2022 (2) TMI 1027 - AT - Income Tax

Rectification u/s 154 - Exemption u/s 11 - HELD THAT - It is clear that the issue for consideration before us has its roots in order passed under Section 154 rectifying the AO - The aforesaid assessment order has already been set aside by the Tribunal vide common order 2021 (11) TMI 1024 - ITAT MUMBAI . Therefore, we are of the view that it would be in the interest of justice that the issue before us pertaining to the utilization of accumulated also remanded to the file of AO who would be at liberty to examine the same in terms of Section 11(3)(c) of the Act and the grant relief to the Assessee, if any, as per the applicable law. Accordingly, the issue is remitted to the file of Assessing Officer and the present appeal is disposed off in terms of the aforesaid directions.

Summary

Issues:
Challenge to order passed by CIT(A) under section 250 of the Income Tax Act, 1961 for the assessment year 2011-12. Rectification order passed under section 154 of the Act adding an amount due to non-utilization within the specified period. Interpretation of provisions of section 11 of the Act regarding exemption for the Assessee.

Analysis:
The Appellant challenged the order passed by the Commissioner of Income Tax (Appeals) under section 250 of the Income Tax Act, 1961, for the assessment year 2011-12. The Appellant contended that its activities were charitable and reserved the right to claim exemption under section 11 of the Act. The Assessing Officer denied exemption under section 11 and computed income based on mutuality principles. The appeal before the Commissioner of Income Tax (Appeals) was dismissed, leading the Appellant to appeal before the Tribunal.

The Assessing Officer rectified the assessment order under section 154 of the Act, adding an amount due to non-utilization within the specified period. The Appellant challenged this rectification order before the Commissioner of Income Tax (Appeals) but did not succeed. The Appellant argued that the accumulated amount had been utilized in a subsequent financial year, which could be examined by the Assessing Officer while quantifying the benefit under section 11 of the Act.

The Tribunal, after considering the contentions, noted that the assessment order had already been set aside in a separate judgment, entitling the Appellant to exemption under section 11 of the Act. Therefore, the Tribunal remanded the issue of the utilization of the accumulated amount back to the Assessing Officer for further examination in accordance with section 11(3)(c) of the Act. The Tribunal directed the Assessing Officer to grant relief to the Assessee as per applicable law. The appeal was allowed for statistical purposes, and the order was pronounced in open court on 18.02.2022.