2024 (10) TMI 259

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....nt Year (AY) 2012-13 arising from the order dated 22/12/2017 passed by the Assessing Officer (hereinafter referred to as "AO") u/s. 143(3) r.w.s.147 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). Facts of the case: 2. The assessee, M/s Tourism Corporation of Gujarat Ltd. (TCGL), engaged in the promotion and development of tourism in Gujarat, was initially assessed under section 143(3) of the Act, with an income of Rs. 36,70,08,460/- on 31/12/2014. The assessment was later reopened under section 147 due to discrepancies identified by the AO. A notice under section 148 was issued on 22/09/2016, to which the assessee filed its return of income on 28/12/2016. 2.1. During the course of assessment proceedings, the AO....

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.... that TCGL had consistently recognized 15% of grants utilized as income in prior years, without differentiation between direct and indirect utilizations. The AO concluded that there was no tangible reason to exclude the Rs. 13,39,91,645/- paid to District Collectors from the calculation of utilized grants. Therefore, the AO added Rs. 2,00,98,747/- to the total income, asserting that the consistent recognition method should not be changed arbitrarily without evidence. 2.2. The AO also noted a delay in the payment of employees' contributions towards EPF, which was paid well beyond the due date. Therefore, the delayed payment of Rs. 7,39,238/- was added to the income, as it was paid beyond the stipulated time frame. 3. The assessee p....

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....so stated that the statutory auditor commented that while calculating the grants utilized, assessee did not include Rs. 13,39,91,645/- that was passed on to District Collectors and other implementing agencies and accordingly there is an understatement of income by Rs. 2,00,98,747/- (i.e., 15% of Rs. 13,39,91,645/-). 6. The Authorised Representative (AR) of the assessee, stated that the assessee is fully owned by the Government of Gujarat and acts as a nodal single-window authority responsible for the promotion and development of tourism in Gujarat. The corporation receives grants from GOG, which are utilized for various tourism-related activities, including administrative expenses, salaries, and infrastructure maintenance. As per the GOG....

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....ion of the 15% charge on the decentralised grants was consistent with the policy of charging income only on grants actually utilized by the assessee, not those merely transferred to other agencies. 6.2. The AR argued that only real income, not notional income, can be subjected to tax. Since the Rs. 2,00,98,747/- represented a hypothetical charge on funds that were not utilized by TCGL, it did not constitute real income. The assessee cited Hon'ble Supreme Court's judgment in Godhra Electricity Co. Ltd. Vs. CIT (225 ITR 746) to support the principle that only actual income that accrues to the taxpayer can be taxed. 7. Upon careful consideration of the facts, grounds of appeal, and submissions made by both parties, we conclude that the A....