2018 (10) TMI 2035 - AT - Income Tax

Rectification of mistake u/s 154 - award money received from BCCI - Eligibility to exemption u/s 10(17A) - sum received as award from BCCI (Board of Cricket Control of India) which otherwise was exempted u/s 10(17A) was filed as taxable income. HELD THAT - Once, it is brought to the notice of the AO that income shown in the return of income is not in accordance with law and such an income cannot be taxed under the Income Tax Act or is entitled for exemption, then there cannot be estoppel against the assessee to claim it as exempt and AO cannot reject the same simply because assessee had shown it in the return of income. It is a well settled law that tax can be levied under the express provision of law and if any deduction or exemption is allowable to the assessee in law, then it is the duty upon the AO to compute the income and allow such deduction under such express provision of the law. If the assessee claims that such an income is exempted u/s. 10(17A) which is duly supported by CBDT Circular which is binding on the Revenue Authorities, then the same needs to be exempted and allowed in accordance with law. Accordingly, we remit the matter back to the file of the AO to examine the assessee's claim in light of provisions of law and if such a claim is allowable in view of the CBDT Circular No.2 of 2014 r.w.s. 10(17A), then same should be allowed. Accordingly, appeal of the assessee is partly allowed for statistical purposes.

Summary

Issues:
1. Whether the sum received by the assessee as an award from BCCI is exempt under section 10(17A) of the Income Tax Act.
2. Whether the assessee's claim to exclude the sum of Rs.30 lakhs from taxable income for Assessment Year 2013-14 is justifiable under Section 154.

Analysis:
1. The appeal was filed against the order passed by the Commissioner of Income Tax (Appeals) for the Assessment Year 2013-14 regarding the sum of Rs. 30 lakhs received by the assessee as an award from BCCI. The assessee contended that the amount was exempt under section 10(17A) of the Income Tax Act. However, both the Assessing Officer and the CIT (A) rejected the claim, stating that the assessee had initially shown the amount as taxable income in the return. The ITAT Delhi, in its judgment, emphasized that if an income is not in accordance with the law and is entitled to exemption, the Assessing Officer cannot reject the claim solely based on the initial declaration in the return. The Tribunal referred to the well-settled principle that tax can only be levied under express provisions of the law and if an exemption is allowable, the Assessing Officer must compute the income accordingly. The Tribunal remitted the matter back to the Assessing Officer to re-examine the claim in light of the law and the CBDT Circular, directing that if the claim is allowable under section 10(17A) along with Circular No.2 of 2014, it should be granted.

2. The second issue revolved around the assessee's application under Section 154 to rectify the mistake of including the exempt sum in the taxable income. The Assessing Officer and CIT (A) both rejected the application, stating that it was beyond the scope of Section 154 as it was a debatable issue. The ITAT Delhi, however, disagreed with this reasoning and held that the Assessing Officer cannot deny the exemption if it is allowable under the law. The Tribunal emphasized that the CBDT Circular supporting the exemption is binding on Revenue Authorities, and thus, the claim should be examined based on the provisions of law. Consequently, the ITAT allowed the appeal of the assessee partly for statistical purposes, directing the Assessing Officer to reconsider the claim in accordance with the law.

In conclusion, the ITAT Delhi partially allowed the appeal of the assessee, directing the Assessing Officer to re-examine the claim of exemption for the sum received from BCCI in light of the provisions of law and the CBDT Circular, emphasizing that tax can only be levied under express provisions and exemptions must be granted if allowable.