ITAT Jodhpur: AO Allows ₹2.61 Crore Deduction under Sections 54EC and 54F; Assessee's Appeal Dismissed as Infructuous

The Income Tax Appellate Tribunal (ITAT) Jodhpur has dismissed an assessee's appeal as infructuous. Initially, the Assessing Officer (AO) disallowed deductions under Sections 54EC and 54F. However, following a rectification application under Section 154, the AO subsequently allowed deductions totalling ₹2.61 crore. As the AO's order resolved the assessee's grievance, the ITAT found the appeal no longer necessary.

Background

The dispute arose from the directions issued by the First Appellate Authority requiring the Assessing Officer to examine the assessee's eligibility for deductions under Sections 54EC and 54F. The assessee had challenged these directions, contending that they amounted to enhancement of assessment without providing the mandatory opportunity of hearing under Section 251(2) of the Act.

While giving effect to the appellate directions, the Assessing Officer initially disallowed the deduction. Subsequently, the assessee filed an application under Section 154 along with supporting evidence and details of the deductions claimed.

AO Allows Deduction of ₹2.61 Crore

After considering the assessee's application and the supporting documents, the Assessing Officer, by order dated 16 October 2024, accepted the rectification application and allowed the deductions claimed under Sections 54EC and 54F.

The total deduction allowed amounted to ₹2,61,83,266.

The AO also recomputed the assessee's total income after giving effect to the relief granted by the CIT(A) and the deductions under Sections 54EC and 54F.

ITAT's Decision

Before ITAT, the assessee submitted that since the Assessing Officer had already allowed the deductions through the Section 154 order, the grievance raised in the appeal had effectively been resolved.

The Tribunal agreed and observed that the grievance raised by the assessee stood redressed by virtue of the order passed under Section 154. Consequently, the appeal had become infructuous.

Accordingly, ITAT dismissed the appeal.

Key Takeaway

The case demonstrates that where the Assessing Officer subsequently grants the disputed relief through a valid rectification order under Section 154, the original grievance before the Tribunal may cease to survive, rendering the appeal infructuous.

In the present case, the assessee ultimately received the benefit of deductions aggregating to ₹2.61 crore under Sections 54EC and 54F, and therefore ITAT did not adjudicate the original legal challenge on merits.

This AI-generated summary is for informational purposes only. Please view attached original judgment for the complete text and authoritative interpretation.