In a major relief to Gujarat Rural Industries Marketing Corporation, the division bench of the Gujarat High Court deleted addition of 2.3 crores made by the Income Tax authorities.
Assessee, is a Government owned Corporation established for the purpose of upliftment of Safai Kamdars and certain members of Scheduled Caste involved in manual scavenging and other similar activities. For the year under consideration, the Assessing Officer made an addition of Rs.2,37,15,593/- on account of unutilized Revenue Grant.
On appeal, ITAT deleted the addition and held in favour of the assessee. Aggrieved by the order, the department approached the High court for relief.
Justices Akil Kureshi and Biren Vaishnav noticed the decision of the High Court in an earlier case, wherein the Court dealt with a similar issue. In that case, assessee claimed that the grant received by them from the Government would form part of their corpus fund under section 11(1)(d) of the Act.
Allowing the plea of the assessee, the bench noted that the assessee was formed to grant concessional loans and advances to Safai Kamdars (sweepers) and their dependents, to examine the problems of Safai Kamdars and try to find their solutions, to promote economic developmental activities for the benefits of Safai Kamdars, their family members and dependents, etc. Grant of Rs.8.97 was made available to the Corporation under Government Resolution dated 9th December 2000.
In the above judgment, the bench had observed that “detailed provisions were made for allotment of funds to the respondent assessee. It was a scheme envisaged for implementation of certain Government programmes in particular, to uplift the living condition of manual scavengers and other Safai Kamdars involved in similar activities. Though exact words may not have been used that the funds made available are directed to form the corpus of the Corporation and to be used for such purpose, the entire purport of the scheme has to be gathered from the reading of the scheme as a whole. If so done, it leaves no doubt in our mind that the funds were made available to the Corporation for implementing the scheme in a particular manner. The assessee Corporation was not the sole trustee. The Scheduled Caste Development Board was also liable for implementation of the scheme to be supervised by a Committee headed by the Deputy Minister which included other Government officials.“
Following the above decision, the division bench dismissed the departmental appeal and held in favour of the assessee.
Read the full text of the Judgment below.
