COMMISSIONER OF INCOME TAX (EXEMPTIONS) vs. AHMEDABAD URBAN DEVELOPMENT AUTHORITY

Aggrieved by the order passed by the Income Tax Appellate Tribunal, Ahmedabad (“the ITAT” for short) on 25.03.2021 in ITA No.1083/Ahd/2018 for the A.Y. No.2012-13,the Revenue is before this Court raising the following question as substantial question of law for determination. “[A] Whether, on the facts and in the circumstances of the case and in law, the Appellate Tribunal has erred in allowing the claim of the assessee for carry forward of deficit, ignoring the fact that there is no express provisions in the Income Tax Act, 1961 allowing such claim, and without appreciating the fact that this would have the effect of granting double benefit to the assessee, first as accumulation of income u/s.11(1)(a) or corpus donation u/s.11(1)(d) in earlier/current year, or exempt income u/s.10(34), and then as application of income u/s.11(1)(a) in subsequent years which is legally not permissible, without going into the merits? [B]Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal is justified in allowing the claim of the assessee for carry forward of deficit holding that the proceedings u/s. 263 of the Act could not be sustained thereby quashing the order u/s.143(3) r.w.s. 263, without appreciating the facts that the order in ITA No.1422/Ahd/2017 was appealed before this Hon’ble Court in Tax Appeal No.300 of 2018 which was decided against the Revenue and the Revenue has filed SLP before the Supreme Court, which is pending? [C]Whether on the facts and circumstances of the case and in law, the Appellate Tribunal is justified in holding that the proceedings u/s. 263 of the Act could not be sustained without appreciating that against the decision of this Hon’ble Court in Tax Appeal No.214 of 2020, the department has preferred SLP before the Hon’ble Supreme Court, which is pending?”

The assessee trust filed the return of income for Assessment Year 2012-13 and declared the total income as ‘Nil’. The scrutiny assessment took place under section 143(3) of the Income Tax Act, 1961 (“the Act” for short) and the order of assessment came to be passed on 16.03.2015. The Assessing Officer assessed the total income of the respondent at Rs.1,98,48,79,000/- where the addition had been made to the tune of Rs.42,77,29,078/-, under section 11(1)(2) of the Act. While so doing the Assessing Officer had disallowed the Capital Expenditure (General) and the Capital Expenditure (Drainage). It also has disallowed the Capital Expenditure (EWS) and Capital Expenditure (Nirmal Bharat/Vambhay).

During the course of the revision proceedings under section 263 of the Act, the assessee was given an opportunity to be heard. The Assessing Officer, after availing the opportunity, had disallowed the claim of the assessee for setting off to brought forward losses and determined the income at Rs.2,41,26,08,078/-, in his order of assessment under section 143(3) of the Act read with section 263 of the Act.

The assessee carried the appeal before the CIT(Appeals), which allowed the appeal of the assessee vide order dated 26.02.2018, subject to the directions issued to the Assessing Officer, wherein the Assessing Officer has been directed to set off the deposit of earlier years with current year in the following manner:

The Revenue, being aggrieved by this order of the CIT(Appeals), preferred the appeal before the Income Tax Appellate Tribunal (“the Tribunal” for short). There was a challenge of the order under section 263 in ITA No.978/Ahd/2017 and the Tribunal had allowed the appeal of the assessee as quantum appeal against the assessment order dated 16.03.2015, which had been set aside and was sent to the Assessing Officer for re- Tribunal is being elaborated in the following manner:

The Tribunal has committed no error. It has rightly pointed out that the original assessment order, since has been set aside, the proceedings under section 263 of the Act cannot be sustained relying on the earlier orders of the Tribunal passed in ITA no.1422/Ahd/2017 and and ITA no.978/Ahd/2017. 10. These appeals have been held to have become infructuous. Rightly as noted above, the Tax Appeals arising from both these appeals being Tax Appeal No.300 of 2018 and Tax Appeal No.214 of 2020 have been decided by this Court, where the appeals of the Revenue are not being entertained and are dismissed. The substantial questions have been answered in favour of the assessee against which, the SLP is pending, where no stay has been granted, resultantly, this appeal meets the very fate without giving any separate detailed reasons.

Tax appeal stands dismissed. (MS.SONIA GOKANI, J. ) (NISHA M. THAKORE,J) SUDHIR