TaxTMI 
TaxTMI 
2015 (11) TMI 391
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.... approved channelising agent for Bangalore in respect of rose, onion and niger seeds. The Government of Karnataka sanctioned Rs. 10 crores for improvement of infrastructure in order to encourage the farmers for development of horticultural sector and to promote export. The relevant part of the proceedings of the said Government order dated January 23, 2007, issued by the Government of Karnataka, is reproduced below : "Government Order No. AHD 88 HPP 2006, Bangalore, dated January 23, 2007 Government is pleased to sanction new scheme namely, 'Support to KAPPEC' (2401-00-800-2-29) during 2006-07. 2. The Director of Horticulture is permitted to release Rs. 10.00 crores (Rupees Ten crores only) to DAPPEC for creation, of infra structure facilities in various parts of the state for increasing the export of horticultural produce. 3. KAPPEC shall make earnest efforts to get matching contribution from Government of India through its agencies/schemes such as ASIDE, National Horticulture Mission for the purpose. 4. KAPPEC shall prepare viable and implementable schemes and obtain approval from the KAPPEC Board. The approved schemes will be submitted to the Department of....
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....ement of infrastructure to promote agricultural exports, has categorically specified that the said grant shall be used for creation of infrastructure facilities in various parts of the State for increasing the export of horticultural produce and the assessee shall prepare viable and implementable schemes and obtain approval from KAPPEC Board and the said approved schemes will be submitted to the Department of Horticulture. Further, she relied on the letter dated November 12, 2013, in support of her contention that the Government has considered the interest earned on the grant released by the Government should be treated as additional grants of the scheme for which the grant is originally released. The learned counsel placed reliance on the judgment of this court in Karnataka Urban Infrastructure Development Finance Corporation case (supra), Indian Oil Panipat Power Consortium Ltd. v. ITO [2009] 315 ITR 255 (Delhi), CIT v. Karnataka Power Corporation [2001] 247 ITR 268 (SC), CIT v. Bokaro Steel Ltd. [1999] 236 ITR 315 (SC) to contend that the grant amount received from the Government of Karnataka, temporarily kept in fixed deposits till the utilisation period has to be treated as th....
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....ies as grant and the nodal agency will constitute a revolving fund with the help of Central and State shares out of which finance could be provided to various agencies such as water, sewerage boards, municipal corporations, etc. The objective is to create and maintain a fund for the development of infrastructural assets on a continuing basis and therefore the assessee is a nodal agency formed/created by the Government of Karnataka as per the guidelines ; there is no profit motive as the entire fund entrusted and the interest accrued therefrom on deposits in bank though in the name of the assessee has to be applied only for the purpose of welfare of the nation/States as provided in the guidelines ; the whole of the fund belongs to the State Exchequer and the assessee has to chan nelise them to the objects of the centrally sponsored scheme of infra structural development for the mega city of Bangalore. Funds of one wing of the Government are distributed to the other wing of the Government for public purpose as per the guidelines issued. The monies so received, till they are utilised, are parked in a bank. The finding recorded by the Tribunal clearly shows that the entire money in que....
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....on in Tuticorin Alkali Chemicals Ltd.'s case (supra) and Bokaro Steel Ltd.'s case (supra) has held that in Tuticorin Alkali case, the question related was with the interest earned by the company during its formative period by investments while in Bokaro Steel Ltd.'s case (supra), it is so confined and did not apply where the receipts were directly connected with or were incidental to the work of construction of the assessee's plant. Accordingly, applying the law enunciated in Bokaro Steel Limited' case allowed the appeal. 14. In the light of the judgments referred to above, we have examined the case on hand. It is clear that the assessee has received the grant of Rs. 10 crores from the Government of Karnataka for a particular project, i.e., for improvement of infrastructure and to promote export of horticultural produce. Before the said grant was utilised for the specific purpose it was parked in fixed deposits and the interest was earned and by the subsequent additional evidence produced by the assessee before the Tribunal, it is further made clear that the State Government has categorically specified that any interest earned on those grants originally grant....