DCIT Vs National Stock Exchange Investor Protection Fund Trust (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai, decided two Revenue appeals together because both involved common issues relating to assessment years 2020-21 and 2021-22. The appeals challenged the orders of the Commissioner of Income-tax (Appeals) [CIT(A)], who had deleted adjustments made by the Centralized Processing Centre (CPC) under Section 143(1) of the Income-tax Act and allowed exemption claimed under Section 10(23EA).
For Assessment Year 2020-21, the Revenue argued that the CIT(A) wrongly held that receipts from the National Stock Exchange and its members were exempt under Section 10(23EA), despite the provisions of Section 11(7). It further contended that the assessee had not established that the receipts qualified for exemption under the relevant CBDT notification and that the CPC was justified in denying the exemption under Section 143(1)(a) because the incorrect claim was apparent from the return.
The assessee, a trust, had filed its return declaring nil income. While processing the return under Section 143(1), the CPC denied exemption of ₹26.37 crore claimed under Section 10(23EA). The assessee challenged the adjustment before the CIT(A), arguing that the adjustment was beyond the scope of Section 143(1)(a) and that the CPC had not issued any prior intimation proposing the adjustment. The CIT(A) accepted these submissions, held that the adjustment was incorrect, directed its deletion, and allowed the exemption. Before the Tribunal, the Revenue relied on its grounds of appeal but did not dispute that no show-cause notice or prior intimation had been issued before making the adjustment.
