2024 (7) TMI 572

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....o the AY 2002-03. From AY 2003-04 to 2008-09, total income of the assessee was exempted U/s. 11 of the Act. Consequent to amendment to section 2(15) of the Act, the assessee filed its return of income for the AY 2009-10 onwards admitting its income under the head 'business income'. Further, the registration U/s. 12AA of the Act was cancelled w.e.f 1/4/2009 vide proceedings of the Ld. CIT-1, Visakhapatnam dated 11/09/2012. The assessee filed its return of income for the AY 2010-11 on 29/9/2010 admitting a total income of Rs. 81,20,30,260/-. The case was selected for scrutiny under CASS and accordingly notice U/s. 143(2) dated 5/9/2011 was issued and served on the assessee on 8/9/2011 by the DCIT, Circle-1(1), Visakhapatnam. The assessee in response to the notice, filed a revised return of income on 29/03/2012 admitting the same income at Rs. 80,20,30,260/- however, by claiming a higher TDS credit. Thereafter, the case has been assigned to the Addl. CIT, Range-1, Visakhapatnam by the Ld. CIT-1, Visakhapatnam. After examining the books of accounts and discussing the facts of the case with the assessee's Authorized Representative, the Ld. AO passed an order U/s. 143(3) of the Act on 30....

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..../s. 43B of the Act on the reasoning that such disallowance made in the earlier years in the respective computation of income of the assessee did not materially affect the non-taxable status of the assessee which claimed and enjoyed the total exemption from taxation on account of its status as a Charitable Trust / institution. The Ld. CIT-1, Visakhapatnam observed that allowing the deduction of expenditure relating to the earlier assessment years during the AY 2010-11 amounted to grant of double benefit to the assessee and therefore the order of the Ld. AO is erroneous and also prejudicial to the interests of the Revenue. The Ld. CIT-1, Visakhapatnam further observed that once the income of the assessee is computed or deemed to have been computed as per the aforesaid method for the earlier years during which it obtained the benefit of exemption, the profit / loss computed under the head "profits and gains of business or profession" wherein the disallowance U/s. 43B has been made becomes irrelevant and as such no consequential effect would be given to the disallowed amount on payment basis in the subsequent year. Therefore, the Ld. CIT-1, Visakhapatnam was of the opinion that such ex....

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.... 4,44,91,804/-. 5. Any other ground that may be urged at the time of appeal hearing." 7. At the outset, Ld. AR submitted that in the first round of proceedings, the assessee instead of contesting the consequential order of the Ld. AO passed U/s. 143(3) r.w.s 263 of the Act, the assessee filed an appeal against the order U/s. 263 of the Act, dated 21/11/2013 passed by the Ld. CIT-1, Visakhapatnam. The Ld. AR further submitted that on appeal of the assessee, the Hon'ble Tribunal quashed the order passed U/s. 263 of the Act, dated 21/11/2013 by the Ld. CIT-1, Visakhapatnam and allowed the appeal of the assessee in ITA No.25/Viz/2015, dated 27/09/2023. Therefore, the Ld. AR prayed that since order passed U/s. 263 of the Act, dated 21/11/2013 was quashed by the Hon'ble Tribunal vide its order dated 27/09/2023, the consequential order passed by the Ld. AO U/s. 143(3) r.w.s 263 of the Act, dated 29/01/2015 giving effect to the direction of the Ld. CIT-1, Visakhapatnam has no legs to stand and therefore the same deserves to be quashed. 8. On the other hand, the Ld. Departmental Representative did not raise any objection to the submission of the Ld. AR. 9. We have heard both the sides ....

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....263 of the Act is absent. Further, in the case of CIT vs. Chettinad Logistics Pvt Ltd reported in [2017] 248 Taxman 0055 (Madras) the Hon'ble High Court of Madras held that if no exempt income forming part of the total income of the assessee was earned in the relevant assessment year, additions made by the Ld. AO by relying upon section 14A of the Act read with Rule 8D is beyond the scope and content of the main provisions. Further, in the case of Redington (India) Ltd vs. Addl. CIT [2017] 392 ITR 633 (Mad.), the same view was upheld by the Hon'ble Madras High Court. In view of these facts and circumstances of the instant case and relying on the judicial pronouncements as discussed above, we considered it deemed to be fit that exercise of powers U/s. 263 of the Act by the Ld.CIT-1, Visakhapatnam is not valid in law and deserves to be quashed. 11. Further, with respect to Ground No.8, wherein the assessee has submitted that an amount of Rs. 4,21,233/- pertaining to deduction U/s. 43B of the Act, we find from the written submissions made by the Ld. AR that the assessee has submitted before the Ld. CIT-1, Visakhapatnam that the expenditure of Rs. 4,21,233/- is in respect of Seignio....