TaxTMI 
TaxTMI 
2019 (4) TMI 548
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....rier as per the provision of Sec 34 of the H.P. VAT Act, 2005 read with the H.P. VAT Rules of, 2005. Against the said declarations a form bearing No. ST XXVI-A was to be issued to the person declaring the goods. Till the year 2009 a user fee of Rs. 5/- per form was charged by the assessee society and which was enhanced to Rs. 10 as per the letter dated 18.05.2009. As per the clauses of 8.2 of the bye laws of the memorandum, the assessee used to deposit. Rs. 1 per declaration with the State Treasury prior to 2009 which was enhanced to Rs. 2 per declaration after 2009. The application of the assessee for registration u/s 12AA of the Act, 1961 was rejected on 29/11/2013 by CIT, Shimla by holding that the activities carried on by the society were not for the benefit of general public utility, but was for providing infrastructure facilities to the State Government (Excise and Taxation Department). The assessee filed its return declaring Nil income on 31.03.2015 after setting off the excess of income over expenditure at an amount of Rs. 89,98,634/-, as per clause 10(2) & 8(2) of bye laws of the assessee-society, as payable to H.P. Govt. The case of the assessee was selected for scrutiny ....
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....oner of Income Tax (Appeals) is not justified in upholding the addition of Rs. 89,98,634/- made to the taxable income of the assessee treating the alleged income over expenditure to be the taxable income of the assessee appellant. Fact of the matter is that the surplus if any belongs to the government and as such is not the income of the assessee appellant. 2. That the order of the Id Commissioner of Income Tax ( Appeals) is bad in law and facts." 5. The Revenue on the other hand has challenged the action of the Ld.CIT(A) in holding that the amount of fees collected to be directly remitted to the State Treasury was not in the nature of income of the assessee and has raised the following grounds before us: "1. On the facts and in the circumstances, the Ld. CIT(A) has erred' in not justified in deleting the addition of Rs. 1,27,90,072/- made by the A.O. which was paid to the Govt. as per the byelaws of the assessee society and holding them as non taxable, inspite of the fact that the assessee had debited such payment to its P&L Account and had claimed it as a revenue expenditure through the assessee is not registered u/s 12AA of the Act and nor its income is ....
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....'income' in terms of Section 2 (24)(i) of the IT Act, 1961. 29. The expression 'gain', on the other hand, is not synonymous with the word 'profit', for it is not restricted to pecuniary or commercial profits only as it includes other considerations of value gained also. For example, any advantage or benefit acquired or value addition made by some activities would amount to gain, even though the activities are not profit motivated. 30. Applying these principles to the facts of the cases in hand, it may be seen that the respondentAssessee continued to receive Rs. 5/- per Form till May, 2009 out of which Re.I/- was straightaway deposited in the Government Treasury and out of the balance of Rs. 5/-, only the actual expenditure incurred by it on collection process was deducted and the balance amount (80% as assessed by the authorities) was duly deposited in the Government Treasury to be paid to the Excise and Taxation Department of the State Government. In this entire process, the respondent-Assessee neither anything nor earned any profit. The VAT amount recovered by the respondent-Assessee was/is an entrustment of the statutory function of the ....
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....0 of the Incometax Act, in clause (a), after sub-clause (iia), the following subclause has been inserted with effect from the 1st day of April, 2014, namely:- "(iib) any amount- (A) paid by way of royalty, licence fee, service fee, privilege fee, service charge or any other fee or charge, by whatever name called, which is levied exclusively on; or (B) which is appropriated, directly or indirectly, from, a State Government undertaking by the State Government. Explanation.-For the purposes of this sub-clause, a State Government undertaking includes- (i) a corporation established by or under any Act of the State Government; (ii) a company in which more than fifty per cent of the paidup equity share capital is held by the State Government; (Hi) a company in which more than fifty per cent of the paid-up equity share capital is held by the entity referred to in clause (i) or clause (ii) (whether singly or taken together); (iv) a company or corporation in which the State Government has the right to appoint the majority of the directors or to control the management or policy decisions, directly or indirectly, including....
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.... (iii) a company in which more than fifty per cent of the paid-up equity share capital is held by the entity referred to in clause (i) or clause (ii) (whether singly or taken together); (iv) a company or corporation in which the State Government has the right to appoint the majority of the directors or to control the management or policy decisions, directly or indirectly, including by virtue of its shareholding or management rights or shareholders agreements or voting agreements or in any other manner; (v) an authority, a board or an institution or a body established or constituted by or under any Act of the State Government or owned or controlled by the State Government. 12.3 Applicability: - This amendment takes effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years. A perusal of the amendment and the explanation clearly shows that the intention of the legislature was to prevent the surpluses of any entity to flow to the State Governments etc. without paying due taxes and treating the payment as an eligible expense rather than it being an appropriation of income. Co....