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| The Tax Publishers2020 TaxPub(DT) 1273 (P&H-HC) : (2020) 422 ITR 0244 : (2020) 317 CTR 0838 INCOME TAX ACT, 1961
Section 4
Where amount of interest which accrued on grants received by assessee-society from State Government for various purposes including construction of houses for police officials could be used only for that purpose and in event it could not be used for that purpose, same has to be refunded back to Government, assessee was not recipient of income arising on account of interest earned on deposits with banks.
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Income - Chargeability - Amount of interest on grant received from State Government whether part of said grant and not chargeable to income tax -
Assessee was regularly given grants by State Govt. for various purposes including construction of houses for police officials. During relevant year, grant remained un-utilized and money which was parked in bank earned interest. As per AO, interest was exigible to tax. Held: Tribunal rightly held that amount of interest which accrued on any money parked in bank would be deemed to be a further grant for that particular purpose as same can be used only for that purpose and in event cannot be used for that purpose, same has to be refunded back to Government, thus, assessee was not recipient of income arising on account of interest earned on deposits with banks and interest income was not exigible to tax.
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
IN THE PUNJAB & HARYANA HIGH COURT
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