Tribunal Overturns CIT(A)'s Decision, Orders Recomputation of Income

The Tribunal set aside the CIT(A)'s order denying exemption under sections 11 and 12 of the Income Tax Act, directing the AO to recompute the income based on the judgment of the Hon'ble Gujarat High Court. Due to the Tribunal's decision in a separate appeal, no effect was given to the CIT(A)'s order dated 8.3.2017, leading to the dismissal of the Revenue's appeal. The assessment order passed under section 143(3) read with section 263 on 27.3.2017 was deemed baseless as the original assessment order was no longer valid, resulting in the dismissal of both appeals.

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Issues:
1. Dispute regarding denial of exemption under sections 11 and 12 of the Income Tax Act.
2. Giving effect to the order of the ld. CIT(A) dated 8.3.2017.
3. Challenge against assessment order passed under section 143(3) read with section 263 on 27.3.2017.

Issue 1: Dispute regarding denial of exemption under sections 11 and 12 of the Income Tax Act:
The Tribunal noted that the original assessment order dated 16.3.2015 denied exemption under sections 11 and 12 of the Act to the assessee based on the applicability of the second proviso to section 2(15). The Tribunal observed that the CIT(A) had relied on a previous ITAT order for the Asstt. Year 2010-11 and 2011-12, which was later reversed by the Hon'ble Gujarat High Court. Consequently, the Tribunal found that the ld. CIT(A) erred in principle by following the ITAT order. The Tribunal set aside the CIT(A) order and directed the AO to recompute the income of the assessee considering the judgment of the Hon'ble Gujarat High Court to provide the benefit of sections 11 and 12.

Issue 2: Giving effect to the order of the ld. CIT(A) dated 8.3.2017:
The Tribunal addressed the controversy arising from giving effect to the CIT(A)'s order dated 8.3.2017 in the Asstt. Year 2012-13. Since the Tribunal had set aside this order in a separate appeal, the basis for giving effect to the CIT(A)'s order ceased to exist. Consequently, the Tribunal held that no order for giving effect could be passed, rendering the proceedings redundant and leading to the dismissal of the Revenue's appeal.

Issue 3: Challenge against assessment order passed under section 143(3) read with section 263 on 27.3.2017:
In this issue, the Tribunal highlighted that the assessment order dated 27.3.2017 was passed under section 143(3) read with section 263. However, the Tribunal had previously set aside the order passed under section 263, making the subsequent assessment order baseless. The Tribunal emphasized that the CIT's jurisdiction under section 263 depended on the original assessment order dated 16.3.2015, which was no longer valid due to the Tribunal's decision. As a result, both the appeals challenging the assessment order and the 263 proceedings were deemed infructuous and dismissed.

In conclusion, the Tribunal's judgment addressed multiple issues related to the denial of exemption under sections 11 and 12, the impact of setting aside previous orders, and the implications on subsequent assessment proceedings. The decisions rendered by the Tribunal aimed at ensuring compliance with the legal provisions and judicial precedents, ultimately leading to the dismissal of the Revenue's appeals in light of the circumstances and legal principles involved.

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