DCIT-3(2)(1), MUMBAI, MUMBAI vs. MAHARASHTRA AIRPORT DEVELOPMENT COMPANY LIMITED, MUMBAI

P a g e | 2 87/Mum/2024 A.Y. 2016-17 Maharashtra Airport Development Company Limited, Mumbai आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The above captioned appeal has been filed by the assessee and Cross appeal by the Revenue against the orders of even date as passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated24.12.2018 for the Assessment Year [A.Y.] 2016-17.Since some of the issues are common and also the fact that appeals were heard together, they are being taken up together for adjudication vide this composite order for the sake of brevity. We take up assessee’s appeal first.

2. The grounds of appeal

are as under:- (AY 2016-17)(Assessee)

1. The order passed u/s 143(3) of the I.T. Act by the Ld. Asst. Commissioner of Income Tax, Circle-3(2)(1), Mumbai (“the Ld. Assessing Officer”) is without jurisdiction, invalid and bad in law and against the principles of natural justice. This ground is general in nature. Hence, no adjudication is needed. 2. a) The Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “the Ld. CIT(A)”) has, on facts and circumstances of the case, erred in sustaining the re-characterization of interest income of Rs. 23,55,68,319/- on Fixed Deposits as ‘income from P a g e | 3 ITA No. 37, 87/Mum/2024 A.Y. 2016-17 Maharashtra Airport Development Company Limited, Mumbai other sources’ instead of ‘business income’ to be reduced from the cost of the project without appreciating the explanations/submissions placed on record and also in not providing adequate opportunity of being heard. b) Without prejudice to the Ground no. 2(a), the Ld. CIT(A) erred in facts and law in not allowing deduction of interest expense u/s. 57 against the above interest income on Fixed Deposits of Rs. 23,55,68,319/- assessed under ‘income from other sources’. c) Without prejudice to Ground no. 2(a) & 2(b), on facts and circumstances of the case, the Ld. Assessing Officer erred in law in not increasing/restating the “Capital Work in Progress” / “Cost of the Project” to the extent of addition of interest income on Fixed Deposits of Rs. 23,55,68,319/-upheld by the Ld. CIT(A) under the head ‘Income From Other Sources’ which is reduced by the assessee from “Capital Work in Progress” in its Balance Sheet. ADDITIONAL GROUND OF APPEAL On facts and circumstances of the case, the addition of interest income of Rs. 23,55,68,319/- earned on Fixed Deposit ought to have not been made as the assessee is a State by itself or a surrogate of the State or an agent, performing the functions of the State and/or on behalf of the State of Maharashtra within the meaning of Article 12 r.w. clause (1) of Article 289 of the Constitution of India and that the said interest income is not derived from any trade or business carried on by the assessee.

3. The assessee has raised the above additional ground of appeal under Rule 11 of the ITAT Rules whereby the taxability of the interest income of Rs 23.55 cr. has been contested. This ground raised by the assessee is against the re-characterization of interest income of Rs. 23,55,68,319/- on Fixed Deposits by the Assessing Officer to tax it as P a g e | 4 ITA No. 37, 87/Mum/2024 A.Y. 2016-17 Maharashtra Airport Development Company Limited, Mumbai ‘Income from other sources’ as against ‘Business income’ claimed by the assessee and reduced it from the cost of the project.

4. In this regard, it has been pointed out by the ld.AR that in recent orders for AY 2010-11, 2012-13, 2014-15 & 2015-16 in its own case on the same issue as above, the Hon’ble ITAT, Mumbai held that the appellant is a State by itself or a surrogate of the State or an agent, performing the functions of the State and/or on behalf of the State of Maharashtra within the meaning of Article 12 of the Constitution of India read with clause (1) of Article 289 of the Constitution of India. Besides, in the recent order for A.Y. 2007-08 in its own case from the hon’ble ITAT wherein it is affirmed that the assessee is a State within the meaning of Article 289 of the Constitution of India, being an instrumentality/agent of the State and consequently, the interest earned on the Fixed Deposits, being not in the nature of business income, has been held to be exempt.

4.1 Therefore, it is claimed that the interest income of Rs. 23,55,68,319/- earned on Fixed Deposits, not being derived from any trade or business carried on by the assessee, ought to have not been taxed and added under the head ‘income from other sources’. However, P a g e | 5 87/Mum/2024 A.Y. 2016-17 Maharashtra Airport Development Company Limited, Mumbai as no specific ground in this regard had been taken by the assessee, it accordingly filed the additional ground of appeal which is a legal. Further, all facts pertaining to the said additional ground are on record. Accordingly, no investigation would be required in respect of the additional ground of appeal. The assessee therefore prayed that additional ground of appeal may be admitted and decided as per law. The appellant in this regard relies on the decisions of the hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. (1998) 229 ITR 383 (SC) and Jute Corporation of India v. CIT (1991) 187 ITR 688 (SC) wherein it has been held that legal ground can be taken up at any point of time.

4.2 On due consideration of above stated facts we are inclined to admit the above additional ground which to our mind is a pure legal ground requiring no need to go beyond the facts on record. Since, the ground is intrinsically linked to the very taxability of interest income on FDRs, we consider it appropriate to adjudicate the same at the outset.

5. Facts in brief are that the assessee which is Maharashtra Government undertaking has been consistently disclosing interest income on certain FDRs kept with banks. The said interest is shown as part of capital work in progress and not offered for tax while the P a g e | 6 87/Mum/2024 A.Y. 2016-17 Maharashtra Airport Development Company Limited, Mumbai Revenue has been taxing the same as Income from other sources. In the AY 2008-09, the coordinate bench directed the department to examine the cash flow so as to ascertain where the said deposits were made out of surplus amount available with the assessee or not.It submitted that during the year, Interest on fixed deposits with various Banks was Rs.23,55,68,319/-.It had earned interest on Fixed Deposits with Banks and these fixed deposits were not placed out of surplus funds. As impugned interest on Fixed Deposits was inextricably linked to the main business activity of the Company, the same was treated as Business Income and was reduced from cost of the project by it as per Accounting Standards issued by the Institute of Chartered Accountants of India. Accordingly, the interest was in the nature of business receipt and not Income from Other Sources. Reliance was placed on various case laws. Further, attention was drawn to the observation recorded by Hon’ble ITAT, G Bench, Mumbai in the assessee’s own case at Para 6 of the Appellate Order for A.Y. 2008-09 wherein the ITAT directed the AO to re-adjudicate the issue to determine whether the Fixed Deposits are placed out of surplus funds or out of loans and borrowings to determine whether Interest earned thereon is in the nature of Income from Business or Income from Other Sources. In the year under P a g e | 7 ITA No. 37, 87/Mum/2024 A.Y. 2016-17 Maharashtra Airport Development Company Limited, Mumbai consideration, the AO made the addition on the same lines as in previous assessment years and the ld.CIT(A) upheld the addition.

5.1 The ld.AR has claimed that the issue is squarely covered in favour of the assessee. Attention is drawn to the order in assessee’s own case, the coordinate bench in its order dated 27.09.2024 in and 5202/Mum/2018 AY 2007-08 has dealt with similar additional ground and the question of taxability of interest income on FDRs etc. It was concluded that in view of the provisions of Article 289(1) of the Constitution, the impugned sum was not liable to income tax at all. Relevant parts of the order are extracted as below for the sake of brevity and clarity, “In view of the above, being a set aside matter, scope before us in the present appeals is limited to the direction so given, whereby we have to ascertain whether the said direction has been complied or not. However, at this stage before us, for the first time, assessee has raised a legal issue vide additional ground no.4, under Rule 11 of the ITAT Rules. While raising this additional ground, assessee has submitted that it has received orders for various years in its own case, passed by the Co-ordinate Bench wherein it is affirmed that assessee is a State by itself or a surrogate of the State or an agent, performing the functions of the State and/or on behalf of the State of Maharashtra within the meaning of Article 12 of the Constitution of India read with clause(1) of Article 289. Therefore, the assessee contends that the interest income earned by it on fixed deposits which has been added under the head "income from other sources" and not derived from any trade or business carried out by the assessee, cannot be added in the hands of the assessee. It is contended by the assessee that it is a legal ground which goes to the root of the matter and no fresh investigation is required in respect of the same. Assessee relies on the decision of the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. (1998) 229 ITR 383(SC) and Jute Corporation of India (1991) 187 ITR 688(SC), wherein it is held that legal grounds can be raised at any stage of the proceedings. Before we take up the matter for admissibility of this additional ground, brief history and facts of the case are noted as under:

P a g e | 8 87/Mum/2024 A.Y. 2016-17 Maharashtra Airport Development Company Limited, Mumbai 4.1. Assessee is a company registered under the Companies Act, 1956 and carries on the activity of development of "Multi-modal International Hub Airport at Nagpur" as a Special Planning Authority appointed under section 40(1)(b) of the Maharashtra Regional and Town Planning Act, 1966. It also carries on the activity of maintenance and development of various airports in the State of Maharashtra situated at Shirdi, Solapur, Amaravati, Pune, Karad, Phaltan, Dhule and Chandrapur. Assessee is also appointed as SEZ Developer in accordance with provisions of SEZ Act, 2005. 4.2. Assessee filed its return of income on 20.10.2007 reporting total income at Rs. Nil. During the course of scrutiny assessment u/s 143 Maharashtra Airport Development Company Ltd., AY 2007-08 (2), ld. Assessing Officer rejected the assessee's claim of commencement of business and accordingly disallowed all the expenditure and taxed receipts amounting to Rs. 13,56,67,377/- under the head "Income from other sources". Aggrieved, assessee went in appeal before the ld. CIT(A). 4.3. Ld. CIT(A) partly allowed the appeal of the assessee and directed the ld. Assessing Officer to ascertain those expenses which are directly related to earning of this income from other sources and the same should be allowed as expense for earning such income u/s 57 of Act. Ld. Assessing Officer, passed an order on 03.02.2012, giving effect to directions of ld. CIT(A), in respect of allowing expenditure u/s 57 of the Act, related to earning of income from other sources, but did not allow the aforesaid expenses. Aggrieved, assessee once again went in appeal before the ld. CIT(A) who vide order dated 21.12.2012, allowed only 10% of expenditure which is debited to Profit and Loss account as expenditure u/s 57 against income from other sources. Aggrieved, assessee went in appeal before the Tribunal. Co-ordinate Bench of ITAT heard the case on 16.12.2015 and the matter was set aside to the file of ld. Assessing Officer for deciding afresh the quantum of interest expenses to be allowed against interest income. However, while giving effect to the directions of ITAT, ld. Assessing officer denied assessee's claim of deduction in respect of interest on borrowings to the tune of Rs. 8,87,83,570/- against interest income on fixed deposits. Aggrieved, assessee is in appeal before the Tribunal.

P a g e | 9 87/Mum/2024 A.Y. 2016-17 Maharashtra Airport Development Company Limited, Mumbai 5.1. In the course of hearing, reliance was placed on the decision of Co- ordinate Bench of ITAT, Mumbai in assessee's own case in ITA No.3682/Mum/2017 for AY 2012-13, dated 15.03.2024 which in turn placed reliance on another decision in assessee's own case in ITA No.3072/Mum/2014 for AY 2010-11, dated 19.06.2019, wherein assessee has been held as an agent of the State. Assessee further placed reliance on the decision of Co-ordinate Bench in the case of City and Industrial Development Corporation of Maharashtra Ltd. vs. PCIT (2012) 25 taxmann.com 333 (Mum), wherein similar issue was considered. Reliance was also placed on the decision of PCIT vs. Maharashtra Labour Welfare Board in ITA No.137/Mum/2023, dated 25.09.2023 which also held that the assessee therein is a State within the meaning of Article 289(1) of the Constitution of India being an instrumentality of State. 5.2. Considering the findings in the above judicial precedents, in our considered opinion a plea of the assessee goes to the root of the jurisdiction of the ld. Assessing Officer to levy tax on the income of the assessee. In the year under consideration, this issue has not been taken before the authorities below and is raised for the first time before us as a pure point of law which is relevant to determine the tax liability of the assessee. 5.3. In the present case, only a fresh appraisal of the facts in the context of the legal issue raised by the assessee is required to be undertaken and no new facts are to be investigated. The bonafide of the additional ground so raised by the assessee are not contested and therefore, in the given set of facts and circumstances, the additional ground so raised is admitted for adjudication. While doing so, the ratio of the judgment of Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. (supra) fortifies the admission of the said ground for adjudication. Since this additional ground goes to the root of the matter, we are inclined to take it up first before dealing with all other grounds taken by the assessee as well as by the Revenue, in their respective appeals.

P a g e | 10 87/Mum/2024 A.Y. 2016-17 Maharashtra Airport Development Company Limited, Mumbai 6.1. From the above, we note that Article 289 exempts state income or property from taxation. On plain reading of above article, it is clear that Union can (i) itself impose or authorize to impose (ii) any tax to such extent, as parliament may by law provide (iii) in respect of a trade or business of any kind carried on or on behalf of Government of a state. Further, Article 289 (2), which is the exception to 289(1), it is important to note that parliament by law provide to tax the property or income in relation to only trade or business of any kind carried on by, or on behalf of, the Government of a State, or any operations connected therewith, or any property used or occupied for the purposes of such trade or business, or any income accruing or arising in connection therewith.

9. On the above stated factual status/setup of the assessee, we note that identical additional ground was raised by the assessee before the Co-ordinate Bench of ITAT in its appeal for Assessment Year 2012-13 and 2015-16 in ITA No. 3682/Mum/2017 and ITA No.522/Mum/2019, respectively, which was admitted and adjudicated upon to hold that assessee is an arm of the State, thus an instrumentality of the State. The relevant observations and findings of the Co-ordinate Bench in this respect are reproduced below for ready reference.

P a g e | 12 87/Mum/2024 A.Y. 2016-17 Maharashtra Airport Development Company Limited, Mumbai 22. In order to decide the issue in controversy we would decide if the assessee company is a state while executing the work of development of airports, repair and maintenance of airports as an arm of the state, 23. Undisputedly the assessee company was incorporated as a company under the Companies Act, 1956 by the Government of Maharashtra as a special purpose company to develop multi model international hub airport at Nagpur and aviation infrastructure in the State of Maharashtra in order to provide regional air connectivity and operationalising certain government schemes. It is also not in dispute that the assessee company was formed with equity participation from various government companies namely CIDCO, MIDC, NIT, MSRDC, SICOM & NMC which are owned and controlled by Government of Maharashtra; that the entire management and functional control of the assessee company is that of Chief Minister of Government of Maharashtra and all other board persons are senior officers of the State Government of Maharashtra; that grant-in-aid was received by the assessee company from Government of Maharashtra in order to carry out statutory functions and its activities are for the development of the state in general and for the benefit and welfare of the general public in particular; that it is also not in dispute that the assessee company is appointed by the State Government as a special planning authority under section 40(IB) of the Maharashtra Regional Town Planning (MRTP) Act, 1966; that it is also not in dispute that the assessee company being a special planning authority is required to carry out the work of development and disposing of land in the notified area as an agent of the state.

P a g e | 13 87/Mum/2024 A.Y. 2016-17 Maharashtra Airport Development Company Limited, Mumbai (v) that the assessee company is required to submit the timely reports/returns etc. to the state government from time to time as required under section 155 of the MRTP Act. vi) that under section 160 of the MRTP Act a state government can dissolve the special planning authorities and upon dissolution its properties, the liabilities, undischarged functions shall get transferred to the state government. vii) that as per sub-section 3A of section 113 of MRTP Act any corporation/company or subsidiary company which is into the work of developing and disposing of land in the area of a new town is an agent of the state government. Sub section 3A of section 113 of the Act reads as under: "(3A) Having regard to the complexity and magnitude of the work involved in developing any area as a site for the new town, the time required for setting up new machinery for undertaking and completing such work of development, and the comparative speed with which such work can be undertaken and completed in the public interest, if the work is done through the agency. of a corporation including a company owned or controlled by the State or a subsidiary company thereof, set up with the object of developing an area as a new town, the State Government may, notwithstanding anything contained in sub-section (2) require the work of developing and disposing of land in the area of a new town to be done by any such-corporation, company or subsidiary company aforesaid as an agent of the State Government, and thereupon, such corporation or company shall, in relation to such area, be declared by the State Government by notification in the Official Gazette, to be the New Town Development Authority for that area." viii) that the co-ordinate Bench of the Tribunal in case of City and Industrial Development Corporation of Maharashtra Ltd. vs. ACIT (2012) 25 taxmann.com 333 (Mum.) while deciding the identical issue in case of City and Industrial Development Corporation (CIDCO) which is also a subsidiary company under the control and supervision of State Government into business of construction of residential and commercial structures as well as development of infrastructure in towns and any development project completed by the CIDCO was held to be an agent of the state government. And as such its income cannot be assessed as business income in the hands of the CIDCO. ix) that like CIDCO the assessee company is also wholly owned company of State of Maharashtra which is into land acquisition, development of airports, repair and maintenance of airports and as such receiving of grant-in-aid from Government of Maharashtra by the assessee company being an agent of the state is not assessable to tax. x) that Hon'ble Bombay High Court in Writ Petition No.1211 of 2009 (supra) vide its order dated 07.11.2009 held that "acquisition of land on behalf of the P a g e | 14 ITA No. 37, 87/Mum/2024 A.Y. 2016-17 Maharashtra Airport Development Company Limited, Mumbai state government at the cost of state government by CIDCO appointed as new town development authority under sub section 3A of section 113 is doing the work of developing and disposing of the land in the area as an agent of the state government. So the appointment of CIDCO being under section 3A of section 113 of the MRTP Act the CIDCO acts as an agent of the state government". xi) that when we apply the ratio of the decision rendered by Hon'ble Bombay High Court in case of Percival Joseph Pareira (supra) to the case at hand the assessee company is also appointed as a town planning authority under sub section 3A of section 113 of MRTP Act for acquisition of land for development of airports, repair and maintenance of airports and for rehabilitation of the project affected persons (POP), for infrastructure development of airports in the notified area as an agent of the state. The assessee company carries out all the activities for and on behalf of the state government and after development and completion of the project the entire property vests in the state government. The entire control over the assessee company is of state government being exercised through the officer of the state government. In these circumstances the assessee company is an agent of the state not assessable to tax. As such grant-in-aid received by the assessee company from the Government of Maharashtra for land acquisition, development of airports, repair and maintenance of airports etc. is not a capital receipt as has been held by the Ld. CIT(A) rather the assessee company has performed these functions as an agent of the state and as such not assessable to income tax xii) that the assessee company has been formulated with a specific purpose i.e. to acquire the land for development of airports, repair and maintenance of airports etc, for which it receives grant-in-aid from the state of Maharashtra which is not taxable under Income Tax Act. xiii) that it is however brought on record and candidly admitted by the Ld. A.R. for the assessee that other income derived by the assessee company from its project is not claimed as exempt. xiv) that the contention of the Ld. D.R. for the Revenue that when the assessee company itself is paying taxes on its business income the grant-in-aid received by the assessee on which profit is to be earned is also business income is not sustainable in view of what has been discussed in the preceding paras. xv) that even Article 289(1) of the Constitution of India itself says about the income from trade etc. but the grant-in- aid received by the assessee company from State of Maharashtra for the purpose of land acquisition, development of airports, repair and maintenance of airports is not a trade activity, hence not taxable to the income tax. 9.1. Thus, from the perusal of the above, we note that it has been held that the assessee is an agent of the State of Maharashtra, amenable to immunity as per Article 289(1) of the Constitution of India.

P a g e | 15 87/Mum/2024 A.Y. 2016-17 Maharashtra Airport Development Company Limited, Mumbai 9.2. We also take note of the decision of Co-ordinate Bench of ITAT in the case of Maharashtra Labour Welfare Board vs. DCIT in ITA No.137/Mum/2023 dated 25.09.2023, wherein the assessee was held as a State, within the meaning of Article 289 of the Constitution of India, being an instrumentality or an agency of the State and thereby the interest earned on the FDRs was held to be exempt. While holding so, the Co- ordinate Bench relied on the decision of the Hon'ble Supreme Court in the case of Som Prakash Rekhi vs. Union of India (supra). Support was also drawn from the decision of the Hon'ble High Court of Karnataka in the case of CIT vs. Karnataka Urban Infrastructure Development and Finance Corporation (2006) 155 taxmann.com 228 (Kar), wherein the Hon'ble High Court held that assessee acted as a nodal agency of the Government for implementing the scheme of the Government and therefore the interest income earned on the bank deposits cannot be treated as the income of the assessee, as the interest is earned out of the money given by the Government for the purpose of implementing the scheme.

6. In ground no.3 it is stated that a) The Ld. CIT(A), in view of the facts and circumstances of the case, erred in upholding the disallowance u/s. 14A r.w.r. 8D amounting to Rs. 12,01,617/- made in a mechanical manner without appreciating the explanations provided by the appellant and without assigning any reason of dissatisfaction as envisaged u/s 14A(2) of the Act. b) The Ld. CIT(A), in view of the facts and circumstances of the case, erred in upholding the disallowance u/s. 14A r.w.r. 8D amounting to Rs.12,01,617/- without appreciating that it is well settled that once there is no exempt income earned during the year, no such disallowance could have been made. c) On facts and circumstances of the case, the Ld. Assessing Officer ought to have not added the amount of disallowance Rs. 12,01,617/- u/s. 14A of the Act arrived as per Rule 8D to the Book Profits computed u/s 115JB of the Act.

7. As per the balance sheet the assessee had made several investments but had not disallowed any such expenses suo-motu interms of section 14A of the Act. The AO was satisfied that disallowance u/s. 14A r.w.r. 8D was to be made in respect of investments which were capable of generating exempt income. In view of the above the disallowance u/s.14A r.w.r. 8D was computed at Rs.12,01,617/-was P a g e | 17 87/Mum/2024 A.Y. 2016-17 Maharashtra Airport Development Company Limited, Mumbai added to the income which was also upheld by the ld.CIT(A).He also made adjustments under MAT.

7.1 It appears that facts involved and the disallowance made are identical in previous assessment years and have already been adjudicated in favour of the assessee on the ground that the AO has mechanically applied the provisions contained under rule 8D without noticing the fact that there was no exempt income and own funds of the assessee were far more than the investment made by it during the years under consideration. It is admitted fact on record that during the year under consideration no exempt income has been earned by the assessee. Identical issue has already been decided in favour of the assessee in its own case for A.Y. 2010-11 and 2011-12. By now, it is a settled principle of law that when there is no exempt income earned by the assessee during the year under consideration no disallowance can be made under section 14A read with rule 8D. Reliance in this case is placed on decisions rendered by Hon'ble Delhi High Court in case of PCIT vs. Era Infrastructure (India) Ltd. (2022) 141 taxmann.com 289 (Delhi). Similarly, when there is no disallowance under the normal provisions no disallowance under section 14A readwith rule 8D under MAT provisions is sustainable as has been held by Hon'ble Bombay High P a g e | 18 87/Mum/2024 A.Y. 2016-17 Maharashtra Airport Development Company Limited, Mumbai Court in case of CIT vs. M/s. Bengal Finance & Investments Pvt. Ltd. in Income Tax Appeal No.337 of 2013 order dated 10th February 2015.Accordingly,the AO is directed to delete the disallowance made by invoking the provisions of Rule 8d r.w. Section 14A of the Act as also the consequential addition u/s 115JB of the Act. The ground no.3(a)/(b) and (c) are therefore allowed.

8. In ground no.4,it is stated that a) On facts and circumstances of the case, the Ld. CIT(A) ought to appreciate that the grant received during the year from the State Government is a capital receipt, not liable to tax, as the assessee is a State by itself or a surrogate of the State or an agent, performing the functions of the State and/or on behalf of the State of Maharashtra. b) The Ld. CIT (A) erred in facts and law in upholding the addition of Grant-in-aid received from the Government of Maharashtra towards the various ongoing/pending projects amounting to Rs. 184,66,84,704/- (comprising of Grant towards MIHAN Rehabilitation of Rs. 140,00,00,000/- + Grant towards Shirdi Airport of Rs. 42,14,00,000/- + Grant towards Other Airports (Repairs & Maintenance) of Rs. 2,52,84,704/-) by invoking provisions of Section 2(24)(xviii) of the Act without appreciating the explanations and documents placed on record by the appellant. c) The Ld. CIT(A) failed to appreciate that the Grant in Aid given by the State Government is for specific purpose and same has been spent by the appellant for that specific purpose and that the appellant is not the beneficiary of such grants.

P a g e | 19 87/Mum/2024 A.Y. 2016-17 Maharashtra Airport Development Company Limited, Mumbai d) Without prejudice to ground no. 7(a), (b) and (c), the subsidy received by the assessee can be treated as income only in the year in which the expenses are incurred or utilisation thereof is made based on the principle of matching concept and only the resultant net income be taxed. e) The Ld. Assessing Officer in facts and law ought not to have added the Grant-in-aid received from the Government of Maharashtra towards the various ongoing/pending projects amounting to Rs. 184,66,84,704/- to the book profit u/s. 115JB of the Act.