TaxTMI 
TaxTMI 
2018 (6) TMI 696
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cross-objections by assessee. The Ld.CIT(A) has passed common order vide order dt. 20-11-2017 and amongst various issues decided by the Ld.CIT(A), Revenue is aggrieved on the exclusion of interest accrued on the funds received from the State Government towards Lift Irrigation Scheme Funds [LIS]. 2. Revenue has raised the common grounds in all the years. Briefly stated facts are that assessee is a company engaged in the business of transmission of electrical energy. During the course of assessment proceedings, amongst various additions / disallowances, the AO made addition towards interest earned on Fixed Deposits made out of unutilized LIS funds in all the assessment years. For the sake of convenience, the additions made by AO on the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....only be used for LIS projects and assessee cannot use at its discretion. It has relied on various communications from the Government. The facts and contentions are listed by the CIT(A) in para 6 as under: * The Capital Grant amounts have to be treated as Tagged Grants and an obligation is attached to it to utilise the amounts only for the implementation of LIS Projects. * The LIS Grant amount has to be deposited in a separate Bank Account and maintained separately for rendering account to the State Government. The same has been treated as a current Liability in the Balance Sheet to the extent of unutilised Grant amount. * Interest earned/ accrued on the deposits of LIS Grant amounts is also to be utilised for the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2. Ld.CIT(A) has considered the submissions and deleted the addition, holding as under: "7. I have gone through the contentions of the appellant vis-avis order passed by the Assessing Officer. The issue is common to all the assessment years under appeal. Though the addition is made in all the assessment years from 2008-09 onwards, the detailed order with in-depth examination of the issue is passed for the Asst. Years 2013-14. The issue is dealt with at pages 2 to 11 of the order. After examination of various correspondence available on record, the Assessing Officer concluded that there is no condition put by the GoAP that the interest earned on deposit is to be treated as part of the grant. Further, the Assessing Officer brought ou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ad reported in-(2014) 45 Taxmann.com 339. 6. CIT v Punjab State E-Governance Society in ITA No. 75 of 2011. The assessee also relied on the ratio laid down by the Hon'ble Supreme Court in the case of M/s Bokaro Steel 236 ITR 315 (SC) to contend that interest which is inextricably connected to the Capital Grant is to be treated as Capital Receipt only which will go to reduce the cost of the Capital Asset that is corning into existence by the utilisation of the Capital Grant along with the interest thereon. Further, it was pointed out that the interest earned was reduced while calculating depreciation on the asset by showing the same as part of the grants as received from the Government of Andhra Pradesh. 7.2 On....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the factual position emerging from the records as above, it is seen that the amounts given by the Government are grants for specific purpose and interest earned thereon is inextricably connected to such grants. The facts of the case are similar to the various cases relied on by the assessee as at para-6.1 and the ratio laid down in case of M/s Bokaro Steel 236 ITR 315 (SC) is squarely applicable. Accordingly, it is held that the interest income cannot be assessed as 'business income' of the assessee and would go to increase the grants received from the GoAP. In view of the above, the grounds raised as regards to this issue are allowed". 4. Ld.DR, reiterated the contentions of AO, whereas Ld. Counsel for assessee referred to th....