TaxTMI 
TaxTMI 
2015 (8) TMI 1081
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....ff by way of this common order. 2. The facts of the case, briefly, are as under :- 2.1 The assessee is a registered society engaged in assisting its members for data generation and other related technical issues. The assessee was Registered as a society on 12.2.2008 under the Karnataka Society Registration Act under the directions from Govt. of Karnataka with the main object of strengthening the quality of urban local government through e-governance. Members are enrolled as per the rules and bye-laws of the society. The assessee made an application for grant of registration under Section 12A of the Income Tax Act, 1961 (in short 'the Act') to the Director of Income Tax (Exemption), Bangalore. On perusal of the objects of the socie....
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.... shall be returned to GOK together with accrued interest. 2.3 The assessee received Rs. 1,97,00,000 and Rs. 25,00,000 as grants from GOK in the period relevant to Assessment Years 2008-09 and 2010-11 respectively. The grants received in the period Assessment Years 2008-09 and thereafter were all invested in Fixed Deposits ('FD') and this yielded interest income of Rs. 29,25,518 in the period relevant to Assessment Year 2010-11. The question for consideration before the Assessing Officer was regarding the taxability of the Govt. grants received from GOK and the interest income accrued on FDs, which was also claimed as exempt on the principle of mutuality. The Assessing Officer after examining the matter rejected the assessee's claim for....
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....V, Bangalore dt.22.8.2014 for Assessment Years 2008-09 and 20.8.2014 for Assessment Year 2010-11, the assessee has preferred these appeals before this Tribunal raising the following identical grounds for both the assessment years involved. " 1. The learned CIT (Appeals), erred in confirming the order passed by ld. Assessing Officer in bringing the amount of specific grant given by Government of Karnataka to the appellant society as taxable. 2. The learned CIT (Appeals), erred in ignoring the direction of Government of Karnataka, whereby it is stated that, even the interest earned on the deposit made out of specific grant was required to be added on to the original grant and therefore, cannot be taxed as income. 3. The learned CIT (Appeal....
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....utilized only for the purpose of assisting the member bodies in implementation of e-governance and that the interest on grant would stand on the same footing as the grant itself. The assessee contended that because of the conditions imposed by the Addendum, the grant as well as the interest income on FDs cannot be considered as the assessee's income by virtue of there being an overriding title to the income even before it reaches the assessee and the principle of diversion of income by overriding title is applicable. 4.3 Per contra, the learned Departmental Representative supported the impugned orders of the learned CIT (Appeals) as being in order. It was contended that both the assessee's appeals on these issues are liable to be d....
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....hs to Directorate of Municipal Administration for the Operational Cost of Rs. 77.O0 lakhs for the year 2008-09 to Karnataka Municipal Data Society and to reimburse a sum of Rs. 197.00 lakhs, which was released for the year 2007-08. This grant should be incurred for the year 2008-09 under the Account Head "3604- 00-193-0-01"(l00)(Plan). In the Government Order, Director, Directorate of Municipal Administration has been authorised to draw from State Huzur Treasury and to recover a sum of Rs. 197.00 lakhs, which was released to Karnataka Municipal Data Society for the year 2007-08, and the remaining amount of Rs. 77.00 lakh to Karnataka Municipal Data Society for the Operational Cost and pay through cheque." 13. It is seen from the above....
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....t. The Society shall hold the money as a custodian for the Government. It shall create a fund out of the grant money and any accrued interest and utilize the funds for assisting the member bodies in implementation of e-Governance. If any asset is created out of this fund shall belong to the Government. Utilization certificate shall be submitted to Government after spending the funds. Further in case the amount is unspent the same shall vest in such an institution or body which Government prescribes together with any accretion thereto." 14. It can thus be seen from the above that the addendum, if at all, would operate only for the previous year relevant to A.Y. 2010-11 and not to an earlier period viz., A.Y. 2009-10. In other words, duri....