ITAT Restores Matter Back To AO To Verify ICSI's Income Tax Exemption Claim

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has restored the matter back to the AO to verify the Institute of Company Secretaries of India's (ICSI) income tax exemption claim.

The bench of Astha Chandra (Judicial Member) and N.K. Billaiya (Accountant Member) has observed that the claim of the assessee needs verification. It would be judicially expedient to restore the matter back to the file of the AO to carry out the necessary verification of the assessee's claim, and if, on verification, the claim of the assessee is found to be correct and in accordance with the law, modify the assessment.

The appellant/assessee filed an ROI declaring a total income of Rs. Nil and claimed a refund after claiming exemption. At the time of issuing the intimation, the CPC, Bengaluru, had given less credit to TDS, and a refund had been determined as against the refund claimed in the ITR. In response to the intimation issued under u/s 143(1), a rectification application under u/s 154 was e-filed by the appellant on December 20, 2022, stating "Correction of details of prepaid taxes.".

An order was passed under Section 154 of the Income Tax Act by CPC, Bangalore, in which CPC had not given the credit of balance TDS, but this time demand was raised for Rs. 64,47,35,040 on account of disallowing the claim made under Section 11(2) of the Income Tax Act, 1961.

The appellant had again e-filed a rectification application under Section 154 of the Income Tax Act, 1961, against the rectification order passed under Section 154 of the Income Tax Act to reprocess the case.

In response to the application, a rectification order was passed by CPC, Bangalore, in which the department gave full credit to TDS as claimed in the ITR form, i.e., Rs. 1,68,51,181. However, the benefit of the exemption claimed under § 11(2) was not given, and accordingly, a demand has been raised by CPC.

The assessee, aggrieved by the denial of the benefit of exemption claimed under Section 11(2) of the Income Tax Act, 1961, in a rectification order under Section 154/143(1) passed by CPC Bangalore, filed an appeal before the CIT (A).

The CIT(A) partly allowed the assessee's claim under Section 11(2) of the Act amounting to Rs. 110,94,73,718 as against Rs. 120,00,33,672 claimed in the return. It is against the denial of the benefit of the balance claim of Rs. 9,05,58,182 on account of the non-accumulation of funds under Section 11(5) that the assessee is in appeal before the Tribunal.

The assessee contended that the assessee is registered under Section 12A. It e-filed a rectification application under Section 154 after receiving an intimation under Section 143(1)(a) of the Act. However, in the order passed by CPC Bangalore, the assessee's claim made under Section 11(2), which was in the original intimation under Section 143(1) dated December 14, 2022, was denied. The assessee, despite having reservations about it, submitted all documents pertaining to investments under Section 11(5) before the CIT (A) was asked. The CIT (A) did not ask for clarification from the assessee for the alleged discrepancy found by him while matching the details of the investment with the evidence furnished. It is in violation of the principles of natural justice. The CPC Bangalore was also the CIT(A), which did not appreciate that the assessee had duly complied with the provisions of Section 11(2) as Form 10 was e-filed before the specified due date.

The tribunal partially allowed the appeal of the assessee and remanded the matter back to the AO.

Counsel For Appellant: Ranjan Chopra

Counsel For Respondent: Sapna Bhatia

Case Title: The Institute of Company Secretaries of India Versus DCIT

Case No.: ITA No. 3372/Del/2023

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