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Income Tax Appellate Tribunal, BENCH : COCHIN
Before: SMT. BEENA PILLAI & Ms. PADMAVATHY S.
Date of hearing : 12.01.2023 Date of Pronouncement : 20.01.2023 O R D E R
Per Padmavathy S, Accountant Member:
This appeal is against the order of CIT(A), National Faceless Assessment Centre, Delhi [NFAC], Delhi dated 25.5.2021 for assessment year 2014-15. The assessee is a religious trust and has filed return for AY 2014-15 on 30.3.2016 declaring an income at Rs.Nil. The return was processed u/s. 143(1) where the AO (CPC) had made certain adjustments to compute the total income of the assessee at Rs.10,13,130 which was disallowed u/s. 24(a) of the Act.
2. Aggrieved the assessee preferred an appeal before the CIT(A). The assessee submitted before the CIT(A) that out of the rental income received by the assessee during the year under consideration, a sum of Rs.10,13,132 is claimed as a standard deduction u/s. 24. The assessee submitted that the said disallowance cannot be made while issuing intimation u/s. 143(1) where the CPC has travelled beyond its power. The assessee further submitted that a similar issue in assessee’s own case for AY 2013-14 was considered by the CIT(A) and vide order dated 24.1.2020 the issue was held in favour of the assessee. Accordingly, the assessee prayed for deletion of the disallowance. The CIT(A) did not accept the submissions by stating that earlier year’s appellate order cannot be taken as valid precedent. On merits, the CIT(A) held that according to law, there is no deduction permissible u/s. 24 against the rental income derived by a charitable trust computed u/s. 11 by relying on various judicial decisions. Aggrieved, the assessee is in appeal before the Tribunal on the following grounds:-
“1. The Appellate Order of the learned Commissioner of Income tax(Appeals), National Faceless Appeal Centre is opposed to law and facts of the case.
Under the scheme the Income tax Act, net income of each head had to be separately computed based on the rules applicable to that head, which fact was not appreciated by the learned Commissioner of Income tax(Appeals).
The learned Commissioner of Income tax ought to have found that event deduction was not to be allowed as application it had to be allowed under the provisions of the Income tax Act as per the rules applicable to computation of income.
4. The learned Commissioner of Income tax(Appeals) went wrong in concluding that an appellate order of the earlier year on the same issue was not to be followed in the current year.
5. The decisions cited by the learned Commissioner of Income tax(Appeals) were not applicable to the instant case. 6. The total application of the appellant was more than 85% of the gross income but in the Income Computation Statement this was limited to Rs.12,41,610/- since the balance was a surplus and a negative computation was of no consequences. It is the plea of the appellant that, without prejudice to the above grounds the amount set off has to be reworked and in computing the 85% it had to be expended to cover the additional income computed on account of the disallowance. A statement showing recomputation on this alternate ground is attached as Annexure-B. 7. For these and other grounds that may be urged during the appellate proceedings it is prayed that the appeal may be allowed.” 3. The ld AR submitted that the assessee is entitled for the standard deduction u/s. 24 while computing the income from house property. The ld. AR further submitted that the issue of allowability of standard deduction u/s. 24 is debatable and therefore cannot be done through an order u/s. 143(1). The ld. AR further submitted that the CIT(A) in assessee’s own case for AY 2013-14 has considered the same issue and has allowed the deduction and the department has not preferred further appeal against the order of CIT(A). Therefore it is submitted by the ld. AR that the issue of allowability of standard deduction u/s. 24 in assesssee’s case has reached finality and therefore the revenue cannot take a different stand for the year under consideration.
The ld DR relied on the order of the lower authorities.
We heard the rival submissions and perused the material on record. We notice that the CIT(A) has held that the earlier years’ appellate order cannot be taken as a valid precedent in which case the same adjustment was held to be allowable. Further we notice that the CIT(A) has upheld the disallowance based on various judicial decisions. We also notice that the CIT(A) had not considered the facts based on which the appeal was allowed in favour of the assessee in AY 2013-14 and how the facts are distinguishable for the year under consideration. We also see merit in the argument of the ld. AR that since the revenue has not preferred any appeal against the order of the CIT(A) for AY 2013-14, the impugned issue has reached finality. In the facts and circumstances of the case, in our view, to decide the applicability of the decision of AY 2013-14 in assessee’s own case for AY under consideration, the facts of the year under appeal needs to be examined, We therefore remit the issue to the AO for fresh consideration and decide the issue in accordance with law after giving reasonable opportunity of being heard. It is ordered accordingly.
In the result, the appeal is allowed for statistical purposes.
Pronounced in the open court on this 20th day of January, 2023.