2024 (11) TMI 634 - AT - Income Tax

Exemption u/s 11 - return was filed using ITR-6 - argument of Ld. CIT(A) recording principle of consistency and applicability of res judicata - HELD THAT - Material available on records indicate that the assessee has been granted exemption u/s 11 for immediately preceding AY-2014-15 as is evident from order u/s 143(3) dated 28.12.2016. Perusal of para-3 thereof also alludes that same situation qua filing of ITR-6 and treatment of assessee as a rested entity u/s 12AA existed in the said year as well. The perusal of order further shows that the assessee has been allowed exemption u/s 11. The argument of Ld. CIT(A) recording principle of consistency and applicability of res judicata have been found to be correct. It is trite law that principle of res judicata do not apply to direct tax however the revenue cannot take different positions in different years if there is no change in the material facts. The assessment orders for AY s 2014-15 2015-16 show that the same fact of filing of ROI in ITR 6 was existing therein. The Ld.AO in AY-2014-15 chose to grant the assessee deduction u/s 11. This decision has become final and rather accepted by the revenue as nothing has been brought on records to suggest that the same was agitated through available revisionary remedies like action u/s 263 etc. It is trite law that notwithstanding principle of res judicata not applicable to direct taxes, an AO is not permitted to take different stand on the same issue and same set of facts over different years. DR has not been able to point out any difference in the facts of the case as they existed in comparison to AY-2014-15. Accordingly, we are of the view that the Ld. CIT(A) has taken a correct decision in granting exemption u/s 11 and no interference is required to be made to his order at this stage. - Decided against revenue.

Summary

Issues:
Challenge to grant of exemption u/s 11 despite filing return using ITR-6.
Agitation over grant of depreciation on assets acquired from government grants.

Analysis:

1. The primary issue in this case was the challenge by the revenue against the grant of exemption u/s 11 to the assessee despite filing the return using ITR-6. The revenue contended that the doctrine of res judicata does not apply to direct taxes. Additionally, the revenue raised concerns regarding the grant of depreciation on assets acquired from government grants.

2. The factual background revealed that the assessee trust filed its income tax return using ITR-6 and was engaged in executing common effluent treatment plants for leather industries in Tamil Nadu. The trust received grants from the Government of India and contributions from promoters for project execution. During scrutiny, the assessing officer noted the claim of depreciation and grants received for asset acquisition. The assessing officer initially considered the assessee's no objection to being assessed as a registered entity u/s 12AA. However, adjustments were made to the returned loss, treating it as profit and adding depreciation, project fund amounts, and ROC fees.

3. The CIT(A) held that consistency and res judicata principles applied, as in the preceding assessment year, the assessee was allowed exemption u/s 11 despite filing using ITR-6. The CIT(A) rejected alternative grounds raised by the revenue as infructuous. The DR argued in favor of the assessing officer's order, while the AR supported the CIT(A)'s decision. The material on record indicated that the assessee was granted exemption u/s 11 for the previous assessment year, and the same situation regarding ITR-6 filing existed. The CIT(A)'s decision was upheld based on consistency and the prohibition against taking different stands on the same issue with unchanged facts over different years.

4. The tribunal concurred with the CIT(A)'s decision to grant exemption u/s 11 and found no need for interference. It was emphasized that the revenue cannot change positions on the same issue with the same facts in different years. The tribunal dismissed all grounds of appeal raised by the revenue, including those related to depreciation, as academic and infructuous. Consequently, the appeal of the revenue was dismissed, and the order was pronounced on 23rd October 2024 in Chennai.