LINTAS EMPLOYEES EDUCATION TRUST,MUMBAI vs. CENTRALIZED PROCESSING CENTRE,INCOMETAX DEPARTMENT, BENGALURU

Lintas Employees Education Trust, Mumbai for A.Y. 2020-21, against the appellate order passed by the National Faceless Appeal Centre (NFAC), Delhi, dated 8th June, 2023, wherein the appeal filed by the assessee against the order dated 13th April, 2022, passed under Section 154 of the Income-tax Act, 1961 (the Act) by the Dy. Commissioner of Income Tax, Central Processing Centre, was statistically allowed.

Without prejudice, the learned CIT(A) failed to take into consideration that the Interest from Tax Free Bonds is exempt from tax u/s. 10(15) and therefore cannot be treated as taxable income under the head Profits and Gains of Business/Profession'.

The fact shows that assessee is an association of persons, formed for the purpose of benefit of the employees of Lintas Employees Education Trust group. It filed its return of income on 30th December, 2020, at the total income of ₹7,14,550/-. In the return of income, assessee claimed exempt dividend income of ₹19,68,793/- and interest from tax free bonds of ₹1,12,880/-. Intimation was passed under Section 143(1) of the Income-tax Act, 1961 (the Act) on 25th November, 2021, wherein the above exempt income was not considered as exempt income but treated as income from business and profession. Thus, the gross total income shown by the assessee of ₹7,14,550/- was considered at ₹27,96,230/-. In the intimation under Section 143(1) of the Act in annexure of business and profession at row no.5(c), the income credited to profit and loss account which is exempted, shown to be ₹20,81,673/-. Thus, in the return of income total exempt income (5a+5b+5c) was shown to be ₹20,81,673/-. The income computed under Section 143(1) of the Act has also shown the exact sum in row no.5(c), however, in intimation total exempt income should be the total of 5a+5b+5c was taken at ₹nil. Against this intimation, assessee preferred the application for rectification of total income however, the

We have heard the rival contentions and perused the orders of the lower authorities. The only issue involved in this appeal is that in the return of income assessee has claimed exempt income comprising of dividend income of ₹19,68,793/- and interest from tax free bonds of ₹1,12,880/- in the return of income, assessee has disclosed the same. While computing the total income also under Section 143(1) of the Act, the above income is considered as an exempt income, however, in annexure, business and profession as A(5)(c) the same amount was considered as exempt income by the learned Assessing Officer also however, row (d), which is the total of 5(a) to 5(c) it was not considered and taken as Nil. Therefore, it is apparent error in the intimation under Section 143(1) of the Act. If claim of the assessee of exempt income is found to be incorrect by CPC under Section 143(1)(a)(ii) of the Act, then prior to making such an adjustment an intimation should have been given to assessee. Admittedly, no such intimation is given. The rectification order passed under Section 154 of the Act also does not given any reason for rejection of the same but reiterates the intimation under Section 143(1) of the Act. The learned CIT (A) has categorically held that dividend income is not taxable for this year u/s 10 (35 ) of the Act. Further,

In the result, the appeal of the assessee is allowed.