DEPUTY COMMISSIONER OF INCOME-TAX, (EXEMPTIONS) CIRCLE, PUNE vs. MAHARASHTRA ACADEMY OF ENGINEERING AND EDUCATIONAL RESEARCH, PUNE

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ITA 787/PUN/2019Status: DisposedITAT Pune28 December 2022AY 2013-148 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer's grounds regarding denial of exemption and treating the assessee as AOP were academic as consequential assessments showed income as NIL. The Tribunal upheld the CIT(A)'s deletion of the Section 40A(7)(b) disallowance, following its own previous decisions.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting the disallowance made by the Assessing Officer under Section 40A(7)(b) for provision for gratuity. The Assessing Officer had also denied exemption under Sections 11 & 12 and treated the assessee as an Association of Persons.

What were the issues?

Whether the disallowance of provision for gratuity under Section 40A(7)(b) was justified, and whether the assessee was eligible for exemption under Sections 11 and 12.

Which sections of the Income-tax Act were involved?

Section 40A(7),Section 11,Section 12,Section 12A(a),Section 10(23C)(vi),Section 13

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCHES “A” : PUNE

Before: SHRI SATBEER SINGH GODARA & SHRI G.D. PADMASHALI

For Appellant: Shri Nikhil S. Pathak
For Respondent: Shri Ramnath P. Murkunde, Shri Nikhil S. Pathak
Hearing: 28.11.2022Pronounced: 28.12.2022

ORDER PER SATBEER SINGH GODARA, J.M. :

These Revenue’s twin appeals for Assessment Years 2012- 13 and 2013-14 are directed against the Commissioner of Income Tax (Appeals), Pune-10, Pune’s both order dated 12.03.2019 in case no.PN/CIT(A)10/ACIT(HQ)(Exemp.)/69/15-16 and in case no. PN/CIT(A)10/DCIT Cir.(Exemp.)/25/16-17, assessment year-wise, respectively, in proceedings u/s. 143(3) of the Income Tax Act, 1961 (in short "the Act").

2. Heard both the parties. Case files perused.

3.

The Revenue’s former appeal ITA.No.786/PUN./2019 raises the following substantive grounds :

2 ITA.Nos.786 & 787/PUN./2019 Maharashtra Academy of Engineering and Educational Research, Pune. 1. The learned Assessing Officer has erred in determining the. net taxable income of the appellant at Rs. 4,56,79,340/- as against the returned income of Rs. NIL/-. The addition of Rs.4,56,79,340/- made by the learned Assessing Officer on account denial of exemption u/s. 11 & 12 of the Act is patently illegal and unsustainable in law and the same may please be deleted.

1.1. The Ld. AO has erred in treating the assessee as 'Association of Persons' (AOP) without appreciating that the trust was having a valid registration u/s. 12A(a) as well as 10(23C)(vi) of the Act.

2.

The Ld. AO failed to appreciate that the appellant was duly entitled to claim the benefit of exemption u/s. 11 & 12. 2.1. The learned Assessing Officer has failed to appreciate that– a. the registration of the appellant u/s. 12A(a) which was cancelled by the CIT(central), Pune is now restored by the Hon'ble ITAT, Pune and therefore registration of the appellant holds good. b. The fact that an appeal is filed before High Court by the department against the order of ITAT, is no reason to deny the exemption. c. There were no so called violations u/s. 13 of the Act for year under consideration.

3 ITA.Nos.786 & 787/PUN./2019 Maharashtra Academy of Engineering and Educational Research, Pune. 3. The Ld. AO is not justified in holding that the activities of 'World Peace Centre' were not charitable without examining the exact nature of said activities.

3.1. The Ld. AO has erred in holding that appellant is not eligible for exemption u/s. 11 & 12 as the object of 'World Peace Centre' was not communicated to authorities without appreciating that the said change in the object is very much in knowledge of the authorities. 3.2. The Ld. Assessing Officer ought to have considered the fact that he is not empowered to decide on the issue of validity of registration u/s.12A(1) of the Act at the assessment stage, once the appellant have valid registration.

4. The Ld. AO has erred in disallowing an amount of Rs.2,41,27,211/- being Provision for Gratuity u/s. 40A(7) of the Act without appreciating that the said provisions are not applicable to the assessee as its income is chargeable to tax under the head of 'Income from Other Sources'.

5. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.”

4.

The Revenue’s pleadings are no different in its latter appeal ITA.No.787/PUN./2019 for assessment year 2013-14 wherein the only difference is that of the amount of sec.40A(7)(b)

4 ITA.Nos.786 & 787/PUN./2019 Maharashtra Academy of Engineering and Educational Research, Pune. disallowance of Rs.2,41,27,211/- and Rs.2,76,54,732/- appeal- wise, respectively.

5.

We first of all come to the Revenue’s identical pleadings in its grounds nos.1 to 4 and note with the able assistance coming from the both the parties that the Assessing Officer’s twin corresponding assessments had only invoked sec.40A(7)(b) disallowance hereinabove. These Revenue’s four identical substantive grounds, therefore, raise mere academic questions not germane to the sole issue before us. Coupled with this, Mr. Pathak has also filed before us the Assessing Officer’s consequential assessments dated 10.05.2019 and 17.05.2019; respectively assessing the assessee’s income at NIL only. We thus reject the Revenue’s instant former identical four substantive grounds to these facts and circumstances.

6.

Next comes the Revenue’s sole substantive ground on merits seeking to revive sec.40A(7)(b) disallowance as stated in the preceding paragraphs. The CIT(A)'s detailed discussion reversing the assessment findings to this effect reads as follows :

5 ITA.Nos.786 & 787/PUN./2019 Maharashtra Academy of Engineering and Educational Research, Pune.

6 ITA.Nos.786 & 787/PUN./2019 Maharashtra Academy of Engineering and Educational Research, Pune.

7 ITA.Nos.786 & 787/PUN./2019 Maharashtra Academy of Engineering and Educational Research, Pune.

7.

Suffice to say, it has already on record that this tribunal’s various coordinate bench’s (supra) have already rejected Revenue’s identical contentions in preceding assessment years in assessee’s cases itself. There is no distinction on facts or law raised from the Revenue side before us. We thus adopt judicial consistency to uphold the CIT(A)'s above extracted findings deleting sec.40A(7)(b) disallowance in very terms. The Revenue fails in its sole substantive ground.

8.

No other ground or argument has been pressed before us.

8 ITA.Nos.786 & 787/PUN./2019 Maharashtra Academy of Engineering and Educational Research, Pune. 9. These Revenue’s twin appeals are dismissed in above terms. A copy of this common order be placed in the respective case files.

Order pronounced in the open Court on 28th December, 2022.

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