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Income Tax Appellate Tribunal, ‘A ’ BENCH, CHENNAI
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI MANU KUMAR GIRI, JM
आदेश / O R D E R MANU KUMAR GIRI (Judicial Member) This appeal has been filed by the assessee challenging the impugned order dated 04.11.2023, passed under section 250 of the Income Tax Act, 1961 (“the Act’) by the Ld. Commissioner of Income Tax(Appeals)(NFAC) Delhi [ In short ‘Ld.CIT(A)’] for Assessment Year 2015-16.
The registry has noted delay of 54 days in filing the appeal. Ld. Counsel for the assessee has filed affidavit of the Trustee/Managing Director. The said affidavit is as under: 1. I, D. Dasarathan, am the Trustee / Managing Director of the above mentioned Trust having office at the above mentioned address.
2. I am well acquainted with the facts and circumstances of the case.
3. I state that I have filed an appeal before the Honourable Tribunal, Chennai against the appellate order in ITBA/ NFAC/S/250/2023-24/1057695144(1) dated 04.11.2023.
4. I humbly state before the Honourable Income Tax Appellate Tribunal, that the filing of appeal before the Honourable Appellate Tribunal was due on 02.01.2024. But I have been under treatment for cardiac and related ailments , and I have not been able to attend to me official duties and obligations .
5. I also state that as I have been under treatment for the same and under the medical supervision and rest, for the ailment, I was not able to assimilate the necessary documents and hand over the same for organizing to file an appeal against the above order, and this alone has resulted in a delay of 55 days in filing the appeal before the Honourable Income Tax Appellate Tribunal.
6. I also submit before the Honourable Income Tax Appellate Tribunal that I do not stand to gain by delaying the filing of appeal and neither do I have any intention to delay the filing of the appeal.
I also state that due to the above mentioned reasons as the delay caused in filing the appeal is not due to any inaction or negligence or intentions, and was beyond my cause and control, it is hereby prayed before Your Honor that the delay of 330 days be condoned, the appeal be admitted and that justice be rendered.
The assessee submits that the delay caused is for sufficient reason and also supported by the affidavit. Considering the reasons given in affidavit by trustee of trust and adopting pragmatic approach, the delay in filing of the appeal is condoned and appeal is admitted for adjudication.
The following grounds of appeal are raised by the assessee:-
1. The Rectification Order for the Assessment Year-2015-16, passed under Sec.1540f the Act, by the Learned Assessing Officer of CPC, Bangaluru, was arbitrary and is against law and contrary to facts of the case and hence Erroneous and untenable in Law.
2. Claiming of Depreciation alone and by itself, cannot lead to levy of tax. The Levy of tax, by the scheme of the Act, was to be supported by inadequacy of application of Income and failure to file Form No.10 by the Appellant.
3. The Assessing officer of the Rectification Order was wrong in levying tax solely on the ground of charging/claiming of depreciation without looking in to, or considering the facts/aspects of application of income for the said year.
4. The Assessing officer of the Rectification Order, has grossly erred in refusing to rectify the assessment order /intimation u/s 143(1), when all the relevant and required facts are available with him conveyed through the Return of Income and the accompanying financial statements, without warranting any sort of investigation or reasoning of any extent, whatsoever.
5. The Assessing officer of the Rectification Order has grossly erred in, levying tax without actually considering the actual application of income to the charitable purposes of the Appellant, which far exceeded the income, resulting from, after disallowance of depreciation.
6. The Assessing officer of the Rectification Order, has grossly erred in levying tax on the appellant ignoring the fact that the appellant is recognized/approved u/s 10(23C)(v.i) of the Act.
7. In view of the above and in view of further grounds that may be advanced, as the circumstances may warrant, in the interest of deliverance of justice, during the course of hearings, it is prayed that the Honourable Income Tax Appellate Tribunal may be pleased to grant suitable relief after considering all the evidences and explanations that the Appellant could produce before the during the course of hearing on appeals, on the issues raised, hereinabove and in the Assessment Order concerned.
Brief facts of the case are that, the assessee M/s Dharma Naidu Education and Charitable Trust is a Charitable Trust, registered u/s 12A(a) of the Income Tax Act, 1961 (In short ‘the Act’). The assessee is also approved u/s10(23C)(vi) of the Act as an institution exclusively existing for the purpose of education for A.Y. 2015-16. The assessee has e-filed its Return of income on 30.09.2015 for A.Y.2015-16. The assessee in its return of income claimed exemption under both the sections 11 & 10(23C) of the Act, basis as claimed in the past and subsequent to the said Assessment Year. Being the first year after the introduction of section 11(6) of the Act, appellant was required to fill up prescribed format of the Return of Income. In the prescribed format there were fields seeking details on depreciation. The assessee under the impression that perhaps depreciation will be disallowed automatically followed the instructions and filled the details of depreciation as the prescribed format did not provide chance or option to alter the net computation of total income to be applied for the charitable purposes. In the assessment order u/s 143(1) dated
22.10.2016, depreciation was disallowed, however, application of total income (to the extent 85% thereof) was not considered despite application of income details provided.
Aggrieved against the order u/s 143(1) dated 22.10.2016, assessee filed rectification application u/s 154 of the Act and requested the CPC, Bangalore, to see the actual application of income. AO CPC, Bangalore, vide order dated 16.03.2018 rejected the rectification application u/s 154 of the assessee. Rejection order dated 16.03.2018 is as under: “As seen from the e-filed return of income and the rectification request filed, there is no mistake in the intimation u/s 143(1) to be rectified”.
7. The assessee further challenged the rejection order u/s 154 dated 16.03.2018 before the CIT(A). Ld. CIT(A) vide his order dated 04.11.2023 has dismissed the appeal of the assessee by holding that the present case does not appear to be a case of an apparent and patent mistake as there are issues of claim of depreciation and application of income.
Aggrieved by the order of the Ld. CIT(A), the assessee preferred an appeal before the Tribunal.
Before us, Ld. Counsel for the assessee argued that besides depreciation there was more than statutory required application of Income. In the assessee case, the application of income exceeds 85% of the total income after disallowing depreciation. He further, submitted that since there was application of income more than 85% of total income before depreciation, there would not be any tax liability, even if, depreciation was inadvertently claimed in the return.
Per contra, the Ld.Addl. CIT-DR pleaded to uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee.
We have heard the rival contentions of the parties and perused the material available on record. Section 11(6) of the Act provides as under : Section 11(6) inserted with effect from 1.4.2015 by Finance Act No.2/2014, reads as under: "(6) In this section where any income is required to be applied or accumulated or set apart for application, then, for such purposes the income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset, acquisition of which has been claimed as an application of income under this section in the same or any other previous year.
Looking into the entire conspectus of section 11(6) of the Act and argument put forth by the Ld.Counsel for the assessee, it is necessary to set aside this issue to the file of A.O. to look into the application of Trust afresh. Accordingly, we set aside this issue to AO to look into afresh the application of income by the Trust and calculate tax liability, if any, as per law.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 17th May, 2024 at Chennai.