2023 (9) TMI 404 - AT - Income Tax

Assessment of trust - contravention of provisions of section 13(1)(c) - certain amounts paid by the assessee trust to other trusts where the trustees were also interested - HELD THAT - AO, even though discussed the issue in the body of the assessment order about the alleged contravention of section 13(1)(c) but ended up without making any specific addition in this regard. Consequently, there was no reason either for the assessee to raise this issue before the CIT(A) or the ld. first appellate authority to pass an order thereon. In view of the fact that the AO did not make any addition on this score, we are satisfied that the ground taken by the assessee before the CIT(A) and consequently by the Revenue before the Tribunal did not require any adjudication. Consequently, the ground of the Revenue is dismissed as infructuous. The order passed u/s. 254(1) should be read in the light of the above observations.

Summary

Issues involved:
The appeal by the Revenue against the order passed by the Commissioner of income-tax (Central), Pune on 31-10-2014 in relation to the assessment year 2007-08 regarding Ground No.6.

Issue 1: Interpretation of section 13(1)(c) of the Act

The case involved the advancing of loans by the assessee trust to other trusts where the trustees were also interested, potentially contravening the provisions of section 13(1)(c) of the Act. The Assessing Officer (AO) observed that trustees of the assessee trust were trustees in two of the recipient trusts, leading to a violation of the said provision. The ld. CIT(A) allowed the appeal ground, citing a previous decision in favor of the assessee for a different assessment year. The Tribunal initially decided against the Revenue, referencing certain paras of the ld. CIT(A) order. However, upon a Miscellaneous Application by the Department, the Tribunal recalled its decision for fresh adjudication.

Decision:

After hearing the submissions and reviewing the material on record, it was noted that although the AO discussed the issue of contravention of section 13(1)(c) regarding the advances made to other trusts, no specific addition was made on that basis. The ld. AR argued that since no addition was made by the AO, there was no valid reason for the issue to be raised before the ld. CIT(A) or for an order to be passed on it. The ld. DR also acknowledged that no addition was made towards the advances to the three trusts. Therefore, as the AO did not make any addition on this matter, it was deemed that the ground taken by the assessee and subsequently by the Revenue did not necessitate adjudication. Consequently, the Revenue's ground was dismissed as infructuous, and the appeal was partly allowed. The order was pronounced in the Open Court on 07th September 2023.