TMI Blog2023 (8) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... f proceedings u/s 154 of the Act. Also brought to our notice at the time of haring that the assessee has filed appeal against the assessment order passed u/s 143(3) r.w.s. 153A/153D before the ld. CIT(A) and the same are pending before the ld. CIT(A). Being so, if the assessee has any grievance, it can agitate it before the first appellate authority and the first appellate authority shall not be influenced by our findings on this issue in this appeal and he shall take independent view on this subject on merit in accordance with law while disposing the appeal before him for all these assessment years. This ground of appeals of the assessee is dismissed in all appeals. Depreciation claim - When the income of the assessee is assessed as business income by rejecting the exemption claimed by assessee u/s 11 and the assessee is entitled for all usual deductions under the provisions of the Act while computing the income of the assessee under the head business , more so deduction u/s 30 to 38 of the Act to be granted and not the gross income to be taxed. When the exemption u/s 11 of the Act is rejected, the income of the assessee has to be computed in normal commercial manner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.R. for the assessee submitted that in the assessment order passed u/s 143(3) of the Act for AY 2020-21 the learned assessing officer disallowed the exemption u/s 11 of the Act and determined the total income at Rs. 93,48,99,765/-. The ld. A.R. submitted that during the search, no unaccounted investment or sum of money or any other article or thing or bullion etc. was found. In the assessment order also, there was no discussion of any amount being added u/s 68, 69, 69A, 69B, 69C 69D of the Act. Apart from denying the exemption u/s 11 of the Act, the learned AO added certain unaccounted capitation fee alleged to have been received. The assessee has filed an appeal against the aforesaid assessment order and the appeal is pending. The total tax payable was determined as under: Particulars Reference Amount Assessed Income A 93,48,99,765 Income Tax (A) B = A*37.21% 35,16,07,430 Surcharge (B) C = B * 47.14% 16,57,57,162 Total D = B + C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent from record and liable of rectification. 3.3 Further he submitted that, on appeal with CIT(A), it was held that the capitation fees is taxed u/s. 115BBE of the Act. However, there is no error in tax computation. 3.4 The ld. A.R. submitted that the learned lower authorities failed to understand that there is no discussion in the assessment order or CIT(A) order regarding the taxation of capitation fees under which provisions of the Act. The orders are silent on this issue. Therefore, without any discussion or justification on the taxability of capitation fees and the provisions attracted, the provisions of section 115BBE of the Act cannot be applied. Further, the learned lower authorities do not discuss anything regarding the provisions of 68, 69, 69A, 69B, 69C 69D of the Act. Without justifying that the above provisions are attracted, the income cannot be taxed u/s. 115BBE of the Act. Hence, the taxing the capitation fees u/s. 115BBE of the Act is not correct and requires rectification. 4. On the other hand, the ld. D.R. submitted that on the issue of tax calculation, it is observed that the AO had taxed the amount of Rs 23,77,50,000/- as per provisions of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears. This ground of appeals of the assessee is dismissed in all appeals. Ground Nos. 3 Depreciation Rs. 14,85,18,591/- 6. The ld. A.R. submitted that the assessee claimed exemption u/s 11 12 of the Act in the return of income and therefore, did not claim depreciation as per S. 11(6) of the Act. In the assessment order, the learned assessing officer denied the exemption u/s 11 of the Act. Therefore, automatically the assessee becomes eligible for depreciation which is claimed in the Income and Expenditure account for the year ended 31.03.2020. Consequently, the assessee filed an application for rectification u/s. 154 of the Act. The learned assessing officer stated that there is no discussion regarding the issue of disallowance of depreciation in the assessment order. Further, the learned assessing officer denied the claim of the assessee stating that the depreciation claim was not made in the return of income. This observation of the learned assessing officer is bad in law and as stated above that the assessee has claimed exemption u/s 11 and 12 of the Act and therefore, the depreciation cannot be allowed in the return of income. The learned CIT(A) also stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed it during assessment proceedings. The merits of the claim of the depreciation of the assessee including a fresh claim can surely be examined by the CIT(A) in an appeal against the assessment order but it cannot be considered as a mistake apparent from record which could have been rectified by the AO. 8. We have heard the rival submissions and perused the materials available on record. In our opinion, when the income of the assessee is assessed as business income by rejecting the exemption claimed by assessee u/s 11 of the Act and the assessee is entitled for all usual deductions under the provisions of the Act while computing the income of the assessee under the head business , more so deduction u/s 30 to 38 of the Act to be granted and not the gross income to be taxed. In other words, when the exemption u/s 11 of the Act is rejected, the income of the assessee has to be computed in normal commercial manner. Even if there is no claim of deduction towards depreciation, the same to be granted as this is the mandatory deduction to be granted u/s 32 of the Act if the assessee owns and puts the assets to use. Accordingly, we direct the AO to grant the allowable deduction towar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ITAT order was not before the assessing officer at the time of passing the assessment order. Therefore, the above denial of exemption u/s. 11 of the Act does not result to mistake apparent from record. However, the learned CIT(A) did not consider that the above order was in existence and available on record on the date of passing his order. Hence, the assessment amounts to rectification. 10. The ld. D.R. submitted that in relation to the issue of allowing exemption under Section 11 of the Act on the basis of the order of the ITAT passed on 20.10.2021 i.e. after the assessment order had been passed by the AO, here again it is an issue on which two different opinions are possible. The ITAT had restored the matter of cancellation of registration under Section 12AA of the Act to the file of PCIT for fresh adjudication and the same was still pending at the time of passing of rectification order by the AO. During appellate proceedings the assessee has not raised any argument against the rejection of this plea of the assessee by the AO but it has raised a fresh issue that the AO should have rectified the order on the basis of a subsequent ITAT order dt. 08.06.2022. It is noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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