NANDURBAR NAGAR PARISHAD,NANDURBAR vs. ITO WARD 1, DHULE, DHULE

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.182/PUN/2026 िनधा�रण वष� / Assessment Year : 2022-23 Nandurbar Nagar Parishad, Vs. ITO, Ward-1, Dhule. Opp. Bhatwal Talkies, Nandurbar S.O., Nandurbar, Nandurbar- 425412. PAN : AAALN0363R Appellant Respondent Assessee by : Shri Piyush Bafna & Shri Aakash Parakh Revenue by : Shri Amit Bobde Date of hearing : 21.04.2026 Date of pronouncement : 15.06.2026 आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 26.11.2025 passed by Ld. CIT(A)/NFAC for the assessment year 2022-23. 2. Facts of the case, in brief, are that the assessee is a local authority as mentioned in Maharashtra Municipal Councils, Nagar Panchayats and Industrial Township Act, 1965 and has furnished its return of income u/s 139(4) of the IT Act by declaring income of

2 ITA No.182/PUN/2026 Rs.Nil after claiming deduction of Rs.56,32,62,698/- u/s 57 of the IT Act. The case was selected for scrutiny and notices u/s 143(2), 142(1) and show cause notices respectively were issued to the assessee. Not being satisfied with the reply of the assessee, the Assessing Officer vide order dated 21.03.2024 completed the assessment proceedings u/s 143(3) r.w.s. 144B of the IT Act by determining the income of Rs.56,32,62,698/- as against income of Rs.Nil returned by the assessee. The above assessed income includes addition of Rs.56,32,62,698/- on account of disallowance of expenses claimed u/s 57 of the IT Act. 3. Being aggrieved with the above assessment order, the assessee preferred an appeal before Ld. CIT(A)/NFAC. After considering the reply and submissions of the assessee, Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee. 4. It is the above order against which the assessee is in appeal before this Tribunal. 5. We have heard Ld. Counsels from both the sides and perused the material available on record including the paper book furnished by the assessee. In this regard, we find that in sum and substance of all the grounds relates to challenging the addition of

3 ITA No.182/PUN/2026 Rs.56,32,62,698/- made by the Assessing Officer and confirmed by Ld. CIT(A)/NFAC whereby the exemption claimed by the assessee u/s 10(20) of the IT Act being a local authority has been denied by both the revenue authorities. 6. In this regard, we find that admittedly the assessee is a local authority and for assessment years 2007-08 & 2018-19 and for assessment year 2024-25 the exemption u/s 10(20) of the IT Act was allowed in 143(3) regular assessment proceedings. In support of this fact, copy of all the above assessment orders are produced before this Bench in paper book page nos.194 to 224. However, we find that in assessment year 2022-23 and 2023-24, the exemption u/s 10(20) was not allowed by the Assessing Officer since in the return of income, the assessee wrongly claimed deduction u/s 57 of the IT Act instead of claiming the exemption u/s 10(20) of the IT Act and the appeal against both the above assessment orders for A.Y. 2022-23 & 2023-24 were filed before Ld. CIT(A)/NFAC and the appeal for assessment year 2022-23 was decided by Ld. CIT(A)/NFAC and the appeal for assessment year 2023-24 is still pending before Ld. CIT(A)/NFAC as informed by the assessee. We further find that the assessee explained before the Assessing

4 ITA No.182/PUN/2026 Officer that due to mistake while filing the return of income instead of claiming exemption u/s 10(20) of the IT Act, deduction u/s 57 of the IT Act was claimed, however, a revised computation of income was furnished before the Assessing Officer wherein exemption u/s 10(20) of the IT Act was mentioned. In this regard, we find that both the lower authorities were of the opinion that any claim can be made through revised return only and therefore, the benefit of exemption u/s 10(20) of the IT Act was not allowed to the assessee. 7. In this regard, we find that admittedly the assessee is a local authority coming under the purview of section 10(20) of the IT Act and for earlier and subsequent assessment years, the Assessing Officer in 143(3) regular assessment proceedings for assessment years 2007-08, 2018-19 and also for assessment year 2024-25 accepted that the assessee is entitled for exemption u/s 10(20) of the IT Act. Accordingly, we find force in the above arguments of Ld. Counsel of the assessee that this is not the first time when the assessee is claiming exemption u/s 10(20) of the IT Act and since last many years the assessee is engaged in the same activity and remains to be a local authority as designated by Government of Maharashtra and the same claim u/s 10(20) was accepted in prior as

5 ITA No.182/PUN/2026 well as in subsequent period by the Department, therefore, merely on the basis of an inadvertent error while filing the return of income cannot be a basis for denial of exemption u/s 10(20) of the IT Act. We also cannot accept the contention of Ld. CIT(A)/NFAC that no supporting documents were filed by the assessee, since it is evident that in support of its contentions the assessee vide its reply dated 12-02-2024 furnished before the Assessing Officer submitted that the income is from municipality taxes, recovery under Special Act i.e. Ambulance Charges, Market Option Transfer Fee, Market Liason Fee, Property Transfer Fee, Building Rent Development Tax etc. and duly audited financial statements were also furnished wherein complete detail of income and expenditure were available. Apart from this, Budget presented by Nandurbar Nagar Parishad and its approval/sanction dated 16.10.2021 by the Collector, Nandurbar was also produced before the Assessing Officer. 8. Considering the totality of the facts of the case and in view of our above discussions, we are of the considered opinion that the assessee local authority is entitled for exemption u/s 10(20) of the IT Act since in prior and subsequent period, the Revenue itself has allowed the exemption u/s 10(20) of the IT Act to the assessee.

6 ITA No.182/PUN/2026 Accordingly, we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC and direct the Assessing Officer to delete the impugned addition of Rs.56,32,62,698/-. Thus, the grounds of appeal raised by the assessee are allowed. 9. In the result, the appeal filed by the assessee is allowed. Order pronounced on this 15th day of June, 2026. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 15th June, 2026. Sujeet/DOC Sujeet Kumar Digitally signed by Sujeet Kumar Sharma Sharma Date: 2026.06.15 16:43:26 आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : +05'30' अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr.CIT concerned. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “B” ब�च, 4. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 5. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.