TaxTMI 
TaxTMI 
2017 (2) TMI 171
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....d in confirming the order of the Assessing Officer rejecting application u/s. 154 without appreciating that assessee is entitled to exemption on dividend income on units of mutual fund Rs. 48,90, 114/- u/s. 10(35) of Income tax Act. 1961. 2. Without prejudice to above when the Assessing officer has not allowed the set off or expenses. against income from other sources, he ought to have allowed the exemption in respect of dividend income on mutual funds as all the details were available from the P&L Account and Balance Sheet which were filed along with return of income and on identical facts exemption u/s 154 was allowed for the A.Y.2005-06." 2. The brief facts in this case as brought out before us are that the assessee company was inc....
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....eads as under:- "Dear Sir, With reference to above we are in receipt of Assessment order passed u/s 143(3) of the Income Tax Act 1961 for the above year, we write to you as under :- Without prejudice to our contention in the appeal filed against the above order we have to request you to kindly pass an order rectifying the mistake apparent from record as stated below and oblige. Sir, while treating the Income from Mutual Fund as Income from Other Sources of Rs. 76,40,047/-, out of which the deduction of Rs. 48,90,114/- for being dividend on units of Mutual Fund which is exempted is not considered for exemption." 4. Being aggrieved, the assessee filed appeal before the Ld. CIT(A) wherein it was submitted that the assessee is el....
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....r the identical amount, there was an apparent mistake in the final assessment order passed by the AO which required necessary rectification for which application u/s 154 was filed within four years from the date of assessment order, and the AO should have allowed the application by granting benefit of exemption due to the assessee as per law and facts of this case. He further submitted that there is no denial to the fact that assessee was eligible for the benefit of exemption u/s 10(35) but only for the reason that the claim was not made in the original proceedings, the benefit has been wrongly denied to the assessee. In this regard, it was submitted that the claim of exemption was an alternative claim and its need arose only when the divid....
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....u/s 154 only when its need arose as a result of re-computing of income by the AO. 8. We have analysed full facts of this case and also examined legal position under the income tax law as would be applicable under such situations, as has been explained by various courts in our country time to time. In this regard it is firstly noted by us that original return of the assessee was filed by setting off entire income (including impugned dividend income) against the development expenses incurred during the year, and the balance amount of the development expenses after debiting the aforesaid income was added to the capital work-in-progress. Thus, the assessee did not show the impugned dividend income from the units of mutual funds in the return....
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....f the Ld. AO on this aspect, since in our opinion what attained finality at the stage of the Tribunal was that the entire interest income and dividend income should be assessed as 'Income from other sources' and it would not be adjusted against the development expenses, as was claimed by the assessee in its return. But, the other aspect whether any part of the aforesaid income was eligible for benefit of exemption or not, was not adjudicated upon by the Tribunal. Thus, it was open before the AO to assess the income as per law after granting requisite exemption. 10. The second obstacle mentioned by the AO for giving relief to the assessee was that no such relief could have been given u/s 154, since only a mistake apparent on record could ....
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....found to be correct. Hence, assessment is hereby rectified u/s 154 of the Income-tax Act, 1961. 3. The revised total income of the assessee is computed as under:- I) Rent Income received Rs. 10,836/- II) (a) Interest earned on Fixed Deposit Rs. 88,047/- (b) Interest on loans Rs.7,11,717/- (c) Income from units of Mutual Fund Rs.11,08,963/- Less : Deduction as Rs. 7,79,674/- Rs. 3,39,289/- REVISED TOTAL INCOME Rs.11,39,889" 11. Thus, from the perusal of the above, it is evident that the AO had himself granted the benefit of exemption and that too u/s 154. Thus, the AO was very much aware of this fact that dividend income of the assessee is eligible for the benef....