2019 (12) TMI 1338 - AT - Income Tax

Revision u/s 263 - assessment framed under section 143(3) of the Act as erroneous insofar prejudicial to the interest of revenue - Exemption u/s 11 denied - HELD THAT - Admittedly, the assessment order framed under section 143(3) of the Act dated 16 March 2015 has been set aside to the file of the AO for re-adjudication as per the provisions of law as submitted by the learned AR for the assessee As held Tribunal has committed a grave error in holding the activities of the assessee in the nature of trade, commerce or business and consequently holding that the proviso to section 2(15) of the Act shall be applicable and therefore, the assessee is not entitled to exemption under section 11 - proviso to section 2(15) of the Act shall not be applicable so far as the assessee-AUDA is concerned and as the activities of the assessee can be said to be providing general public utility services, the assessee is entitle to exemption under section 11 of the Act. Both the questions are therefore, answered in favour of the assessee and against the Revenue. Impugned order passed by the Tribunal in respective appeals for differ assessment year are hereby quashed and set aside. Accordingly, all these appeals are allowed and answered both the questions in favour of assessee and against the Revenue. The issue involved in the order of learned CIT under section 263 of the Act is dependent on the assessment order to be framed by the AO in accordance to the direction provided by the ITAT as discussed above. Therefore, we hold that the impugned order under section 263 of the Act does not require any separate adjudication at this stage. Accordingly, we conclude that the order framed under section 263 of the Act is infructuous.

Summary

Issues:
1. Revision of assessment order under section 263 of the Income Tax Act, 1961.
2. Validity of the assessment order framed under section 143(3) of the Act.
3. Interpretation of High Court's decision on applicability of exemption under section 11 of the Act.

Analysis:
1. The appeal was filed against the order of the Commissioner of Income Tax (Appeals) under section 263 of the Income Tax Act, 1961, challenging the revision of the assessment order. The grounds of appeal raised by the assessee included contentions regarding the legality of invoking section 263, directing fresh assessment, and disregarding relevant legal precedents and circulars.

2. The assessment under section 143(3) of the Act was deemed erroneous by the Commissioner as carry forward losses were not added back to the total income of the assessee. However, the Tribunal had previously set aside the assessment order for fresh adjudication, rendering the section 263 order infructuous.

3. The High Court's decision clarified that the assessee, an autonomous body under the Gujarat Town Planning Act, was entitled to exemption under section 11 of the Act. The Tribunal, following the High Court's ruling, allowed the appeals of the assessee and directed the AO to re-adjudicate the issues in line with the legal judgment.

In conclusion, the Tribunal held that the order under section 263 of the Act was unnecessary due to the reassessment directed by the Tribunal. The appeal was disposed of accordingly, emphasizing the need for the AO to follow the High Court's judgment in re-evaluating the assessee's case in earlier years.