BELGAUM SMART CITY LTD. Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) The petitioner is a Company registered under the provisions of the Companies Act , 2013 and is a Company whose 50% of the shares are prescribed by the Central Government and another 50% is prescribed by the State Government. It is established for the purpose of developing the City of Belagavi, as a Smart City.

(2.) The petitioner received certain grants from Central Government towards development of Smart City in the year 2016-17. However, as the scheme was not formulated by the Government for which the grant had to be applied, an amount of Rs.383,22,56,443.00 was kept in Fixed Deposit and it earned an interest of 13,72,99,699/-. The first respondent has assessed the said income for income tax. The petitioner contending that the said income is exempted from taxation has preferred an appeal before the second respondent. Before filing of the appeal, as the petitioner expressed a desire to file an appeal before the first respondent, the impugned order dtd. 13/2/2020 bearing No. ITBA/ COM/ F/ 17/ 2019-20/ 1025123781(1), Vide Annexure-J to the writ petition was passed by the first respondent, wherein a stay was granted on the order of the first respondent subject to deposit of 20% of the amount assessed. However, as it was found that appeal was not filed immediately, the entire amount of tax is recovered by the first respondent. Thereafter, the petitioner has preferred an appeal before the second respondent challenging the assessment order and also has filed this writ petition challenging the impugned order. The appeal has now been assigned to 'The National Faceless Appeal Center'.

(3.) During the course of arguments, attention of the Court is drawn to a letter dtd. 2/2/2022 issued by the Government of India to all CEOs' of Smart Cities stating that as per Rule 230(8) of GFR, 2017, all interests against advances released to any granting institutions should be remitted to Consolidated Fund of India and it is submitted that the entire interest earned, which is assessed for tax has to be now remitted to Government of India.