2022 (9) TMI 413 - AT - Income Tax

Denial of exemption u/s 10(25)(ii) - Disallowance by CPC u/s 143(1) - CPC not grant exemption u/s 10(25) to the assessee as it was not claimed by the assessee in the return of income - filling of return in the abbreviated name - Addition of interest income solely on the ground of not filing return in the complete name of the assessee i.e. Indo Euro Chemical Services Limited Employees Provident Fund covered under FPS rather filed the return in the abbreviated name as IECS Ltd. Employees P.F. Covered under FPS - HELD THAT - As decided in own case 2021 (12) TMI 639 - ITAT DELHI Adjustment made by the Revenue Department by denying the exemption claimed by the assessee u/s 10(25)(ii) of the Act cannot be and shall not be subject matter of section 143(1) of the Act. This can only be done u/s 143(3) of the Act. Because u/s 143(1) returned filed by the assessee should be accepted. So, we are of the considered view that when undisputedly assessee has been accorded registration under Rule 3(1) Part A of the Fourth Schedule of the Act there is no scope for the Revenue to deny the exemption claimed u/s 10(25)(ii) of the Act on hyper technical grounds. CIT (A) has erred in dismissing the rectification application filed by the assessee u/s 154 of the Act by denying a relief otherwise available to the assessee u/s 10(25)(ii) of the Act. So, we direct the AO to allow relief to the assessee by allowing exemption u/s 10(25)(ii) of the Act after due verification qua the abbreviated name mentioned by the assessee in its return in the light of the order for according exemption to the assessee. - Decided in favour of assessee.

Summary

Issues:
1. Jurisdiction and legality of the intimation passed under section 143(1) of the Income Tax Act, 1961.
2. Denial of exemption claimed under section 10(25) by the Centralized Processing Center.
3. Confirmation of total income determination by the Centralized Processing Center.
4. Levy of interest under sections 234A/234B/234C of the Act.

Issue 1:
The appeal challenged the order of the ld. CIT (A) regarding the jurisdiction and legality of the intimation passed under section 143(1) of the Income Tax Act, 1961. The appellant argued that the intimation was beyond jurisdiction and bad in law. The CIT (A) upheld the action of the Centralized Processing Center in denying the exemption claimed under section 10(25). The appellant contended that the adjustment made by the CPC fell outside the permissible adjustments specified under section 143(1). The CIT (A) dismissed the grounds of appeal, stating that the system processed the return based on the appellant's claim and that there was no aberration in the order under section 143(1).

Issue 2:
Regarding the denial of exemption claimed under section 10(25), the CIT (A) confirmed the action of the CPC in determining the total income of the appellant. The CIT (A) upheld the denial of exemption on the grounds that the appellant had not obtained registration under section 12A/12AA of the Act and that the approval granted to the provident fund trust was not in the appellant's name. The appellant argued that the return form ITR-7 covered trusts claiming exemption under section 10(25) and was not exclusively for institutions registered under section 12A/12AA. The ITAT referred to a previous decision in the appellant's own case for AY 2014-15 and directed the AO to allow relief by granting exemption under section 10(25) after due verification.

Issue 3:
The CIT (A) confirmed the levy of interest under sections 234A/234B/234C of the Act. The ITAT, after considering the facts and the previous decision in the appellant's case for AY 2014-15, allowed the appeal, directing the AO to grant the exemption under section 10(25) after verification. The ITAT followed the coordinate Bench decision due to the similarity of facts.

Issue 4:
The judgment pronounced on September 8th, 2022, allowed the appeal of the assessee, directing the AO to grant the exemption under section 10(25) after verification. The ITAT considered the earlier decision in the appellant's case for AY 2014-15 and directed the AO to allow the relief available under section 10(25) of the Act. The appeal was allowed based on the similar facts and the direction given in the previous decision.

This detailed analysis of the judgment covers all the issues involved comprehensively, providing a clear understanding of the legal aspects and outcomes of the case.