2011 (4) TMI 1332

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....07, raising following substantial questions of law:- "i) Whether in the facts and circumstances of the case and in law the ITAT was justified in upholding the decision of ld. CIT(A) and deleting the addition of Rs. 10,80,40,212/- made by the A.O. on account of unutilized portion of grant received from the State Government? ii) Whether in the facts and circumstances of the case and in law the ITAT was justified in upholding the decision of ld. CIT(A) and deleting the addition of Rs. 65,89,678/- made by the A.O. on account of interest earned on FDRs?" 2. The assessee is a society registered under the Societies Registration Act, 1860 and is also registered under Section 12AA of the Act with the Income Tax Department. Its object is to promot....

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....see as income in the Income & Expenditure Account. The issue presently is as to whether the grants received by the assessee for specific purposes constituted "income" within the meaning of sections 11 and 12 of the Act. It is also noticed that un-disbursed/unspent amount of tied-up grants are shown as a liability in the balance sheet, whereas the unspent amount of the general grants remain as income with the assessee. The specific tied-up grants are not credited in the Income & Expenditure Account and are taken directly into the liability side of the balance sheet of the assessee under the head "project Fund Account" whereby the assessee is maintaining separate account for each project for which the grant is received." xxx xxx xxx "12. ....

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....arnataka High Court, in somewhat similar circumstances, in the case of CIT Vs. Karnataka Urban Infrastructure Development & Finance Corporation, 284 ITR 582 (Kar) held as under:- "Held, that there was no profit motive as the entire fund entrusted and the interest accrued on the deposits in the bank, though in the name of the assessee, had to be applied only for the purpose of welfare of the nation as provided in the guidelines. The whole of the funds belonged to the State Exchequer and the assessee had to channelise them to the objects of the centrally sponsored scheme of infrastructural development for the mega city of Bangalore. The entire money was received for a public purpose and the end scheme was implemented in accordance with the ....