Interest received on FDR made from grant received not taxable if forms part of grant

What is important is whether the interest earned on the Central Government grant is to be treated as the income earned or not, and not what the assessee claimed. As stated hereinabove, in the letter of the Central Government releasing the grant, which provides a condition that the interest earned on the central grant already released would form part of the central grant limit of Rs. 50 Crores, the amount of Rs. 21,22,253/= being interest earned on the fixed deposit of Rs. 16.70 crores which was the grant received by the assessee from the Central Government cannot be said to be its income and the aforesaid sum, as per the condition of release of grant, the interest earned on the Central Government grant ie., Rs. 21,22,253/= in the present case is to be included as a part of the grant received from the Central Government. Under the circumstances, as such, no error has been committed by  the Tribunal in deleting the addition of Rs. 21,22,253/= made by the Assessing Officer, treating it as the income of the assessee.

HIGH COURT OF GUJARAT AT AHMEDABAD

TAX APPEAL No. 855 of 2013

COMMISSIONER OF INCOME TAX II

Versus

SAR INFRACON PVT LTD.

Date of Order/ Pronouncement – 3rd  October 2013

ORAL ORDER (PER : HONOURABLE Mr. JUSTICE M.R. SHAH)Present Tax Appeal has been preferred by the Revenue challenging the impugned judgment and order dated 15th February 2013 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench “B” [“Tribunal” for short] in ITA No. 1079/Ahd/2010 for A.Y 2005­06, by which, the Tribunal has dismissed the said appeal preferred by the Revenue, confirming the order passed by the learned CIT [A] dated 23rd November 2009.