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TMI Blog2023 (7) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... ndividuals and HUFs, whereas the Assessee is a trust, and so, not entitled to benefit u/s 54B of the Act. (iv) The Assessee is not entitled to benefit u/s 10(21) r.w.s. 35(1) r.w.s. 11 of the I.T. Act. (v) Whether the sale of the property was voluntary or otherwise, is not material to the assessment of the income chargeable to tax under the Income Tax Act, except if any exemption or benefit becomes available from the transaction of sale. CIT(E) has correctly held the assessment order to be erroneous as well prejudicial to the interests of the Revenue. CIT(E) has, rightly, hence, cancelled the assessment order passed u/s 143(3) - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... le purpose. It was further submitted that the Janta promoters have developed land in Sector 82 and have carved out plots around the Dera's land, as a result land of the assessee has become /sandwiched/marooned from all its sides in between the property owned by janta Promoters. 2. The Dera's went to the Hon'ble Court of Additional District Court, SAS, Mohali filed the suit. It is indeed clear that the sold agriculture land and purchased another agriculture land with equal amount of sale proceeds. It will not be out of place to say that the said transaction was merely the exchange of land rather than sale purchase of the land. A copy of order of Hon'ble Additional District Court is enclosed (As Per Annexure-I). The Hon'ble Court in its order mentioned as below on page No. 13:- 'It has been dedicated in the name of "Murti Baba Siri Chand Ji" and as such legally it is held in Trust on behalf of "Murti Baba Siri Chand Ji" by Mahant Biram Dass. Thus a case of potent legal necessity has been made out to sell the suit land. It is under the circumstances permission to sell suit property at the market rate has been sought so as to purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4/- as exempt under section 11(1 A) of the Act. As per the assessment records, the assessee trust is not registered u/s 12A/12AA or 10(23C) of the Act. Therefore, the exemptions under section 11 and 12 of the Act are not applicable in this case. This is per the text of Section 11, the first limb of sub-section 1 of which [viz. Section 11(1)] is reproduced hereunder (emphases in underlined bold italics supplied): "(1) Subject to the provisions of Sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income- (a) Income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India....... " Therefore the Question and Answer situation to apply the above would be: Q: Which kind of income is exempted from tax under Section 11? A: The following income is exempted: 1. The Income is derived from property which is held under trust 2. The property must be so held under trust for charitable or religious purposes; 3. Such income as held under trust for charitable or religious purposes must be applied i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54B of the Act do not represent or demonstrate the correct application of provisions of the Act. Whether the sale or alienation of the property in consideration has been done voluntarily or under duress or without discretion or unintentionally or in any other manner is not material to the assessment of the incomes that are chargeable to tax under the Income-tax Act unless the assessee is able to demonstrate to the Assessing officer that there are provisions in the Income-tax Act that operate in manners granting exemption or relief or benefit in any manner to the considerations that have emerged from the sale/alienation transaction. Therefore the following submissions of the assessee that: "Dera lands are exempted from provisions of Punjab land Reforms Act 1972, now Punjab Land reforms (Amendments) Act 2017. CBDT Circular 14 elated 11.04.1955-Officers of the Department must not take advantage of ignorance of an assessee as to his rights. The Dera has never claimed the benefit u/s 54B of the Income Tax Act, 1961" are to be examined against the above backdrop. As stated earlier, even if the assessee has not claimed the benefit u/s 54B of the Act, the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. It has also held that the phrase "prejudicial to the interest of revenue" is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the revenue. If due to an erroneous order of the ITO, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an ITO adopts one of the course permissible in law and it has resulted in loss of revenue; or w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as rightly observed by the ld. CIT(E). (ii) The AO had wrongly given benefit of deduction u/s 54B to the Assessee, without any claim by the Assessee for such benefit. (iii) Even otherwise, the provisions of section 54B of the Act are applicable to individuals and HUFs, whereas the Assessee is a trust, and so, not entitled to benefit u/s 54B of the Act. (iv) The Assessee is not entitled to benefit u/s 10(21) r.w.s. 35(1) r.w.s. 11 of the I.T. Act. (v) Whether the sale of the property was voluntary or otherwise, is not material to the assessment of the income chargeable to tax under the Income Tax Act, except if any exemption or benefit becomes available from the transaction of sale. 7. Therefore, in our considered opinion, the ld. CIT(E) has correctly held the assessment order to be erroneous as well prejudicial to the interests of the Revenue. The ld. CIT(E) has, rightly, hence, cancelled the assessment order dated 9.12.2019, passed u/s 143(3) of the I.T. Act, in the Assessee's case, for A.Y. 2017-18. 8. In view of the above, finding no error therein, the order under appeal is hereby confirmed. The grievance sought to be raised by the Assessee is found to be without merit a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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