Reflection in the P/L a/c towards income not determinative; Entries in books of account do not decide the nature of receipts -HC

CIT Vs. M/s State Urban Development Society (P & H High Court)- It has been held that reflection in the profit and loss account towards the income is not determinative. The entries in the books of account do not decide the nature of receipts. Since, the grants have been received by the assessee for disbursement and keeping in view the fact that the same cannot be utilised for any other purpose such as distribution for the poverty in furtherance to the object of the Schemes, it cannot be treated as income of the assessee.

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

Date of Decision: 19.10.2011

ITA No. 210 of 2011

Commissioner of Income Tax, Panchkula

Versus

M/s State Urban Development Society

HEMANT GUPTA, J.

Revenue is in appeal aggrieved against the order dated 30.7.2010 passed by Income Appellate Tribunal, Chandigarh (for short the ‘Tribunal’) whereby the appeal filed by the revenue was dismissed and the cross appeal filed by he assessee was allowed. The assessee is a society formed by Government of Haryana as per the regulations of Government of India for implementation and monitoring of Poverty Eradication Programmes in the urban area of Haryana. The assessee-society receives the scheme money from Government of India and distributes to every district of Haryana through District Urban Development Agency headed by Deputy Commissioner/Additional Commissioner of each district. Certain amount from the Scheme money is utilized for administrative & office expenses. The assessee was disbursing money under two Schemes i.e. SJSRY and NSDP. The Assessing Officer assessed the income of the assessee @ Rs. 9,00,80,992/- inter alia, hold that the essential conditions of Section 11 and 12 of the Income Tax Act, 1961 (for short the ‘Act’) have not been fulfilled by the assessee and amount not disbursed.