GUJARAT INDUSTRIAL INVESTMENT CORPORATION LIMITED EMPLOYEES PROVIDENT FUND,GANDHINAGAR V. THE ITO, WARD-1(EXEMPTIONS), AHMEDABAD

ITA 584/AHD/2025

AI Insights

The case involves the Gujarat Industrial Investment Corporation Ltd. Employees Provident Fund (the assessee), which appealed against the order of the CIT(Appeals) confirming an adjustment made under Section 143(1) of the Income Tax Act by the Centralized Processing Centre (CPC), Bengaluru. The adjustment amounted to Rs. 43,49,352, disallowing an exemption claimed under Section 10(23AAA) of the Act. The assessee argued that its income was exempt under alternative provisions, specifically Sections 10(25) or 10(38) read with Section 2(38), even if the exemption under Section 10(23AAA) was not allowable. The CIT(Appeals) upheld the CPC's adjustment, leading to the assessee's appeal to the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714634 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2022-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B.P. MAKWANA
• Assessee Lawyers: MAULIK KANSARA
• Keywords: Set aside; Opportunity of being heard

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.584/Ahd/2025 (Assessment Year: 2022-23) Gujarat Industrial Investment Corporation Ltd. Employees Provident Fund, C/o. Divyang Shah & Co., Chartered Accountants, 201, 2nd Floor Devashish Complex, Nr. Regenta Central Antarim Hotel, Off. C.G. Road, Ahmedabad-380009 Vs. Income Tax Officer, Ward-1 (Exemption), Ahmedabad [PAN No.AAATG9188P] (Appellant) .. (Respondent) Appellant by : Shri Maulik Kansara, AR Respondent by: Shri B. P. Makwana, Sr. DR Date of Hearing 16.07.2025 Date of Pronouncement 06.08.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), ADDL/JCIT (A)-2, Guwahati vide order dated 26.02.2025 passed for A.Y. 2022-23. 2. The assessee has raised the following grounds of appeal: “1. Whether, on facts and in circumstances of the case and in law, Ld. CIT(A) has erred in confirming the adjustment u/s. 143(1) of the act amounting to Rs.43,49,352? 2. Whether, on facts and in circumstances of the case and in law, Ld. CIT(A) has erred in charging “Gross Income” instead of “Net Income” while processing return u/s. 14391) of the act? Printed from counselvise.com ITA No. 584/Ahd/2025 Gujarat Industrial Investment Corporation Ltd. Employees Provident Fund vs. ITO Asst. Year –2022-23 - 2– 3. Without prejudice to what has been stated above, whether, on facts and in circumstances of the case and in law, Ld. CIT(A) has erred in not allowing deduction of Rs.41,32,006/- u/s. 57 of the Income tax act? 4. Whether, on facts and in circumstances of the case and in law, Ld. CIT(A) has erred in not allowing exemption u/s 10(25) r.w.s. 2(38) of the I.T. Act amounting to Rs.43,49,352? Further, appellant craves leave to add, amend, alter or withdraw all or any ground of appeal.” 3. The brief facts of the case are that the assessee, a trust, filed it’s return declaring Nil income under the head \"Income from Other Sources\". The Centralized Processing Centre (CPC), Bengaluru processed the return under Section 143(1) of the Income Tax Act (Act) and made an adjustment of ₹43,49,352/-, thereby computing the total income at that amount. The adjustment was made on account of the disallowance of exemption claimed under Section 10(23AAA) of the Act. 4. The assessee filed appeal before CIT(Appeals) against the intimation order passed CPC. The assessee contended during appellate proceedings before CIT(Appeals) that its income was actually exempt under alternative provisions as well, namely Sections 10(25) or 10(38) read with Section 2(38) of the Act, even if exemption under Section 10(23AAA) was not allowable. The CIT(Appeals), however, found that the CPC had duly issued an intimation under Section 143(1)(a) of the Act proposing the adjustment, and that the limited scope of adjustments permissible under Section 143(1) of the Act had been adhered to. The claim of alternate exemptions could not be entertained at the appellate stage, as the adjustment related specifically to the disallowance of a particular exemption initially claimed under Section 10(23AAA) of the Act, by the assessee. Therefore, the CIT(Appeals) rejected Printed from counselvise.com ITA No. 584/Ahd/2025 Gujarat Industrial Investment Corporation Ltd. Employees Provident Fund vs. ITO Asst. Year –2022-23 - 3– all grounds of appeal, holding that the adjustment made by the CPC was in accordance with law and procedure, and consequently, the appeal of the assessee was dismissed. 5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the Counsel for the assessee submitted that the alternate plea of the assessee should have been considered by CIT(Appeals), being an appellate authority duly empowered to do so and also in light of several judicial precedents which have held that appellate authorities are empowered and should look into the alternate plea raised by the assessee at appellate stage, even if inadvertently there was an omission on part of the assessee to make a claim in the return of income. In response, the Ld. DR placed reliance on the observations made by the CPC and Ld. CIT(Appeals) in their respective orders. 6. We have heard the rival contentions and perused the material on record. Having considered the rival submissions and in light of the legal position that appellate authorities are vested with the power to adjudicate on alternative legal pleas raised by the assessee even if such claims were not made in the return of income, we are of the considered view that the CIT(Appeals) erred in not examining the alternate claim of exemption under Sections 10(25) or 10(38) read with Section 2(38) of the Act. The CIT(Appeals), while upholding the procedural legality of the adjustment made under Section 143(1) of the Act, in our view ought to have examined whether the income which was brought to tax by way of disallowance of Section 10(23AAA) exemption, could nonetheless be excluded from the total Printed from counselvise.com ITA No. 584/Ahd/2025 Gujarat Industrial Investment Corporation Ltd. Employees Provident Fund vs. ITO Asst. Year –2022-23 - 4– income under any other applicable provision of the Act, as claimed by the assessee during appellate proceedings. In view of the above, and in the interest of justice, we deem it appropriate to set aside the order passed by the CIT(Appeals) and restore the matter to the file of the Jurisdictional Assessing Officer (JAO). The JAO shall examine the alternate claim of exemption under Sections 10(25) or 10(38) read with Section 2(38) of the Act, after giving the assessee an adequate opportunity of being heard and to furnish the necessary evidence in support of such claim. We clarify that we have not expressed any opinion on the merits of the claim, and the JAO shall decide the issue in accordance with law. 7. In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 06/08/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 06/08/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "