TaxTMI 
TaxTMI 
2013 (6) TMI 159
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....pellant submits that the order of the learned Commissioner of Income-tax (Appeals) is required to be cancelled as he has not taken into consideration and dealt with the judgements of the Gujarat, Mumbai & Delhi High Courts nor discussed why they were not applicable to the facts of the case. (3) The appellant further submits that the learned Commissioner of Income-tax (Appeals) has not at all property construed the ratio of the judgements and was not justified in not giving deduction based on the above. (4) The Learned Commissioner of Income-tax (Appeals) further erred in not considering the copy of computation and final accounts of Gujarat Hira Bourse for the year ended 31.03.2008 by treating as additional evidence when this evidence was called for by the predecessor of the Commissioner of Income-tax (Appeals) and, therefore, admissible as per para 4 of Rule 46A of the Income-tax Rules, 1962 and ought to have been taken into consideration." Grounds of ITA No. 1080/Ahd/2010 (A.Y. 06-07) "(I) Addition of Rs.1,25,44,938/- in respect of Interest:- (1) On the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals) erred in confirming addition....
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....re development in industrial cluster. The SPV was initial planned to develop infrastructure for SEZ project at Surat promoted by Cujarat Hira Bourse (GHB, a section 25 company promoted by Surat Diamond Association). The Central Government had released grant against the contribution made by GHB. The copy of letter of grant to GHB and IIUS is attached herewith as Annexure-1 alongwith this reply before the A.O. As per the mandate laid down under the scheme GHB and Central Government paid their respective for the project to assessee company. The said fund were kept under Escrow Accounts/FDs with banks by the assessee company during the years under consideration as it neither has any entitlements over the funds nor has authority to spend the same without approval of Central Governemnt. The subjected fund in an event if the project is not getting materialized has to be returned by assessee company to GHB and Central Government. Moreover, the letter of Central Government also provided condition that "The interest earned on the central grant already released would form part of the central grant limit of Rs.50 crore. The copy of the letter of Central Government was annexed as Annexure-2 bef....
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....v. SLP No. CC 4976 of 2007. The A.O. considered the reply of the assessee and also analyzed the case laws cited by the appellant before him. He observed that interest earned on the Escrow Accounts/FDs has not been specified in the approval letter. The money was lying with the company as idle and income has been earned. Whatever case law cited by the appellant before him, has been distinguished by him. He further relied in case of Tuticorin Alkali Chemcials & Fertilizers Ltd. vs. CIT 227 ITR 172 (SC) and held that interest earned by the assessee before commencement of business on short term deposits with Banks out of term loans secured from financial institutions is income chargeable under the head "income from other sources" and would not go to reduce the interest payable by the assessee which would be capitalized after the commencement of commercial production. The fact that the company has not commenced business does not mean that if it is not chargeable under the head "profits and gains of business", its income from any other source will not be taxed. Company having chosen to invest its idle capital fruitfully the fruits of such investment will clearly be of revenue nature. T....
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....vernment of Gujarat. Further, he also analyzed Section 10 (20A) of the IT Act. Without prejudice to the various findings given by the ld. CIT(A), it was held that w.e.f. 01.04.2003, the GHB/the Chamber of Commerce cannot be said to be an authority as mentioned in Section 10(20A). The appellant had shown interest earned on these FDs in the books of account. The appellant also failed to prove that the amount on accrued interest had been . returned to the, GHB or the trust formed by the Chamber of Commerce. The appellant had claimed the refund on the basis of TDS Certificate received by it from the Bank. As per Section 198, TDS deducted shall for the purpose of computing the income of the assessee, being deemed to the income received. Finally, after discussing all the facts and case laws of the assessee, he confirmed the addition in both the years. 4. Now the assessee is before us. Ld. Counsel for the appellant submitted that the appellant received a grant from Central Government and contribution from GHB which had been deposited in Escrow account/FDs as per the terms and conditions of the Central Government. He also filed paper book which include Audit Report, copy of return, copy....
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.... Auditor of the appellant in A.Y. 05-06 had made the remark as under: "During the period under consideration, the Company received Rs.16.70 Crores as contribution in the form of conditional grant in aid from the Central Government and Rs.5.56 Crores as contribution from Gujarat Hira Bourse in project account. As per the terms of IIU Scheme read with the sanction letter, these funds are strictly to be utilized for the purpose for which the same has been granted. Moreover, the funds can be utilized only after obtaining prior approval of the contributors including Central Government Authorities. Up to 31-03-2005, the funds were kept in separate Escrow account with the bank on which interest of Rs.21.22 lacs has accrued which has also been added to project account alongwith the contributions being expandable for the project only." The appellant had not taken this income in computation of income under any head in both the years. Ld. Counsel for the appellant also filed copy of recent Hon'ble Gujarat High Court decision in case of Gujarat Power Corpn. Ltd. vs. ITO for A.Y. 1992-93, wherein identical addition of interest were made by the A.O. on money received on account of share capit....