AI Drafter 
TaxTMI 
TaxTMI 
2025 (2) TMI 389
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....filing both the appeals and condonation of delay is requested. After hearing both the parties, it is observed that there are sufficient reasons for the delay and following the judgment of the Hon'ble Apex Court in the case of Collector, Land Acquisition Vs. MST. Katiji and Others (1987) 167 ITR 471, delay in filing both the appeals before the Tribunal is condoned. 3. Since the issues involved in both the appeals are identical, only change in figures, therefore for the sake of convenience and brevity, we are taking first ITA No.857/Bang/2024 and the decision of this appeal shall apply mutatis and mutandis to ITA No.858/Bang/2024. The grounds of appeal are as follows:- "Whether in the facts and circumstances of the case, the Ld. CIT(A) was right in law in not following the settled law of the Hon'ble Apex court in the case of Tuticorin Alkali Chemicals and Fertilizer Ltd, reported in 227 ITR 172 wherein it has been clearly held that if the capital of the company is fruitfully utilized instead of keeping it idle, the income generated will be of revenue nature and not accretion to capital? 2. Whether on the facts and in the circumstances of the case the Ld. ....
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....thi Kendra where similar grant received from Govt and interest received on such grant was offered as income without claiming as exempt income. The AO allowed expenses claimed as per P&L account of Rs. 23,00,829 and assessed income at Rs. 13,67,46,710. Aggrieved from the above order, the assessee filed appeal before the First Appellate Authority (FAA) 5. The ld. FAA allowed the appeal of the assessee by observing as under:- "Decision: The AO had made the additions for the following reasons: • The appellant is incorporated as a company under the Companies Act. • The interest income is revenue in nature and any deduction, if any, should have been claimed as per the provisions of the income tax act. However, the appellant did not claim any deduction • Ratio in Tuticorin Alkali Chemicals of the Apex Court and the Kedar Narain Singh vs CIT is applicable to the facts of the case. On the contrary, the appellant made out a clear case as to why these decisions are not applicable in its own case for the assesses in those cases had a business purpose and reiterated that the appellant is a nodal and implementing agency with no....
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....eing submitted as directed by the Hon'ble Bench. 4. Briefly, it is relevant to point out that the respondent assessee is a nodal agency established by the Government of India for implementation of Smart City Scheme. The respondent assessee receives grants from the Central and State Government for implementation of Smart City Scheme. The grants so received are parked in the bank account of the respondent until the time the same is used for the purposes of the smart city project. Interest on the deposits accrues and has been received for both these assessment years. The interest earned by the respondent assessee on the aforementioned funds for the years under appeal are as under:" AY Interest 2017-18 Rs. 13,90,47,536/- 2018-19 Rs. 16,65,00,533/- 5. It is submitted that from the financial year relevant to the assessment year 2017-18, the Respondent assessee is subject to the General Financial Rules, 2017 issued by the Ministry of Finance effective from 11/02/2017. The relevant extracts of the General Financial Rules, 2017 are placed at Page 01 of these submissions. It is submitted that the Grants received by the respondent from the Central Governmen....
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.... dated 20/10/2023 [copy placed at Page 23 of these submissions]; [e] Copy of covering letter dated 10/10/2023 in which a sum of Rs. 38,49,263/- was remitted vide NEFT/RTGS dated 10/10/2023 [copy placed at Page 24 to 27 of these submissions]; 9. It is also relevant to point out here that vide order dated 11/11/2021 [copy placed at Page 28 to 34 of these submissions], the Government of Karnataka has adjusted the accrued interest against the contribution by the Government of Karnataka pending to be released towards the smart city mission. In other words, the interest on the deposits has been ultimately used or applied for the smart city project being implemented by the Respondent assessee either by way of adjustment against future grants or by repaying the same to the Consolidated Fund of India. 10. Thus, it is submitted that the interest earned by the respondent during the assessment year 2017-18 and 2018-19 has been utilized in the manner explained above and cannot be considered to form a part of the income of the respondent assessee. 11. Apart from the aforesaid query, the Hon'ble Bench had also enquired about the status of assessment for the....
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....iled before the learned CIT[A], National Faceless Appeal Centre, Delhi. 179 185 CIT[A] 13. Copy of the decision of the Hon'ble ITAT, Bangalore Bench, Bangalore in ITA NO. 1263/Bang/2015 dated 19/04/2022 in the case of M/s. BANGALORE METRO RAIL CORPORATION LTD, BENGALURU. 186 207 CIT[A] 14. Copy of the decision of the Hon'ble High Court of Karnataka in ITA NO.117/2015 c/w ITA No.118/2015 dated 23/11/2020 in the case of M/s. BANGALORE METRO RAIL CORPORATION, BENGALURU. 208 216 CIT[A] 15. Copy of the decision of the Hon'ble High Court of Karnataka, in the case of M/s. KARNATAKA URBAN INFRA- STRUCTURE DEVELOPMENT AND FINANCE CORPORATION reported in 284 ITR 582. 217 218 CIT[A] 16. Copy of the decision of the Hon'ble High Court of Karnataka in the case of M/s. KARNATAKA URBAN INFRA- STRUCTURE DEVELOPMENT AND FINANCE CORPORATION reported in 315 ITR 301. 219 220 CIT[A] 17. Copy of the decision of the Hon'ble High Court of Karnataka in the case of M/s. KARNATAKA STATE AGRICUTLURAL PRODUCE PROCESSING AND EXPORT CORPORATION LTD reported in 377 ITR 496. 221 224 CIT[A]....
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....of Tuticorin Alkali Chemicals and Fertilizer Ltd. (supra) relied on by the ld. DR is distinguishable and not applicable in the case on hand, since interest income earned on FD and SB A/c. has not accrued in the hands of the assessee. A similar issue has been decided by the coordinate Bench of Hyderabad in the case of Hyderabad Pharma Infrastructure & Technologies Ltd. v. ADIT(Intl. Taxn.) reported in (2014[ 45 taxmann.com 339 in which it has been held as under:- "10. We have heard the submissions of the parties and perused the materials on record. So far as the factual aspect of the issue is concerned, it is not disputed by either of the parties that the grant received from the Central Government, which was not immediately utilized was kept in short term deposits in the banks and interest income was earned on such deposits. In fact, as it would appear from the materials on record, the assessee itself was treating such interest income as its business income and claimed deduction under S.80IA of the Act on such income. However, the fact remains that the Central Government in the Ministry of Commerce and Industry, through its Department of Industrial Policy and Promotion, had....