Per Rajpal Yadav, Judicial Member

-आयकर अपील
य अधकरण, अहमदाबाद यायपीठ - अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL

AHMEDABAD – BENCH ‘SMC’
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER

AND
SHRI PRADIPKUMAR KEDIA, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.2337/Ahd/2017

[Asstt.Year: 2015-16]
City Manager Association Vs. ACIT, CPC

C/o. Ahmedabad Municipal Corpn Usmanpura Cross Road.
West Zone Office
PAN : AAATC 2293 H
(Applicant) (Respondent)
Assessee by : Smt.Arti Shah, AR

Revenue by : Shri Virendra Singh, Sr.DR
सन
ु वाई क% तार
ख/Date of Hearing : 08/08/2019
घोषणा क% तार
ख /Date of Pronouncement: 21/08/2019
आदे श/O R D E R
PER RAJPAL YADAV, JUDICIAL MEMBER:
Assessee is in appeal before the Tribunal against order of the

ld.CIT(A)-9, Ahmedabad dated 18.8.2017 passed for Asstt.Year
2015-16.
2. The Assessee has taken two substantial grounds of appeal,

which reads as under:
“1. The Learned Commissioner of Income Tax (Appeals)-9,

Ahmedabad has erred in law and on facts of the case by
confirming the disallowance of legitimate claim of deduction
of Rs.4,03,4357- u/s.11(l)(a) of the I.T. Act, 1961 as
claimed in the return of income filed by the Appellant.
ITA No.2337/Ahd/2017
2. The Learned Commissioner of Income Tax (Appeals)-

9, Ahmedabad has erred in law and on facts of the case by
confirming the disallowance of deduction of Rs.29,922/- for
amount of TDS for which credit has been claimed against tax
payable on the returned income.”
3. Brief facts of the case are that the assessee has filed its
return of which was processed under section 143(1) of the Income
Tax Act, 1961 determining the income at Rs.8,92,931/- as against
total income of Rs.7,61,081/-. As far as first ground of appeal is
concerned, the assessee has accumulated income out of the
income derived from the trust, which was not utuilised for the
objects of the trust. This accumulated income was 85% of the
alleged surplus. It was kept separately and was to be applied for
the charitable objects of the trust in future years. However,
during the year 2015-16 the assessee could not utilize that
accumulated income and offered it for taxation at Rs.8,79,000/-.
The assessee was of the view that on this unutilized income, it is
entitled for further accumulation at the rate of 15%. In other
words, the assessee was of the view that income which set apart
for future utilization of the objects of the trust, and if not utilized
and offered in future, then that income would be part of the
current income of that figure year, and the assessee will be
entitled to accumulate 15% from that income. A prima facie
adjustment was made vide which its claim was rejected and
addition of Rs.4,03,435/- under section 11(1)(a) of the Act was
made. In other words, the AO was of the view that it is the
deemed income, and on this deemed income no further rebate at
15% has to be granted. Appeal to the CIT(A) did not bring any
relief to the assessee.
4. As far as second ground is concerned the assessee has

contended that grant of TDS at Rs.22,922/- is concerned, this is in
the form of TDS statement shown in Form NO.26AS and there was
no reason at all for not granting the credit for the same. The
ld.CIT(A) has not recorded any specific finding on this issue.
5. Before us, the assessee raised two fold submissions. Firstly,

on the strength of Hon’ble Kolkatta High Court in the case of CIT
Vs. Natwarlal Chowdhury Charity Trust, 52 taxmann 330 (Kol) it is
entitled for deduction at 15% of the alleged deemed income
offered for taxation in this assessment year. In the second
contentions, she contended that both the issues are debatable
that cannot be adjudicated under section 143(1) of the Act.
6. On the other hand, the ld.DR relied upon the order of the
Revenue authorities. He placed on record copy of ITAT’s order in
the case of the Trustees, The B.N. Gamadia Parsi Hunnarshala, 77
TTJ 274 (Mum-Trib.) We would like to reproduce brief order of the
Hon’ble Kolkatta High Court in the case of CIT Vs. Natwarlal
Chowdhury Charity Trust (supra), which reads as under:
"Whether, on the facts and in the circumstances of the case, the

Tribunal was correct in law in holding that the assessee's right to
accumulate 25% of the total income of the previous year
extended to the deemed income under Section 11(3) of the
Income-tax Act, 1961, added therein in the circumstances
mentioned above ?"
2. The facts found by the Tribunal as stated in the statement of

case are as follows :
The assessee-trust accumulated Rs.46,184 during the accounting

years relevant to the assessment years 1973-74 to 1976-77.
During the previous year relevant to the present assessment year,
accumulated income ceased to be invested in fixed deposit with
the Indian Bank and it was, therefore, deemed to be the income
of the trust in the previous year in which it ceased to remain

invested or deposited in terms of clause (b) of sub-section (3)
of section 11 of the Income-tax Act, 1961. The Income-tax Officer
was of the opinion that the assessee was not entitled to
accumulate 25% of this deemed income because permitting it to
do so would amount to a double benefit to the assessee. He,
therefore, assessed the entire deemed income.
3. The Tribunal in agreeing with the decision of the Appellate

Assistant Commissioner observed:
The legal fiction contained in section 11(3) of the Income-tax Act,

1961, should be allowed to play to the fullest extent and there is
no warrant to take a restricted view for denying the exemption
which is specifically allowed by the statute. In fact, as per the law
as stood from April 1, 1976, charitable trusts are permitted to
accumulate up to 25% of their income without complying with any
formalities or condition and such accumulation is not included in
the total income. Therefore, we uphold the order of the Appellate
Assistant Commissioner as it is quite justified in law and the
assessee would be entitled to accumulate 25% of the total income
of the previous year relevant to the assessment year 1978-79
inclusive of the deemed income under section 11 (3) of
the Income-tax Act, 1961.
4. Mr. Moitra, appearing on behalf of the Revenue, has failed

to show any infirmity in the order of the Tribunal. In fact, he has
prayed merely for remand of the case as was done by the Andhra
Pradesh High Court in the case of CIT v. Hyderabad Secunderabad
Foodgrains Association Ltd. [1989] 175 ITR 574. The facts in that
case were quite different and it was felt by the Andhra Pradesh
High Court that it was necessary to remand the case.
`
But, in the instant case, no argument at all has been advanced to
show any infirmity in the order of the Tribunal."
Since Mr. Moitra has failed to show us any infirmity in the order
passed by the Tribunal, the question is answered in the
affirmative and in favour of the assessee.”
7. In the light of the above, let us consider the scope of section

154 for making prima facie adjustment while processing return
under section 143(1)(a) of the Act i.e. process of dealing with the
return is an ex parte process. It is pertinent to observe that
whenever any debatable issue is involved an explanation of the
assessee is required, then on such issue, no prima facie

adjustment in an ex parte proceedings can be made. Reading of
judgment of Hon’ble Kolkatta High Court (supra), and if facts are
looked into, then it would reveal that both the issues were
debatable one, where more than one opinion was possible.
Adjustment under section 143(1)(a) is not permissible on both
these aspects. Therefore, we allow appeal of the assessee, and
delete both the disallowances.
8. In the result, appeal of the assessee is allowed.
Order pronounced in the Court on 21st August, 2019.
Sd/- Sd/-
(PRADIPKUMAR KEDIA) (RAJPAL YADAV)
ACCOUNTANT MEMBER JUDICIAL MEMBER

Per Rajpal Yadav, Judicial Member

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-आयकर अपील

य अ धकरण, अहमदाबाद यायपीठ - अहमदाबाद ।

IN THE INCOME TAX APPELLATE TRIBUNAL

BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER

आयकर अपील सं./ ITA No.2337/Ahd/2017

City Manager Association Vs. ACIT, CPC

Assessee by : Smt.Arti Shah, AR

PER RAJPAL YADAV, JUDICIAL MEMBER:

Assessee is in appeal before the Tribunal against order of the

2. The Assessee has taken two substantial grounds of appeal,

“1. The Learned Commissioner of Income Tax (Appeals)-9,

2. The Learned Commissioner of Income Tax (Appeals)-

4. As far as second ground is concerned the assessee has

5. Before us, the assessee raised two fold submissions. Firstly,

"Whether, on the facts and in the circumstances of the case, the

2. The facts found by the Tribunal as stated in the statement of

The assessee-trust accumulated Rs.46,184 during the accounting

of the trust in the previous year in which it ceased to remain

3. The Tribunal in agreeing with the decision of the Appellate

The legal fiction contained in section 11(3) of the Income-tax Act,

4. Mr. Moitra, appearing on behalf of the Revenue, has failed

7. In the light of the above, let us consider the scope of section

assessee is required, then on such issue, no prima facie

8. In the result, appeal of the assessee is allowed.

Order pronounced in the Court on 21st August, 2019.

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य अधकरण, अहमदाबाद यायपीठ - अहमदाबाद ।