Delhi High Court
Cit vs Delhi State Industrial ... on 27 April, 2007
Bench: M B Lokur, V Gupta
ORDER
1. The revenue is aggrieved by an order dated 5-3-2002 passed by the Income Tax Appellate Tribunal, Delhi Bench 'F' in ITA No. 2441 /Del/ 97 relevant for the assessment year 1991-92.
2. The assessed is a State Industrial Undertaking. It appears that a scheme was formulated by the Delhi Administration for development of Narela Industrial Complex. The assessed was to be in charge of development of a the Complex. Apparently for management of the financial resources, a Narela Revolving Fund was created and separate books of account were maintained relating to the transactions with which the Narela Revolving Fund was concerned.
3. The assessed developed some plots and those were allotted in accordance with the scheme and the surplus funds generated were deposited in the Narela Revolving Fund.
4. The assessed appears to have utilised the funds by investing them in banks and earned interest. The Comptroller and Auditor General of India (CAG) audited the accounts of the assessed and pointed out the mistakes and advised the assessed that the funds in the Narela Revolving Fund did not belong to the assessed and, therefore, the interest earned by investing the surplus funds in banks also did not belong to the assessed. On this objection having been raised, the assessed reversed the entries in the subsequent year and deposited the amounts with the Delhi Administration. In other words, the case of the assessed was that it had not earned any income by way of interest.
5. The assessing officer as well as the Commissioner (Appeals) did not accept the version given by the assessed and concluded that the interest was actually the income of the assessed.
6. The Tribunal reversed the view taken by both the assessing officer as well as the Commissioner (Appeals). It was held that the scheme had been floated by the Delhi Administration and the assessed was merely a developer. Neither the plots in the scheme nor the Narela Revolving Fund, created as a result of the scheme, were the property of the assessed but they belonged to the Delhi Administration. The assessed erroneously utilised the funds by investing them in banks and earned interest thereon which was credited in the Profit & Loss account of the assessed but when the CAG raised a objection, the assessed duly accepted the mistake and reversed the entries in the books.
7. It is quite clear from the above that the amounts lying in the Narela Revolving Fund and the interest earned by investing surplus funds in banks, was not the property of the assessed and, therefore, was not even the income of the assessed. The Narela Revolving Fund and the interest earned on surplus funds belonged to the Delhi Administration. Therefore, there is no question of adding the amount to the income of the assessed, who was only a development agency.
8. We cannot find any fault with the reasoning adopted by the Tribunal particularly since there was no income in the hands of the assessed and credits were duly reversed on the advice of the Comptroller & Auditor General of India. Therefore, no substantial question of law arises for consideration.
9. The appeal is dismissed.
