TaxTMI 
TaxTMI 
2024 (1) TMI 655
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....s been directly transferred to the Balance Sheet without taking it into Income & expenditure account of the assessee. 3. The order of ld. CIT(A) be cancelled and the other of the AO be restored." 3. The assessee has raised the following grounds of appeal in Cross objection: "1. That the Ld. C.I.T.(A) has erred in law and on facts in rejecting the following legal grounds of appeal which goes to the root of the matter and necessary facts were available on records: a) That the case was selected for scrutiny by the I.T.O.-1(4)(2), Rishikesh, who was not "Assessing Officer" in terms of section 2(7A) of the Income Tax Act, 1961 and could not have exercised jurisdiction over the assessee at the relevant time, therefore, the impugned assessment order is illegal, void-ab-initio and liable to be quashed. b) That the Notice issued u/s 143(2) of the Income Tax Act, 1961 dated 29.07.2016 by I.T.O., Ward-1(4), Rishikesh, is illegal, unsustainable in law and nonest in law and subsequent notices issued under section 143(2) dated 19.04.2017 and 21.07.2017 are barred by limitation, therefore, the impugned assessment order against the time barred notice is illeg....
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....s own name and all the accounts should be maintained separately and therefore the fund should have been transferred to income & expenditure accounts of the assessee before transferring into the balance sheet. 8. Aggrieved, the assessee filed appeal before the ld. CIT(A), who deleted the addition made by the AO. 9. Aggrieved, the Revenue filed appeal before the ITAT. 10. Before us, ld. DR supported the order of the Assessing Officer. On the other hand, the ld. AR relied on the order of the ld. CIT(A). 11. Heard the arguments of both the parties and perused the material available on record. 12. The submissions of the assessee before the Revenue Authorities is as under: ".....the appellant society had received total gross receipt of Rs.22,46,00,000/- from M/s. THDC India Limited Rs.19,628/- as grant and Rs.6,05,142/- as interest out of this gross receipts of Rs.22,52,24, 779/- total expenditure towards objects of the society amounted to Rs. 17,92,81,427/- showing excess of Expenditure over Income for the year of Rs.4,59,43,344/-. Out of this excess over expenditure during the year under consideration for the year under consideration an amount of Rs. 1,50,00,000....
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.... out any other deficiency and therefore, this addition must be deleted." 14. Since, the ld. CIT(A) has given a categorical, undisputed finding that after examination of the accounts, the sum of Rs.1.5 Cr. has been duly routed through the income & expenditure account, we decline to interfere with the order of the ld. CIT(A) on this issue. 15. In the result, the appeal of the Revenue on this ground is dismissed. 16. With regard to the addition of Rs.3.31 Cr. made by the AO, the assessee submitted the following details before the ld. CIT(A): "State of Uttrakhand was severally hit by natural calamity and Flash Floods in the Management Authority undertook several projects of rehabilitation and reconstruction of State of Uttrakhand. The Letter No. 28/27/2013 coord dated 08.07.2013 [PB- 35] was issued by Under Secretary, Govt. of India, Ministry of Power to the Chairman and Managing Director of NTPC/PGVCIL/NHPC/THDc/SGVN/PFC/REC/ NEEPCO conveying the decision of the meeting held on 25.06.2013 under the Chairmanship of Minister of State for Power with the Senior Officers and CMDs of Power Sector PSUs in which all the PSUs/Department agreed to make a contribution ....
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....Income Tax Act 1961. It was further stated that it will not be clubbed with other activities or transaction carried out be SEWA-THDC. All the rules and regulations of THDCIL with regard to propriety of public expenditure are applicable for SEAW-THDC. THDCIL would be fully responsible for accountal. It is humbly submitted that funds received from the PSUs for the purpose of R&R projects were never forming part of income of the appellant, because the appellant was not owner of those funds but merely facilitating the collection of R & R funds in a separate Savings account and its disbursal on the directions of Nodal Agency THDCIL and Core Committee. As soon as the rehabilitation work R & R projects were completed the balance amount in the said account was to be returned back to the respective PSUs. Copy of letters from the following PSUs are enclosed in this regard: 1. Copy of Letter of SGV No. Cc/CS/10/2013-1813 dated 03.09.2013. [PB 40] 2. Copy of letter No. 02: 14 : CSR & SD: Sewa THDC dated 05.10.2107 written by Power Finance Corportion Ltd. [PB 41-42] 3. No. REC/CSR/2017-18/1045 dated 01.03.2018 written by REC Corporation Ltd. [PB 43] ....
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....said to be a part of the income of the assessee. Where by the obligation income is diverted before it reaches the assessee, it is deductible; but where the income is required to be applied to discharge an obligation after such income reaches the assessee, the same consequence, in law, does not follow. It is the first kind of payment which can truly be excused and not the second. The second payment is merely an obligation to pay another a portion of one's own income, which has been received and is since applied. The first is a case in which the income never reaches the assessee, who even if he were to collect it, does so, not as part of his income, but for and on behalf of the person to whom it is payable. In our opinion, the present case is one in which the wife and children of the assessee who continued to be members of the family received a portion of the income of the assessee, after the assessee had received the income as his own. The case is one of application of a portion of the income to discharge an obligation and not a case in which by an overriding charge the assessee became only a collector of another's income. The matter in the present case would have been diffe....