considered as income following the Ahmedabad ITAT Decision in the case of Gujarat Safai Kamdar Vikas Nigam and also relying on the decision of jurisdictional Gujarat High Court in the case of Gujarat Municipal Finance Board v/s. DCIT 221ITR 317."

4. We have heard the ld.CIT-DR, perused the material available on record and gone through the contents of the letter filed by the assessee. We find that the AO made addition on account of unspent grant received by the assessee from the Government. However, the ld.CIT(A) deleted the addition by observing as under:-

"4.2 I have gone through the facts of the case, submissions of the Appellant as well as order of the Hon'ble UAT, Ahmedabad Bench in the case of Gujarat Safai Kamdar Vikas Nigam vs. ACIT, Gandhinagar Circle, Gandhinagar (ITA No. 3232/Ahd/2008, order dated 17/04/2009, and Gujarat State Disaster Management Authority vs. ACIT, Gandhinagar Circle, Gandhinagar, ITA No. 949/Ahd/2009, order dated 05/06/2006.

The facts of the present case are similar to the above referred two judgments of Hon'ble ITAT, Ahmedabad. It has to be noted that the entire funds of GSRDC have been received as Grants for application as desired by the government and no other purpose. It may be pertinent here to note that in case the said amount is directed to be refunded by the state government, the appellant has to return the amount back to the government and therefore rightly treated as liability. Otherwise the fund is retained by appellant as trustee for specific application. The grants received are to be utilized as per the specific guidelines given by the ITA No.417/Ahd/2012 ACIT vs. Guj.State Road Development Corp.Ltd.

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Government and the appellant has to strictly adhere to the guidelines given and cannot deviate from it. It cannot utilize or hold the grant for its own use or any other purpose.

The Hon'ble ITAT, Ahmedabad, in the case of Gujarat Safai Kamdar Vikas Nigam has held in para. No. 18.8 as under:

"In view of the above discussions, we hold that the amount of Rs.8.97 crores grant given under "Thakkar Bapa Rehabilitation Grant" is not any income in the hands of the assessee as the assessee is merely a Nodal Agency to implement certain social schemes of the Government of Gujarat and for such specific purposes the assessee is entrusted with such amount. As per the Resolution dated 9/12/2000 of the Government of Gujarat and as also clarificatory letter dated 17/3/2008 of the Government of Gujarat referred to above, it is clear that the nature of the amount is not a contribution or revenue receipt but is only a grant for implementation of a particular scheme as Nodal Agency. It is also relevant to state that the unspent amount of such grant remains the property of the Government and has to be returned to the Government as and when demands. The decisions relied upon by Shri M.G. Patel, learned Counsel for the assessee also support the view taken by us. Furthermore, treatment of such grant as liability of the assessee company has been accepted by the Statutory Auditors of the assessee company as well as by the Comptroller & Auditor General of India in their audit reports. Thus, there was no question of adding the amount to the income of the assessee, who is merely a Nodal Agency to implement certain social beneficiary schemes of the Government. In that view of the matter we hold that the grant of Rs.8.97 crores received from the Government of Gujarat by the assessee be treated as not includible in the income of the assessee and is exempt u/s.11(1)(d) read with section 12(1) of the Act. Ground No.2 of the appeal is allowed."

4.3 Further, Hon'ble ITAT in the case of Gujarat State Disaster Management Authority vs. ACIT, Gandhinagar Circle, Gandhinagar, ITA No.417/Ahd/2012 ACIT vs. Guj.State Road Development Corp.Ltd.

Asst.Year - 2008-09 -5- ITA No. 949/Ahd/2009, has also taken the same view. The appellant viz. GSRDC is also acting as a NODAL Agency / Facilitating Agency at State level for implementation of the Government of India and Government of Gujarat schemes pertaining to road construction and development in Gujarat which interalia includes development of Roads, State Highways, Bridges, Flyovers etc. and the impugned grant having been received for such specific purpose and having been utilized for such specific purposes, the unutilized grant cannot be considered as income following the judgment of Ahmedabad, ITAT, in the case of Gujarat Safai Kamdar Vikas Nigam and Hon'ble Gujarat High Court in the case of Gujarat Municipal Finance Board vs. Dy. CIT 221 ITR 317 (Guj.).

4.4. In view of the facts of the case, and respectfully following the above decisions of jurisdictional court of law, it is held that the A.O. is not justified in considering the unspent grant of Rs.38,63,38,000/- as the income of the appellant company as the amount does not belong to the appellant, and, therefore, the entire addition as above is deleted. This ground of appeal is thus allowed."

4.1. We find that the ld.CIT(A) has followed the decision(s) of the Coordinate Bench (ITAT Ahmedabad) in the case of Gujarat Safai Kamdar Vikas Nigam vs. ACIT-Gandhinagar Circle, Gandhinagar in ITA No.3232/Ahd/2008, dated 17/04/2009 and of Gujarat State Disaster Management Authority vs. ACIT-Gandhinagar Circle, Gandhinagar in ITA No.949/Ahd/2009, dated 05/06/2006. The Revenue has not placed any material on record suggesting that the decisions as relied upon by the ld.CIT(A) are not applicable on the facts of the present case. Therefore, we do not see any reason to interfere with the order of the ld.CIT(A), ITA No.417/Ahd/2012 ACIT vs. Guj.State Road Development Corp.Ltd.

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same is hereby upheld. Thus, ground No.1 of Revenue's appeal is rejected.

5. Ground Nos.2 & 3 are general in nature which require no independent adjudication.

6. In the result, the appeal of the Revenue is dismissed.

Order pronounced in the Court on Friday, the 29th day of May, 2015 at Ahmedabad.

Sd/- Sd/- (जी.डी.अ वाल) (कुल भारत) उपा य (अहम. े ) या यक सद य ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER

Ahmedabad; Dated 29/ 05 /2015 ट/.सी.नायर, व. न.स./T.C. NAIR, Sr. PS

आदे श क! " त$ल%प अ&े%षत/Copy of the Order forwarded to :

1. अपीलाथ( / The Appellant

2. )*यथ( / The Respondent.

3. संबं8धत आयकर आयु:त / Concerned CIT

4. आयकर आयु:त(अपील) / The CIT(A)-Gandhinagar

5. ;वभागीय ) त न8ध, आयकर अपील/य अ8धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड= फाईल / Guard file.

आदे शानुसार/ BY ORDER,

स*या;पत ) त //True Copy//

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad