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ITAT Delhi rules interest income on GOI funds not taxable for M/s. National Highways & Infrastructure Development Corp India

ITAT Delhi rules interest income on GOI funds not taxable for M/s. National Highways & Infrastructure Develop…

The Income Tax Appellate Tribunal (ITAT) Delhi, in the case of M/s. National Highways & Infrastructure Development Corp India, has ruled that the interest income generated on funds owned by the Government of India (GOI) is not taxable in the hands of the appellant company. The appellant company, NHIDCL, is a fully owned company of the Ministry of Road Transport & Highways, Government of India, engaged in the development of national highways and other infrastructure projects. The funds for these projects are provided by the GOI, and the appellant company holds and manages these funds in a fiduciary capacity. The interest income generated on these funds is credited to the government fund and not treated as the income of NHIDCL. The ITAT held that the ownership of the funds and the consequential interest income lies with the GOI, and the appellant company has already deposited the entire interest earned in the Consolidated Fund of India (CFI). Therefore, the ITAT dismissed the appeals filed by the Revenue and ruled in favor of the appellant company.

Case Name:

ITA Nos. 49, 50 & 132/Del/2023

Key Takeaways:

The issue involved in the case was whether the interest income generated on funds received from the Government of India (GOI) is taxable in the hands of M/s. National Highways & Infrastructure Development Corp India (NHIDCL).
The appellant company, NHIDCL, is a fully owned company of the Ministry of Road

Case Synpsis:

The case involves the DCIT, Circle 16(1), New Delhi (the Appellant) and M/s. National Highways & Infrastructure Development Corp India (the Respondent). The case numbers are ITA Nos. 49, 50 & 132/Del/2023, and the assessment years are 2016-17 to 2018-19.

The issue in question revolves around the addition of Rs. 191,34,88,102/- made by the Assessing Officer (AO) on account of interest income generated on the funds received from the Government of India (GOI). The AO treated this interest income as income from other sources under Section 56 (of Income Tax Act, 1961) of the Income Tax Act.

The Respondent, M/s. National Highways & Infrastructure Development Corp India (NHIDCL), is a fully owned company of the Ministry of Road Transport & Highways, Government of India, set up under the Companies Act, 2013. NHIDCL is engaged in the business of developing National Highways and other infrastructure in the Northeast.

The Respondent argued that it is a Nodal Agency of the Government of India and receives funds from the GOI for the execution of road and infrastructure projects in a fiduciary capacity. The funds received from the GOI are kept in a separate bank account linked with the flexi account. The interest generated on these funds is credited to the government fund, as it is part of the government fund and not the income of NHIDCL. The Respondent also clarified that it has already deposited the interest earned on the funds in the Consolidated Fund of India (CFI).

The Commissioner of Income Tax (Appeals) [CIT(A)] held that the ownership of the funds provided by the GOI, along with the consequential interest income, lies with the GOI. The CIT(A) also referred to various judicial pronouncements and held that when an assessee collects income on behalf of the government and remits it back to the government, the income collected by

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Case Name: ITA Nos. 49, 50 &amp; 132/Del/2023 Key Takeaways: <ol><li>The issue involved in the case was whether the interest income generated on funds received from the Government of India (GOI) is taxable in the hands of M/s. National Highways &amp; Infrastructure Development Corp India (NHIDCL).</li><li>The appellant company, NHIDCL, is a fully owned company of the Ministry of Road</li></ol> Case Synpsis: The case involves the DCIT, Circle 16(1), New Delhi (the Appellant) and M/s. National Highways &amp; Infrastructure Development Corp India (the Respondent). The case numbers are ITA Nos. 49, 50 &amp; 132/Del/2023, and the assessment years are 2016-17 to 2018-19. The issue in question revolves around the addition of Rs. 191,34,88,102/- made by the Assessing Officer (AO) on account of interest income generated on the funds received from the Government of India (GOI). The AO treated this interest income as income from other sources under Section 56 (of Income Tax Act, 1961) of the Income Tax Act. The Respondent, M/s. National Highways &amp; Infrastructure Development Corp India (NHIDCL), is a fully owned company of the Ministry of Road Transport &amp; Highways, Government of India, set up under the Companies Act, 2013. NHIDCL is engaged in the business of developing National Highways and other infrastructure in the Northeast. The Respondent argued that it is a Nodal Agency of the Government of India and receives funds from the GOI for the execution of road and infrastructure projects in a fiduciary capacity. The funds received from the GOI are kept in a separate bank account linked with the flexi account. The interest generated on these funds is credited to the government fund, as it is part of the government fund and not the income of NHIDCL. The Respondent also clarified that it has already deposited the interest earned on the funds in the Consolidated Fund of India (CFI). The Commissioner of Income Tax (Appeals) [CIT(A)] held that the ownership of the funds provided by the GOI, along with the consequential interest income, lies with the GOI. The CIT(A) also referred to various judicial pronouncements and held that when an assessee collects income on behalf of the government and remits it back to the government, the income collected by

Case Name: ITA Nos. 49, 50 & 132/Del/2023 Key Takeaways: <ol><li>The issue involved in the case was whether the interest income generated on funds received from the Government of India (GOI) is taxable in the hands of M/s. National Highways & Infrastructure Development Corp India (NHIDCL).</li><li>The appellant company, NHIDCL, is a fully owned company of the Ministry of Road</li></ol> Case Synpsis: The case involves the DCIT, Circle 16(1), New Delhi (the Appellant) and M/s. National Highways & Infrastructure Development Corp India (the Respondent). The case numbers are ITA Nos. 49, 50 & 132/Del/2023, and the assessment years are 2016-17 to 2018-19. The issue in question revolves around the addition of Rs. 191,34,88,102/- made by the Assessing Officer (AO) on account of interest income generated on the funds received from the Government of India (GOI). The AO treated this interest income as income from other sources under Section 56 (of Income Tax Act, 1961) of the Income Tax Act. The Respondent, M/s. National Highways & Infrastructure Development Corp India (NHIDCL), is a fully owned company of the Ministry of Road Transport & Highways, Government of India, set up under the Companies Act, 2013. NHIDCL is engaged in the business of developing National Highways and other infrastructure in the Northeast. The Respondent argued that it is a Nodal Agency of the Government of India and receives funds from the GOI for the execution of road and infrastructure projects in a fiduciary capacity. The funds received from the GOI are kept in a separate bank account linked with the flexi account. The interest generated on these funds is credited to the government fund, as it is part of the government fund and not the income of NHIDCL. The Respondent also clarified that it has already deposited the interest earned on the funds in the Consolidated Fund of India (CFI). The Commissioner of Income Tax (Appeals) [CIT(A)] held that the ownership of the funds provided by the GOI, along with the consequential interest income, lies with the GOI. The CIT(A) also referred to various judicial pronouncements and held that when an assessee collects income on behalf of the government and remits it back to the government, the income collected by

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ITAT Delhi rules interest income on GOI funds not taxable for M/s. National Highways & Infrastructure Development Corp India