The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition made under section 143(1) of the Income Tax Act 1961 as no exemption was claimed in the preceding year on the purchase of fixed assets.
The assessee Varthur Foundation Trust filed return of income on declaring excess expenditure over income. The case was processed under Section 143(1) of the Income Tax Act, 1961 and income was determined by observing that depreciation was not allowed. The assessee filed a rectification application under Section 154 of the Act which was disposed of by the CPC, denying the claim of depreciation and not accepting the 154 applications of the assessee for rectification of mistake apparent on the face of the record.
B.R. Sudhendra, on behalf of the assessee submitted that the assessee was a Trust registered under Section 12A of the Act and it was eligible for claim of exemption under Section 11 of the Act, since the assessee had not claimed any application of income when the fixed assets were first purchased by the assessee.
He further submitted the issue was covered for the scrutiny assessment. The AO, examined the correctness of the claim of depreciation and he had found it was correct and no addition was made. He also contended that additions made by the CPC under Section 143(1) of the Act would not have legs to stand and the CIT(A)’s order was also non-est.
A Single Bench of Laxmi Prasad Sahu, (Accountant Member) allowed the appeal observing that, “the appeal in the scrutiny assessment that there is no addition made by the AO and the AO has noted that no exemption has been claimed by the assessee in the preceding year as application of income on the purchase of fixed assets. Therefore, the additions made by the CPC under Section 143(1) of the Act on the same issue as accepted in the course of scrutiny assessment do not survive.”
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