Case Law Details

Case Name : Pr. Commissioner of Income Tax Vs Gujarat Rural Industries Marketing Corporation (Gujarat High Court)
Appeal Number : Tax Appeal No. 323 of 2017
Date of Judgement/Order : 06/06/2017
Related Assessment Year :
Courts : All High Courts (6133) Gujarat High Court (610)

1. Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal dated 11.8.2016. Following question is presented for our consideration.

“[A] Whether the ITAT has erred ion law in upholding the order of CIT (A) deleting the addition of Rs. 2,37,15,593/- made by the A.O. On account of unutilized revenue grant?”

2. We notice that in case of Tax Appeal No. 1934 of 2009, Division Bench of this Court in a judgement dated 2.5.2011 in substantially similar factual background has made following observations:-

“Though multiple questions are framed, the issue is one, namely, whether the assessee was entitled to claim benefit of section 11(1)(d) of the Income Tax Act, 1961 with respect to Government grant of Rs. 8.97 crores received during the assessment year in question. 

The 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. During the year in question, the assessee received grant of Rs. 8.97 crores from the Government. The assessee claimed that in view of the provisions contained in section 11(1)(d) of the Act, the assessee is not liable to pay income tax on such receipt. Assessing Officer, however, discarded such claim. Issue was carried in appeal. The Appellate Authority also ruled in favor of the Revenue. Issue was further carried in appeal before the Tribunal. The Tribunal allowed the appeal and held that the assessee is entitled to claim exemption under section 11(1)(d) read with section 12(1) of the Act.

Before us, counsel for the Revenue raised the main contention that there was no direction contained in the Government circular releasing grant in favor of the assessee that such amount shall form corpus of the assessee. In absence of any such direction, the Tribunal erred in granting benefit under section 11(1)(d) of the Act applying the Division Bench decision of this Court in the case of CIT Vs. Shakar Vasi Vanik Jain Sahgh, (2003) 260 ITR 366.

With the assistance of the learned counsel for the revenue, we have perused the documents on record. The Tribunal has extensively referred to the background under which the assessee Corporation was constituted. The Tribunal also noted the Government scheme under which such grant of Rs. 8.89 crores was made available. The Tribunal was of the opinion that the amount was disbursed for specific purpose and to be utilized for the purpose for which it was made available. The Tribunal also noted that in previous years, stand of the assessee was accepted by the Revenue.

From the documents on record, we gather that the objects of the Corporation, inter alia, were to grant concessional loans and advances to Safai Kamdars 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. Preamble to the Government resolution states that in the State there are 33,000 Safai Kamdars and 31,000 dependents of such Safai Kamdars. 7500 Safai Kamdars have been given alternate employment and they are rehabilitated. Resolution refers to the survey of urban and rural areas with respect to availability of latrines. It recorded that with a view to abolish inhuman practice of carrying night soil manually, the Central Government has implemented certain schemes. The State Government has made allocation for upliftment and rehabilitation of such sweepers and scavengers. It is further recorded that looking to the current position, the State Government desired to formulate a comprehensive scheme for rehabilitation of the sweepers, scavengers and their dependents. 

By adopting such resolution, the scheme envisaged that the benefits of the scheme being given to sweepers and scavengers engaged in unclean occupation along with the Safai Kamdars. The scheme envisages that 70% of the sweepers and scavengers live in urban areas and they are more educated than those in the rural areas. The scheme further envisages that the benefits should reach to those located in rural areas also.

The task of implementing the scheme was entrusted to the Gujarat Scheduled Caste Development Board with the cooperation of the respondent assessee. The State Government sanctioned additional establishment, provided for the pay scales, etc. and for implementation of the scheme, a committee headed by the Deputy Minister for Social Justice and Empowerment was also constituted. The Committee also included several Government officials.

From the above, it can be seen 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 th 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.

To our mind, the Tribunal committed no error in holding that the grant in question fulfills the requirement of section 11(d)(1) read with section 12(1) of the Act. In the result, tax appeal is dismissed.” 

3. Under the circumstances, this Tax Appeal is dismissed.

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