Income Tax Appellate Tribunal - Ahmedabad
Gujarat State Disaster Management ... vs Jt. Cit, Gandhinagar Range,, ... on 24 March, 2017
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, 6th Floor, Block-11,
Udhyog Bhavan, Sectior - 11,
Gandhninagar 382017 Appellant
Vs.
The Jt. CIT, Gandhinagar Range,
Gandhinagar Respondent
PAN: AAALG0094J
आवेदक क ओर से/By Assessee : Shri M. K. Patel, A.R.
राज व क ओर से/By Revenue : Shri S. L. Meena,CIT D.R.
सन
ु वाई क तार ख/Date of Hearing : 23.03.2017
घोषणा क तार ख/Date of
Pronouncement : 24.03.2017
ORDER
PER S. S. GODARA, JUDICIAL MEMBER
This assessee's appeal for assessment year 2009-10 arises against the CIT(A), Gandhinagar, Ahmedabad's order dated 11.12.2013, passed in appeal no. CIT(A)/GNR/314/2012-13, upholding Assessing Officer's action making addition of interest payable to Government of 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 Management Authority vs. Jt.CIT]A.Y. 2009-10 -2-
2. Relevant facts are in a very narrow compass. This assessee i.e. the Gujarat State Disaster Management Authority is a nodal agency of the Gujarat Emergency Earthquake Rehabilitation Reconstruction Programme since very beginning. It received funds from Gujarat Government, World Bank and Asian Development Bank for the purpose of implementing the earthquake rehabilitation and reconstruction programme. 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 assessee's income in assessment years 2005-06 & 2006-07. The assessee however succeeded in this tribunal for the said assessment 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 Officer's action.
3. We have heard both the parties strongly reiterating their respective stands. The short question before us is as to whether the assessee's interest income payable to Government of Gujarat of Rs.23.37crores is liable to be assessed as its income or not. We notice that this issue has not arisen in assessee's case for the first time. It has already come on record that this tribunal has already accepted similar issue in assessment years 2005-06 & 2006-07 against the Revenue. Learned counsel files before us copy of co- ordinate bench's order in ITA No.946/Ahd/2011 for assessment year 2007-08 decided on 16.05.2014 follows earlier order for assessment year 2006-07 as under:
"4. Heard both the sides. Before us an order of ITAT Ahmedabad 'C' Bench for A.Y.2006-07 titled as "Gujarat State Disaster Management 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 High pronounced in the case of Gujarat Municipal Finance Board, 221 ITR 317 is cited and thereafter held as under:
ITA No. 876/Ahd/2014 [Gujarat State Disaster Management Authority vs. Jt.CIT]A.Y. 2009-10 -3- "The aforesaid judgment of the Hon'ble jurisdictional high court supports the assessee also in its contention that the interest was diverted at source by an overriding title in favour of the State Government. Because of the directive from the State Government, in the cited case the interest was held not to amount as income of the Gujarat Municipal Finance Board and it was held that the interest was diverted to the State 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 dominion over the interest by reason of the overriding title created in its favour by its directive to the Gujarat Municipal Finance Board. Similarly in the present case, as we have already seen, there was a letter 31-12-2004 written by the finance Department of the State Government to the assessee directing the assessee to deposit the interest to the credit of the consolidated fund of the State. This directive was reiterated in the certificate issued by the Principal Secretary. These directives created an overriding title in favour of the State Government so far as the interest element was concerned. Thus, on this point also, namely, the creation of overriding title, 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 assessee 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 examine the alternative contention to the effect that the amount of interest credited to the account of the State Government should be treated as application of the income for the purpose of section 11(1)(a) of the Act, on commercial consideration. Thus ground no.1 is allowed."
Learned Departmental Representative fails to indicate any distinction on facts or law. We thus accept assessee's sole substantive ground.
4. This assessee's appeal is allowed.
[Pronounced in the open Court on this the 24th day of March, 2017.] Sd/- Sd/-
(MANISH BORAD) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 24/03/2017
True Copy
S.K.SINHA
आदे श क त ल
प अ े
षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
ITA No. 876/Ahd/2014 [Gujarat State Disaster Management Authority vs. Jt.CIT]
A.Y. 2009-10 -4-
3. संबं धत आयकर आयु!त / Concerned CIT
4. आयकर आयु!त- अपील / CIT (A)
5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद ।