A two-Judge bench of the Delhi High Court has held that the Society of Indian Automobile Manufacturers ( SIAM ) is not liable to pay income tax on Rs.1,474.10 lakhs sanctioned by the Ministry.
SIAM is the apex Industry body representing leading vehicle and vehicular engine manufacturers in India.
In the instant case, the respondent/assessee is a society registered under Section 12A and enjoys exemption under Section 80G of the Income Tax Act. It is an apex body for Indian automobile manufacturers and works for sustainable growth of the automobile industry in India, and focuses on protection of the environment, pollution control, the safety of automobile vehicle users etc.
While completing assessment proceedings, the Assessing Officer held that Rs.2,55,60,000/- received from the Ministry was income/revenue receipt as the same was deposited in the bank account of the respondent/assessee. Accordingly, the same was added to the income of the respondent/assessee.
On first appeal, the first appellate authority deleted the addition by holding that the Ministry had sanctioned Rs.1,474.10 lacs (including cost of land) for setting up Model Inspection & Certification Centres. The respondent/assessee was to execute this project for and on behalf of the Ministry. The amount received was in form of a financial sanction and not a grant. It was noted that the funds though routed and kept in a separate bank account in the name of the respondent-assessee did not belong to the respondent-assessee. They belonged to the Ministry. Separate books of accounts, ledger, bank book etc. were kept. The respondent-assessee was to periodically furnish utilisation certificate to the Ministry. On completion of the project the unutilised amount was to be returned to the Ministry. Thus, the amount received was not revenue receipt, the first appellate authority observed.
On appeal, the ITAT upheld the above findings.
Upholding the orders of the lower authorities, the bench comprising Justice Sanjiv Khanna and Justice Chander Sekhar held that the “Revenue is therefore unable to dispute the factual position elucidated and highlighted in the appellate orders. We would therefore not upset the finding that the money in the separate bank account in the name of the respondent-assessee was not a grant, but an amount that belonged to the Ministry. This being the position we do not find any merit in the submission made by the Revenue that the amount received from the Ministry belonged to the respondent-assessee and was their income. The amount received in view of the factual findings cannot be treated as revenue receipt or income of the respondent-assessee.”
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