TaxTMI 
TaxTMI 
2015 (1) TMI 515
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....ces under S.153A of the Act were issued by the Assessing Officer on 13.7.2010 for the years under consideration in response to which returns were filed by the assessee society on 11.1.2011. In the assessments completed under S.143(3) read with S.153A of the Act vide orders dated 30.12.2014, the total income of the assessee for the years under consideration was determined by the Assessing Officer as under- S. No. A.Y. Income returned Income assessed Returned u/s.153A 1 2004-05 (-)18,26,68,815 (-) 5,80,59,501 2 2005-06 (-)5,59,67,152 (-) 2,38,62,471 3 2006-07 (-)7,09,71,311 4,42,66,317 4 2007 -08 (- )4,55 ,14,612 2,90 ,17,942 5 2008-09 (-)2,42,49,506 5,10,20,887 6 2009-10 (-)1,53,67,242 8,07,88,658 7 2010-11 NIL 8,83,71,660 3. Records of the above assessments made in the case of the assessee subsequently came to be examined by the learned Commissioner and on such examination, he found that there were following errors in the assessments made by the Assessing Officer under S.143(3) read with S.53A, which were prejudicial to the interests of the Revenue "..... (a) Claiming of Depreciation on Hospital Equipment S....
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....d Commissioner of Income-tax therefore issued a show cause notice to the assessee pointing out the above errors and seeking its explanation as to why the orders passed by the Assessing Officer under S.143(3) read with S.153A for the years under consideration should not be revised by exercising his power under S.263. In response to the said notice, the following submissions were made by the assessee in writing- "With reference to the above we submit the following lines for your consideration and necessary action. 1) Our Society was initially registered as public charitable entity under section 12AA on 04.10.2000. Later, on 26.03.2008, the Society was also granted exemption under section 10(23C} of Income tax Act, 1961. 2) Subsequent to search action conducted on 10-09-2009 on the offices of Society and residence of the Chairman of the Society, the above two registrations were rescinded. 3) The Society challenged the rescinding orders of Hon. Director General of income tax in Hon. High Court of Andhra Pradesh. The Hon'ble High Court suspended the orders of Hon'ble DGIT till further orders. Copies of Orders of the Hon'ble High Court are enclosed. 4) The 12AA....
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....iginal returns considering the 12AA/10(23C) Registrations on hand) as capital receipts which are non-taxable. For this purpose extracts from the book of Sri Rakmnnam and others in their book "LAW AND PROCEDURE ON CHARITABLE TRUSTS AND RELIGIOUS INSTITUTIONS" TENTH REVISED EDITION, was produced where in the learned authors have opined that corpus donations received by the charitable entities, whether registered or not under the provisions of the Income tax Act, 1961, are exempt from tax (a copy of the said extract is enclosed to this letter for the ready reference of your qoodselves): The learned AD after considering our submissions had kindly accepted this plea as well and did not bring these amounts to tax. 7) Having submitted a brief back ground for the claim of depreciation as Income tax Rules and non taxability of corpus donations, we submit hereunder our detailed submissions as why corpus donations should not be taxed. A detailed reading of the relevant provisions of the Act as applicable to charitable trusts (section 11, 12 and 13 ) read with the definition of voluntary contributions as appearing in section would reveal the following: a) Section 2(24) (iii) refers to th....
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.... Educational Society, Hyd 1289/Hyd/2010 iii) ADIT v National Inst of Tourism ITA No 1203/Hyd/2010 dt11-03-2011 g) There are a large number of decisions wherein the jurisdictional ITAT has consistently held the view that the provisions of section 12AA can be independently applied to grant benefit of exemption under section 11 irrespective of whether there is exemption under section 10(23C) or not. In the light of this, there is no question of treating corpus donation as taxable 8) With regard to minor errors that were noticed in the claim of depreciation is concerned, as submitted in the earlier paragraphs, the claim for depreciation as per the provisions of Income tax Act was permitted in the last moment of completion of assessment. The assessee had to, within a short span of time, has to recompute the depreciation amount by categorizing them under various blocks and number of days the assets were put to use in the initial year of purchase. In this process few errors have crept in the computation and the same has occurred on bath ways i.e., on some assets higher deprecation was claimed and in case of some others, a lower rate was claimed. The details have been worked out a....
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....tion of the amount of tax to be paid. It may disagree with primary authority on matters relating to deductions allowable under the statue. All such Litigations as aforesaid may render the order of the primary authority wrong or erroneous as commonly sunder stood. Such situations however, would not be facets of an erroneous decision in so far the meanings of the said expression as appearing in section 36 of the Act are concerned". The revisional powers conferred under Madras General state tax Act are pari material with the powers conferred under section 263 of IT Act. Therefore, the above principles decided in the context of the said act are equally applicable to a case of revision under IT Act. ii) In the case of CIT v Gabriel India Ltd Taxman 71 Taxman 585 Bombay, it was held that if an ITO acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualise a case of substitution of. the judgment of the Commissioner for that of the ITO, who passed the order, unless the decision is held to be erroneous. Cases ....
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....ssessee does not have control over the way an order is drafted by the AO. In case of CIT v. Honda Siel Power Products Ltd 235 ITR 336/330 ITR 547 (Del) it was held that after having applied his mind on the issue, the Assessing officer has passed the order. vii) It cannot be held that lack of deeper enquiry would call for a revisional proceeding. ITO V D G Housing Project Ltd. 2012, 343 ITR 329 Delhi. It is submitted that where an assessment has been completed after enquiry, verification and application of mind, the Commissioner cannot assume prejudice in the absence of positive error and prejudice. viii) In Sirpur Paper Mills Ltd. v. ITO [1978J 114 ITR 404 (AP), it has been held that the department cannot be permitted to begin litigation fresh because of new views they entertain on facts or new versions which they present as to what should be the inference or the proper inference either on the facts disclosed or on the weight of the circumstances. [Para 18). Assessee case stands in a better footing. In the case of the assessee, the observations are in general terms without any cogent reasons and therefore the same would not call for any revisional proceedings. Therefore....
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....of assessment proceedings before the Assessing Officer, and after examining and verifying the same, the claim of the assessee for depreciation was allowed by the Assessing Officer. He submitted that depreciation at higher rate of 40%, no doubt, was allowable only in respect of certain items and although the Assessing Officer did not call for the relevant details of hospital equipment in order to ascertain and verify the exact items on which higher rate of depreciation of 50% was allowable to the assessee, this by itself would not make the assessments made by the Assessing Officer on this issue to be erroneous and prejudicial to the interests of the Revenue. In support of this contention, he relied on the decision of the Hon'ble Bombay High Court in the case of CIT V/s. Nagri Mills Co. Ltd. (33 ITR 681) and that of Hon'ble Supreme Court in the case of CIT V/s. Excel Industries Ltd. (350 ITR 295), wherein it was held that when the rate of tax remains the same in the relevant year as well as in the subsequent assessment years, the dispute raised by the revenue is entirely academic or at best may have a minor tax effect. He contended that the allowability of depreciation either....
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.... by the Hon'ble Andhra Pradesh High Court by its judgment dated 30th July,2014. 9. In support of his contention that the adjustments made by the Assessing Officer under S.143(3) read with S.153A for all the years under consideration are not erroneous as alleged by the learned Commissioner, the learned counsel for the assessee relied inter alia on the decision of the Hon'ble Delhi High Court in the case of CIT V/s. Anil Kumar Sharma (335 ITR 83), wherein it was held that there is a difference between lack of enquiry and inadequate enquiry. He also cited another decision of the Hon'ble Delhi High Court in the case of CIT V/s. Hindustan Marketing and Advertising Co. Ltd. (341 ITR 180), wherein it was held that revision under S.263 was not permissible on the ground that the enquiry by the Assessing Officer should have been more detailed. He also cited the decision of Hon'ble Bombay High Court in the case of CIT V/s. Gabriel India Ltd. (282 ITR 108), wherein it was held that the decision of the Assessing Officer should not be held erroneous simply because in his order, he did not make any elaborate discussion. Reliance is also placed by the learned counsel for the ass....
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....the issues raised by him on merits, and has simply directed the Assessing Officer to complete the assessments afresh after making proper and adequate enquiries on the issues pointed out by him, which the Assessing Officer had clearly failed to do. He contended that the assessee thus is free to raise all his contentions on merits before the Assessing Officer during the course of fresh assessment proceedings and even the learned Commissioner in his impugned order has directed the Assessing Officer to consider the submissions of the assessee, while deciding the relevant issues on merits. The Learned Departmental Representative contended that there is thus no infirmity in the impugned order of the learned Commissioner passed under S.263 and urged that the same may be upheld. 11. We have considered the rival submission and also perused the relevant material available on record. It is observed that depreciation at higher rate of 15% was allowed by the assessing Officer on the furniture in the assessments completed under S.143(3) read with S.153A of the Act for assessment years 2006-07 and from 2008-09 to 2010-11 as against the applicable rate of 10% as per the relevant Income Tax Rule....
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..... 13. In the case of Nagri Mills Co. Ltd. (supra), there was a dispute in regard to the bonus payable to the workers for the year 1951, and the matter was referred to conciliation. The Conciliation Board gave its award in June, 1952 and the bonus was actually distributed in December, 1952. The assessee company maintaining accounts on mercantile basis, claimed the deduction on account of bonus in the assessment year 1952-53, relevant to accounting year 1951. The Income Tax Department however, took a view that the deduction on account of bonus was allowable in assessment year 1953-54 relevant to accounting year 1952. When the matter reached the Hon'ble Bombay High Court, it was observed by The Lordships that the question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different. It was observed that in the case of a company, where tax is attracted at a uniform rate, the issue as to whether deduction in respect of bonus was granted in assessment year 1952-53 or 1953-54 should be a matter of no consequence to the Department and one should have thought that the department would not fritter ....
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....icer in allowing higher depreciation cannot be said to have caused any prejudice to the interests of the Revenue. In this regard, it is observed that the orders giving effect to the orders of the learned CIT(A) for all the years under consideration have been passed by the Assessing Officer only after the impugned order under S.263 came to be passed by the learned Commissioner and based on this subsequent development, it cannot be said that the order passed by the learned Commissioner under S.263 earlier is not sustainable on the ground that the errors pointed out by the Commissioner do not cause any prejudice to the interests of the Revenue, as a result of subsequent development. Moreover, if at all the depreciation has been finally allowed in the case of the assessee as per the books and not as per Income-tax Rules, there will be no impact of the errors pointed out by the learned Commissioner in relation to higher depreciation allowed in the original assessments as per the Income-tax Rules, as the Assessing Officer, is finally required to pass fresh orders of assessment, which are in consonance with the orders passed by him giving effect to the appellate order of the learned CIT(A....