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December 27, 2022

Section 154 of IT Act provides for the correction of exemption claims made mistakenly

by CA Shivam Jaiswal in Income Tax, Legal Court Judgement

Section 154 of IT Act provides for the correction of exemption claims made mistakenly

Facts and issue of the case

Facts of the case are that assessee is a University incorporated by the Burdwan University Act, 1981 by the West Bengal Legislative Assembly for imparting education. Return was filed on 22.10.2018 reporting NIL income by claiming exemption u/s. 10(23C)(vi) of the Act against aggregating annual receipt of Rs.113,13,24,059/-. The said claim of exemption was rejected in the processing of the return by the Centralised Processing Centre (CPC), Bangalore vide intimation passed u/s. 143(1) of the Act dated 20.03.2020. Against the said processing, assessee moved an application of rectification u/s. 154 of the Act on 30.07.2020 by making a correction towards the claim of exemption u/s. 10(23C) (iiiab) of the Act as against eligible claim made u/s. 10(23C)(vi) of the Act.

The rectification application was rejected vide order dated 04.09.2020 against which assessee went in appeal before the Ld. CIT(A), NFAC, Delhi who had upheld the rejection of the claim made by the assessee u/s. 10(23C) (iiiab) of the Act vide its rectification application. Being aggrieved, by the decision the petition filed appeal ITAT

Observation

There is no disputing the fact that the assessee has been providing education without a profit-making motivation and receives a significant amount of funding from the West Bengal government, according to the Ld. Counsel . He further submitted that assessee had always claimed exemption u/s. 10(23C)(iiiab) of the Act on its receipt which has always been allowed. He also referred to the assessment order passed u/s. 143(3) of the Act dated 13.12.2019 for AY 2017-18 wherein assessee had claimed exemption u/s. 10(23C)(iiiab) of the Act which was considered in the said assessment proceedings. He also referred to the assessment order for AY 2016-17 passed u/s. 143(3) of the Act dated 03.12.2018 wherein also assessee’s claim of exemption u/s. 10(23C)(vi) of the Act was considered and allowed. Ld. Counsel further cited the intimation issued under Section 143(1) of the Act for AY 2019–20 and 2020–21, or the years following the impugned order under consideration, which stated that the assessee had requested an exemption under Section 10(23C)(iiiab) of the Act in the return that had been accepted and processed by the department.

He also submitted that a rectification application was filed to correct the inadvertent mistake by making claim of exemption under the correct section of 10(23C)(iiiab) of the Act which has been unjustifiably rejected. Therefore, Ld. Counsel stressed that Rule of Consistency ought to be adopted and there is no reason to depart from the position that has already been made in light of all the aforesaid processing and assessment in the assessee’s own case of the preceding as well as later assessment years. Therefore, Ld. Counsel stressed that Rule of Consistency ought to be adopted and there is no reason to depart from the position that has already been made in light of all the aforesaid processing and assessment in the assessee’s own case of the preceding as well as later assessment years.

It was an inadvertent mistake which occurred at the end of the assessee in the filing of return where the claim of exemption was made u/s. 10(23C)(vi) of the Act instead of section 10(23C)(iiiab) of the Act. It is also noted that upon receiving intimation u/s. 143(1) of the Act wherein the inadvertent claim made u/s. 10(23C)(vi) was disallowed and remedial measure was taken by the assessee by filing an application u/s. 154 for rectifying the mistake by making a claim under the correct section of sec. 10(23C)(iiiab) of the Act. Considering the ITAT Lucknow in the case of Desh Bharti public School Samiti (supra),Court observed that mistake apparent from record is rectifiable under the provisions of section 154 of the Act which in the present case ought to have been allowed as claimed by the assessee.

Conclusion

The Court decided in favour assessee set aside the finding of the Ld. CIT(A) and direct the Ld. AO mistake had occurred as a human error and thus Assessing Officer was to be directed to allow the claim of the assessee by applying the provisions of section 10(23C)(iiiab) of the Act. Accordingly, grounds taken by the assessee in this respect are allowed.

University of Burdwan C/o S. N. Ghosh & Associates Vs ACIT (ITAT Kolkata)

Date of Hearing : 09.11.2022

Date of Pronouncement : 24.11.2022

University-of-Burdwan-Co-S.-N.-Ghosh-Associates-Vs-ACIT-ITAT-Kolkata.docx

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