TaxTMI 
TaxTMI 
2023 (10) TMI 1612
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.... deleting the addition of unrecorded receipts amounting to Rs.1,08,22,957/-. 3. The Ld. CIT(A) has erred in law and on facts in deleting the addition on expenses claimed for which no income (Rs.6,48,02,554/-) was offered. 4. The Ld. CIT(A) has erred in law and on facts in deleting the addition of interest in deposits with GSFS amounting to Rs. 12,07,57,449/-. It is therefore prayed that the order of the learned CIT(Appeals) may be set aside and that of the A.O. be restored to the above extent. 3. The brief facts of the case is that the assessee is a Company engaged in building infrastructure projects namely roads. The assessee-company received grants from Government for carrying out infrastructure namely Roads projects. During the assessment proceedings, the Ld. A.O. noticed from the balance sheet, the grants received during the year an amount to the extent of Rs. 56,22,59,000/- had remained unutilized. The assessee had shown this current liability in its balance sheet. Therefore the A.O. held that this was to be treated as income of the assessee, as the same is not taken to the Profit and Loss account and added to the total income. 4. Aggrieved aga....
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....uring the appellate proceedings, the assessee submitted there are two parties one is Welspun Project Ltd. and other is Ranjit Toll Road Pvt. Ltd. It was submitted to the A.O. that interest income from Welspun Project Ltd. is already accounted for and disclosed as income in the books of account of the assessee. However the A.O. held that the same is not verifiable from the regular books of account. The assessee submitted that this interest is included in the interest income account and there is no question of disclosing the same as direct income. The amount received from Ranjit Toll Road Pvt. Ltd. is only reimbursement of expenditure paid by the assessee as per the agreement, but they have wrongly deducted TDS from such expenditure. The assessee submitted ledger account and pleaded that it cannot become the Income of the assessee. 10. The Ld. CIT(A) after considering the above submissions deleted the addition observing as follows: "....The appellant has submitted that there are two parties one is Welspun Projects Ltd who has paid interest to the appellant and is duly accounted as income which is accepted by the AO. The other is Ranjit Toll Road Pvt Ltd and payment receiv....
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.... to road and bridge construction which is the main object for which the assessee company has been incorporated and even as per the AO/CIT(A) these expenses relate to projects undertaken by the assessee. In the light of this fact alone, there is no case for disallowing the impugned expenses when admittedly they have been incurred wholly and exclusively for the purpose of carrying out the business of the assessee. The case of the Revenue being that no income has been booked against the same, then the logical course of action was to determine whether the assessee failed to book income against the same or has not treated a particular receipt as income .The entire effort of the Revenue ought to have been to bring the concerned income to tax. In the absence of the same, the Revenue could not have been gone on to disallow the expenses incurred by the assessee, which otherwise admittedly were incurred wholly and exclusively for the purpose of business. For this reason alone, we agree with the ld.counsel for the assessee that the disallowance made by the AO was rightly deleted by the ld.CIT(A). 24. Even otherwise on facts, we find that the ld.CIT(A) has noted, that with respect to ....
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....d gone through the orders of authorities below. We have noted that the Hon'ble jurisdictional High Court in decisions referred to by the ld.counsel for the assessee before us, in the case of SAR Infracon P.Ltd. (supra) and in the case of Gujarat Municipal Finance Board (supra) has categorically held that the grants given by the State Governments stipulating deposits of the surplus grants in a particular mode and interest earned thereon,also treated as part of the grants, the same could not be treated as income of the assessee. In the present case, the assessee has deposited surplus grants admittedly as per the directions of the State Government with GSFS and earned interest income amounting to Rs.2,54,85,315/-. 41. We have gone through the Memorandum and Articles of Association of the assessee-company, which was filed before us at PB Page No.117 to 159 and we find that clause 13A categorically states that surplus received by the assessee from the State Government have to be deposited as per the direction of the State Government and the company cannot make any profits out of this. The relevant clause 13A of the Memorandum is reproduced as under: 13A. Any surp....