Top Stories No reopening of matter when grant of benefit u/s 11 of Income Tax Act, was subject matter of appeal: Bombay HC No reopening of matter when grant of benefit u/s 11 of Income Tax Act, was subject matter of appeal, rules Bombay HC By Kalyani B. Nair – On January 27, 2024 6:33 pm – 2 mins read In a recent decision the Bombay High Court ruled that no reopening of matter when grant of benefit under Section 11 of the Income Tax Act, 1961 was subject matter of appeal. The Petitioner filed the original return of income disclosing total deficit at Rs. 3,26,12,415/- after claiming exemption under Section 11 of the Income Tax Act. Petitioner also claimed depreciation on the capital assets of Petitioner.

The said return was accompanied by a copy of the Annual Report and Statement of Account for the year ended 31st March 2009. In its accounts, Hall Charges income of Rs.2,88,87,001/- and compensation for use of premises of Rs.45,69,771/- aggregating to Rs.3,34,56,772/- are disclosed.  Further, the computation of income filed by petitioner also discloses Hall and Premises Rental Income at Rs.3,34,56,772/-. The assessment order was passed under Section 143(3) of the Act by the Assessing Officer (A.O.) denying the exemption under Section 11 of the Income Tax Act and computing the taxable income of Rs.35,90,477/-. Petitioner filed an appeal before CIT(A) against the quantum order.

Grounds taken were regarding denial of exemption under Section 11 of the Income Tax Act, addition of expenses, non-grant of set off/carried forward of unabsorbed depreciation and excess of expenditure over income. The counsel for the petitioner submitted that how much income has escaped assessment and the issue of withdrawal of exemption under Section 11 of the Income Tax Act was considered by the A.O. in the original assessment proceedings, the exemption was withdrawn which were restored in appeal by the Commissioner of Income Tax (Appeals) [CIT(A)]. A Division Bench comprising Dr Justice Neela Gokhale and Justice KR Shriram observed that

“Therefore, as stated in the third proviso to Section 147 of the Income Tax Act, the A.O. has no jurisdiction to assess or reassess any income which was the subject matter of an appeal.  Since the grant of benefit of Section 11 of the Act was the subject matter of appeal and has been held in favour of assessee, the matter cannot be reopened. As regards the issue of disallowance of depreciation claim. “