Assessee is  engaged in building infrastructure projects. It received grants from Government for carrying out its infrastructure projects. Out of total grants received, certain amount had remained unutilized and assessee had shown this as current liability in its balance sheet. Assessing Officer held that this unutilised amount of grant was to be treated as income of assessee reason being that, sanction letter giving grants to assessee did not specify kind of activities to be carried out by assessee for utilization of grants received by it, and accordingly, he inferred from same that grants were in nature of receipts in hands of assessee. Tribunal held that  since assessee is  mere nodal agency to implement certain schemes of State Government and unspent grant remained property of Government and had to be returned to Government as and when demanded, there is  no question of treating such grant as income of assessee. Assessee treated the interest as current liability in its books contending that interest partook character of grants itself and same was asset of State Government and not assessee.  However, Assessing Officer disagreeing with assessee added same to income of assessee. Tribunal held that Memorandum and Articles of Association of assessee showed that surplus grants received by assessee from State Government had to be deposited as per direction of State Government and company could not make any profits out of same. Interest earned on surplus funds is  not freely available to assessee so as to utilize it in manner it desired and make profits out of it. Therefore, interest earned on deposits made out of grant received by assessee from Government is  also to be treated as part of grants, and same could not be treated as income of assessee  (AY. 2010-11)