DEPUTY COMMISSIONER OF INCOME TAX, CHENNAI, TAMIL NADU vs. DVARA TRUST, CHENNAI, TAMIL NADU

आदेश /O R D E R

PER MAHAVIR SINGH, VP:

2 & CO 9/2024 (in ITA 1487/23) & 1495/CHNY/2023 dated 16.10.2023 for assessment year 2017-2018 and Order No.ITBA/NFAC/S/250/2023-24/1057074019 (1) dated 16.10.2023 for assessment year 2018-2019. Assessee had filed Cross Objection for assessment year 2017-2018. The assessment order for the assessment year 2017-2018 were framed by the Deputy Commissioner of Income Tax, Non Corporate Circle 19(1) Chennai vide order dated 31.12.2019 and for assessment year 2018-2019 the assessment was framed by the Additional/Joint/Deputy/Assistant Commissioner of Income Tax/ Income-tax Officer, National e-Assessment Centre, Delhi u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 20.04.2021.

3 & CO 9/2024 (in ITA 1487/23) & 1495/CHNY/2023 Finance and administration through assessee’s pool of employees to its 100% subsidiaries but the ld. CIT(A) relying on Co-ordinate Bench decision in assessee’s own case for the assessment years 2011-2012, 2012-13 and 2014-15 in ITA Nos.233, 234 & 235/Chny/2019 vide order dated 14.03.2022 has allowed the claim of the assessee of sharing expenses by observing at paras 6.3 & 6.4 of his order as under:- ‘6.3 After careful reading of the above order the law that is clear is that if there are no Incubation activities carried out, the income earned will be assessed under the head Income from Other Sources' and that the assessee would be eligible for the deduction of expenses sub-section (iii) of section 57 of the Act. The AO in the impugned order has not brought out any fact to demonstrate that there were incubation activities. Further, the appellant has been able to demonstrate that its case is covered under the above discussed decision of the ITAT and the CIT (Appeal) and that it is carrying out only Segment II activities. Respectfully following the decision, the AO is directed allow the expenses u/s 57(ii) of the Act. Further, it is to state that the 6.4 Respectfully following the order of the CIT (Appeal) and the Hon'ble ITAT, the income is to assessed under the head 'Income from Other Sources, and AO is directed to allow the expenses claimed u/s 57(iii) of the Act to earn the said income. The ground of appeal no 1,2,4 and 4 are allowed’. At the time of hearing, the ld. Senior Departmental Representative could not point out what is the infirmity in the order of the ld. CIT(A). The ld. CIT(A) had followed the Tribunal order in assessee’s own case in earlier assessment years and hence we affirm the order of the ld. CIT(A) on this issue. The appeals of the Revenue stand dismissed.

4 & CO 9/2024 (in ITA 1487/23) & 1495/CHNY/2023 Counsel for the assessee only stated that the ld. Assessing Officer has not followed the direction of the ld. CIT(A). He took us to the order of the ld. CIT(A) in para 6.5 which reads as under:- ‘’6.5 The appellant in its ground of appeal no 5 assailed the disallowance of provision of doubtful advances no longer required and ad-hoc disallowances. The above grounds are adjudicated in the light of the adjudication of the main ground that the income is to be assessed under 'Income from Other Sources' with the corresponding benefit of the deduction of expenses u/s 57(iii) of the Act. The ground of appeal is allowed’’. Ld. Counsel for the assessee only stated that neither the ld. CIT(A) nor the ld. Assessing Officer has understood the issue but has mixed up the issue of disallowance of provision of doubtful and adhoc disallowances. The ld. Assessing Officer has arbitrary considered a sum of Rs.5,01,66,575/- as ‘’income from other sources’’.

5. We have heard rival contentions and gone through facts and circumstances of the case. We find that none of the authorities below has adjudicated the issue properly and hence we remit the issue back to the file of the ld. Assessing Officer with a direction to give an opportunity to the assessee to explain these two issues separately and decide as per law.