ITAT Sets Aside Order Against ICAI [Read Order]

The Income Tax Appellate Tribunal (ITAT), New Delhi in Institute of Chartered Accountants of India vs ACIT, recently set aside the order of the Commissioner of Income Tax (Appeals) against the Institute of Chartered Accountants of India ( ICAI ). Allowing ICAI’s appeal for statistical purposes, ITAT remanded the case back to the Assessing Officer for proper adjudication as per the law.

The assessee, ICAI, filed return of its income declaring nil income after claiming exemption under section 11 of the Income Tax Act, 1961. The assessee is registered under Section 12A of the Act and also notified under Section 10 (23 C) (114) of the Income Tax Act. The return of income was processed under section 143(1) by the CPC Bangalore, however, the amount accumulated or set apart for application to charitable purposes to the extent it does not exceed 15 per cent of the income, claimed at Rs. 985,7,10,000/- under section 11 (1)(a) (11)(b) of the Act and accumulation of Rs. 10,21,26,000/- under section 11(2) of the Act were not allowed and the total claim was restricted to Rs. 548,35,67,000/- instead of Rs. 657,14,03,000/-. Accordingly, the income was computed at Rs. 108,78,36,000. The assessee appealed to Commissioner of Income Tax (Appeals) (CIT(A)).

The CIT(A) found that the return of income revealed that the amount of Rs. 10,21,26,000/- had been mentioned in the relevant column pertaining to accumulation under section 11(2) of the Act, however, in column no. 5 of Schedule 1 of the ITR which pertained to amount invested or deposited in the modes specified in Section 11(5) for the entry pertaining to the year 2013, the said amount had been mentioned as “zero” which showed that the accumulated amount under section 11(2) had not been invested or deposited in modes specified under section 11(5). She, therefore, did not find infirmity in the intimation of the CPC for not allowing the amount claimed. Regarding the non-granting of permissible deduction or allowance at the rate of 15% of the income of the assessee in accordance with section 11(1)(a) of the Act, the CIT(A) observed that the said section provides that income from property held under trust will be exempted provided the income is applied for charitable purposes to the extent of 85 per cent or more. Aggrieved, assessee filed appeal before the ITAT.

The Counsel for the assessee argued that the assessee’s books of accounts were duly audited by the independent auditor whose report in Form No. 10 BB was filed electronically. He contended that the assessee’s professional while filing the ITR failed to punch the amount of Rs. 98.57 Cores under point no. 1(v) of the ITR 7 but the relevant forms, reports and resolutions etc., such being form no. 10 B, 10 BB wherein the said amount of Rs. 98.57 Crores was duly reflected and claimed as such were furnished electronically. It was further submitted that even the amount of Rs. 10.21 Crores which was sought to be accumulated under section 11(2) of the Act and whose details were also filed in the ITR was considered as income and no benefit with respect to the same was provided in the intimation under section 143(1) of the Act. It was further contended that in the intimation under section 143(1) of the Act neither the benefit of Rs. 98.57 Cores as amount being up to 15% of the income was provided to the assessee and nor the claim of accumulation Rs.10.21 Crores.

The Bench comprising of Judicial Member K.N. Chary and Accountant Member N.K. Saini observed “We, therefore, considering the totality of the facts deem it appropriate to remand this issue back to the file of the AO for adjudication in accordance with law, after proper verification from the material available on the record. We also direct to verify the amount of TDS which was claimed to be at Rs. 4,52,54,823/- while the amount considered was at Rs. 4,51,95,563/-. The AO shall provide a due and reasonable opportunity of being heard to the assessee”.