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Income Tax Appellate Tribunal, DELHI “F” BENCH: NEW DELHI
Before: SHRI KUL BHARAT & SHRI PRADIP KUMAR KEDIA
ORDER PER KUL BHARAT, JM : Both appeals filed by the assessee, one against the order of Ld. CIT(A)- 40, Delhi u/s 154 of the Income Tax Act, 1961 (“the Act”) dated 22.04.2019 and another against the order of Ld. CIT(A), National Faceless Appeal Centre [“NFAC”], u/s 143(1) of the Act, dated 29.03.2021, both for the assessment year 2014-15. Since identical grounds have been raised, both appeals were taken up together for hearing and are being disposed off by way of consolidated order for the sake of brevity.
Year : 2014-15] 2. First, we take up assessee’s appeal in pertaining to Assessment Year 2014-15. The assessee has raised following grounds of appeal:-
I. DENIAL OF DEDUCTION UNDER CHAPTER VI-A/SECTION 80-G/ 80GGA READ WITH SECTION 35AC OF THE ACT RS. 24,72,966/-: 1.1 “On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) [CIT(A)] erred in confirming the denial of Deduction claimed by the Appellant for a sum of Rs. 24,72,966/- under Chapter VI-A / Section 80GGA read with Section 35AC of the Act in respect of donation paid to eligible trusts. 1.2. The learned CIT (A) erred in dismissing the appeal without dealing with the submissions made by the appellant. The Appellant submits that the order passed by the CIT (A) is based on non-application of mind and therefore should be struck down. 1.3. The CIT (A) failed to appreciate that there is no mistake / error in the Return of Income filed by the appellant and the adjustment made under Section 143(1) of the Act itself is illegal, invalid and bad in law. 1.4. The learned Assessing Officer and the CIT (A) failed to appreciate that all along in earlier years deduction has been claimed by the appellant trust under Chapter VI-A / Section 80-G/80-GGA read with Section 35A of the Act and such deduction has been allowed consistently and there is no change in facts of the case and on that basis the CIT (A) ought to have considered the same and allowed the said deduction under Section 80-G / 80-GGA of the Act read with 35AC of the Act.
1.5. The learned CIT (A) failed to appreciate that the failure to apply statutory provisions of the Income tax Act, 1961 and assessment of income framed in violation of such provisions is a mistake apparent from the records. It is submitted that the Appellate Order amounts to failure to correct / rectify such mistake and hence the same is unsustainable in law. In view of the above, the appellant prays that the learned Assessing Officer be directed to grant deduction under Chapter VI-A/ Section 80-G / Section 80-GGA of the Act and reduce the total income of the appellant accordingly.”
The only effective ground raised by the assessee in this appeal is against the declining of deduction u/s 80-GGA of the Act amounting to Rs.24,72,966/-.
FACTS OF THE CASE 4. Facts giving rise to the present appeal are that the Central Processing Centre, Bangalore (“CPC”) vide intimation u/s 143(1) of the Act did not allow the deduction to the assessee claimed under Chapter VI A of the Act. Therefore, the assessee filed a rectification letter before the CPC. The CPC did not make any rectification and sustained the adjustment made by the AO.
Aggrieved against this, the assessee preferred appeal before Ld.CIT(A), who after considering the submissions, dismissed the appeal.
Aggrieved against the order of Ld.CIT(A), the assessee is in appeal before this Tribunal.
Ld. Counsel for the assessee submitted that undisputed facts in the present case are that the assessee had not claimed any exemption u/s 11 of the Act and the assessee has been assessed as Association of Persons (“AOP”). 3 | P a g e Therefore, the deduction declined by the authorities below on the basis that the entity claimed exemption u/s 11 of the Act, such income is not includible in total income is contrary to the records.
On the contrary, Ld. Sr. DR opposed these submissions and supported the order of authorities below.
In the rejoinder, Ld. Counsel for the assessee submitted that under the identical facts and against the identical order, the Co-ordinate Bench of the Tribunal have decided the issue in favour of the assessee in the case of Sunflower Trust vs ITO(E) in for AY 2014-15 vide order dated 07.07.2022 and in the case of Mumbai Bench of the Tribunal in the case of Bhoopati Shikshan Pratishthan in ITA No.4606/Mum/2019 for AY 2014-15 vide order dated 07.02.2022. Ld. Counsel for the assessee submitted that the facts are identical therefore, she prayed that the authorities below to be directed to grant benefit of deduction under Chapter VI-A of the Act.
We have heard the contentions of Ld. Authorized representatives of the parties and perused the material available on record and gone through the orders of the authorities below. We find that Ld. CIT(A) has decided the issue by observing as under:-
4.5. “From the provisions as reproduced above it is apparent that income or loss is computed under section 143(l)(a) after making the adjustments as per sub-clauses (i) and (ii) and the adjustments have are based entirely on the information given in the return of income. Based on the facts of the case and in view of the information as given in the return, deduction under Chapter VI-A was not allowed in case of an entity which is claiming exemption under section 11 and in whose case no portion of the income is 4 | P a g e not exempt in view of the provisions of section 13iThis is so since deduction under Chapter VI-A is to be allowed while computing the total income of air assessee and hr the case of entities claiming exemption under section 11, the income is not included in total income. 4.6 Section 154 provides for rectification of mistake which is apparent from record. The Hon'ble Supreme Court in T.S. Balaram, ITO vs. Volkart Brothers & others [(SC) 82 ITR 50] have held that mistake must be obvious and patent and not something which can be established by a long-drawn process of reasoning on points on which there may be two opinions. In the case of Hotz Hotels Pvt Ltd. vs/CIT (2001) 118 -Taxman 94 (Delhi) - wherein the Hon'ble Court have held that:- 5. “A bare look at section 154 makes it clear that a mistake apparent from the record is rectifiable. In order to attract the application of section 154, the mistake must exist and the same must be apparent from the record. The power to rectify the mistake, however, does not cover cases where a revision or review of the order is intended. 'Mistake' means to take or understand wrongly or inaccurately, to make an error in interpreting, it is an error, a fault, a misunderstanding, a misconception. 'Apparent' means visible, capable of being seen, obvious, plain. It means open to view, visible, evident, appears, appearing as real and true, conspicuous, manifest, obvious, seeming. A mistake which can be rectified under section 154 is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. In our view amendment of an order does not mean obliteration of the order originally passed and its substitution by a new order... ...What the revenue intends to do in the present case is precisely the substitution of the order which, according to its, is not permissible under the provisions of section 154 and, therefore, the Tribunal was not justified in holding that there was mistake apparent on the face of the record...
...In order to bring in application under section 154, the mistake must be 'apparent' from the record. Section 154 does not enable an order to be reversed by revision or by review, but permits only some error which is apparent on the face of the record to be corrected. Where an error is far from self-evident, it ceases to be an apparent error. It is, no doubt, true that a mistake capable of being rectified under section 154 is not confined to clerical or arithmetical mistakes. On the other hand, it does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof." 4.7 From the return of income, as noted above it is apparent that exemption was claimed under section 11 and no income was shown in the return of income in respect of which exemption was not available by virtue of section 13. In view of such facts there is prima facie no case of tire assessee for income being assessed as AOP when exemption has been claimed and no portion has been shown to be not exempt by virtue of section 13.”
In the case of Sunflower Trust vs ITO (E) (supra), similar order was passed by Ld. CIT(A) in paras 4.7 to 4.8 of the order. That order was challenged before the Tribunal and the Tribunal after considering the submissions, decided the issue by following the decision of the Co-ordinate Bench of the Tribunal as under:-
“The identical issue involved in the present Appeal has been dealt and decided against the Revenue by the Mumbai Bench of the Tribunal in the case of Bhoopati Shikshan Pratisthan, in vide order dated 07/02/2022, wherein it is held that, the assessee being a charitable trust registered u/s 12A of the Income Tax Act is entitled to claim deduction u/s 80G/80GGA of the Act. The relevant portion of the same is as under:-
7. We find that in the preceding AY i.e. AY 2013-14 and in the succeeding AY i.e. AY 2015-16 the assessee's claim of deduction under section 80G/80GGA has been accepted by the Department. Ostensibly, the assessee has been making similar donations in the preceding and the succeeding AYs towards Chief Minister's Relief Fund, and donation to some other eligible institutions and the consequent benefit of deduction under section 80G has been allowed to the assessee. In AY 2013-14 in scrutiny assessment proceedings, the assessee’s claim was allowed and in Assessment Year 2015-16, the assessee ‘s claim of deduction u/s 80GGA was accepted by the CPC as is evident from the intimation u/s 143(1) of the Act dated 02/08/2016. Thus, disallowance of assessee's claim of deduction under Chapter-VIA in the impugned AY was purely a computational error which could have been rectified under section 154 of the Act. The assessee had furnished relevant documents evidencing the donations made eligible for deduction under section 80G6A/80G of the Act. The same were not disputed by the Department, it is not a case where the assessee's donations were suspected or the institutions/funds to whom donations were made were under lense of suspicion, therefore, the observations made by CIT(A) for dismissing assessee's appeal are unsustainable. Consequently, the impugned order is set-aside and the appeal of assessee is allowed. The AO is directed to grant benefit of deduction claimed by the assessee under Chapter-VIA of the Act.
By respectfully following the order made in the case of Bhoopati Shikshan Pratisthan, (supra) we hold that, the assessee is entitled for deduction of Rs. 24,67,036/- claimed under VI-A/80GGA read with Section 35AC of the Act and further we direct the A.O to grant benefit of the deduction claimed by the assessee under Chapter VI-A of the Act in accordance with law.
14. In the result, the Appeal filed by the assessee is allowed.”
12. The Revenue has not brought to our notice any other contrary binding precedents on this issue. Therefore, respectfully following the decision of the Co-ordinate Bench of the Tribunal, more particularly in view of the fact that the assessee has not claimed any exemption and has been assessed as AOP and finding of Ld.CIT(A) being contrary to the records. The AO is hereby, directed to grant a deduction u/s 80-GGA of the Act read with section 35A/80-G of the Act claimed by the assessee under Chapter VI-A of the Act. Thus, Ground raised by the assessee is allowed.
In the result, the appeal of the assessee is allowed.
ITA Nos.866/Del/2021 [Assessment Year : 2014-15] Now, we take up assessee’s appeal in pertaining 15. to Assessment Year 2014-15. The assessee has raised following grounds of appeal:-
1. “The learned Commissioner of Income-tax (Appeals) [CIT (A)] has erred in not admitting the appeal of the Appellant on the alleged ground that there was no reasonable cause made out by the Appellant to condone the delay in filing of the Appeal.
The learned CIT (A) has erred in taking inconsistent stand by having observed that appeal is not maintainable on the grounds of delay erred in further proceeding and holding that the appeal filed against intimation under Section 143 (1) of Income-tax Act, 1961 (“the Act”) had merged with the order passed under Section 154 of the Act and appeal is therefore not maintainable. The earned CIT (A) has failed to appreciate that intimation passed under Section 143(1) of the Act is a distinct and a separate order and an appeal against such order is maintainable under Section 246A of the Act.
3. The learned CIT(A) erred in confirming the denial of Deduction claimed by the Appellant for a sum of Rs. 24,72,966/- under Chapter VI-A/Section 80GGA read with Section 35AC of the Act in respect of donation paid to eligible trusts.” 16. At the time of hearing, Ld. Counsel for the assessee submitted that under the instruction of the assessee, she does not wish to press this appeal and wishes to withdraw the same. Ld. Sr. DR has no objection.
In view of the submissions made at bar by the Ld. Counsel for the assessee and more particularly, Ld. Sr. DR has no objection, regarding withdrawal of appeal by the assessee. Appeal of the assessee is hereby dismissed as withdrawn.
In the final result, appeal of the assessee in 18. the AY 2014-15 is allowed and the appeal of the assessee in for AY 2014-15 is dismissed.
Order pronounced in the open Court on 13th July, 2022.