2023 (11) TMI 864 - AT - Income Tax

Exemption u/s 11 - Intimation u/s. 143(1) - exemption u/s. 12A has been denied - Form 10B was filed belatedly - CIT(A) accepted the alternate contention of the assessee that the assessee is entitled to the benefit of other deductions when its income is being assessed as an AOP - HELD THAT - A perusal of the order of the ld. CIT(A) clearly shows that the ld. CIT(A) has proceeded to give a direction to the AO to consider the alternate claim of the assessee in respect of the assessment of the income of the assessee u/s. 57 of the Act. This, admittedly, has not been challenged by the revenue. Thus, the fact that the ld. CIT(A) himself has felt that the intimation u/s. 143(1) is to be modified itself shows that the intimation issued by the AO is erroneous per se. This being so, admittedly the adjustments as has been done by the AO is not something that can be done in an intimation u/s. 143(1) of the Act. Consequently, the intimation issued u/s. 143(1) of the Act stands quashed. Entitlement to benefit of deduction u/s. 10(23C)(iiiad) - Even otherwise, when the benefit of deduction u/s. 12A of the Act was being denied, it was incumbent upon the AO to grant the assessee the benefit of deduction u/s. 10(23C)(iiiad) of the Act, especially because an AO is not just an Assessing Authority, he is not only a tax collector but he is a tax assessor and if any benefit is due to the assessee, it is incumbent upon the authority to grant such benefit as permissible under the law. Appeal filed by the assessee stands allowed.

Summary

Issues:
The appeal involves the denial of exemption u/s. 12A of the Act to a charitable trust running a school for the assessment year 2014-2015.

Summary:

Issue 1 - Denial of Exemption u/s. 12A of the Act:
The assessee, a charitable trust running a school, filed an appeal against the denial of exemption u/s. 12A of the Act for the assessment year 2014-2015. The assessee's total receipts were approximately Rs. 13 lakhs during the relevant assessment year. The assessee contended that it was entitled to the benefit of deduction u/s. 10(23C)(iiiad) of the Act as its total receipts were below Rs. 1 crore, and there was no requirement to file Form 10BB in such circumstances. The intimation u/s. 143(1) denying the exemption was challenged, and the appeal sought its annulment. The CIT(A) accepted the alternate claim of the assessee for deductions when the income was assessed as an Association of Persons (AOP). The Tribunal noted that the intimation was erroneous per se, and adjustments made by the Assessing Officer (AO) in the intimation u/s. 143(1) were not permissible. Consequently, the intimation u/s. 143(1) was quashed, and the appeal of the assessee was allowed.

Issue 2 - Grant of Deduction u/s. 10(23C)(iiiad) of the Act:
The Senior DR argued that the assessee did not raise the claim for deduction u/s. 10(23C)(iiiad) of the Act, and without such a claim, it could not be considered. However, the CIT(A) directed the AO to consider the alternate claim of the assessee concerning the assessment of income u/s. 57 of the Act. The Tribunal observed that the AO should have granted the assessee the benefit of deduction u/s. 10(23C)(iiiad) of the Act when the exemption u/s. 12A was denied. It emphasized that the AO is not only a tax collector but also a tax assessor, and if any benefit is due to the assessee, it must be granted as permissible under the law.

In conclusion, the appeal filed by the assessee was allowed, and the intimation u/s. 143(1) denying the exemption u/s. 12A of the Act was quashed. The Tribunal highlighted the importance of granting due benefits to the assessee as per the provisions of the law.