DR SUKUMAR J MAGDUM FOUNDATION,KOLHAPUR vs. INCOME TAX OFFICER, EXEMPTION, WARD-KOLHAPUR, KOLHAPUR
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Income Tax Appellate Tribunal, PUNE BENCH, ‘B’ PUNE
Before: SHRI R.S. SYAL & SHRI S.S.VISWANETHRA RAVI
आदेश / ORDER
PER R.S. SYAL, VP :
This appeal by the assessee is directed against the order
dt. 06-02-2023 passed by the CIT(A) in National Faceless Appeal
Centre (NFAC) u/s.250 of the Income-tax Act, 1961 (hereinafter
also called ‘the Act’) in relation to the assessment year 2018-19.
Briefly stated, the facts of the case are that the assessee e-filed
its return declaring total income at Nil. The return was processed
u/s.143(1) by observing that the assessee did not file audit report in
Form No.10B, which was a condition precedent for claiming
exemption u/s.11. Thereafter, a rectification order was passed on
2 ITA No.320/PUN/2023 Dr. Sukumar J. Magdum Foundation
22-07-2021, noting that Form No.10B was neither uploaded nor any
application was filed for condonation of delay, and, as such, the
benefit of exemption was rightly denied in the Intimation. In this
order, the Assessing Officer (AO) observed that the Intimation u/s.
143(1) determined the total income at Rs.4,31,18,956/- by not
allowing deductions at Rs.4,95,86,799/-. The assessee appealed to
the ld. CIT(A), claiming the benefit of exemption u/s.11, which was
again jettisoned on the ground that the Audit report in Form No.10B
was finally signed on 27-08-2021 and uploaded on 05-03-2022,
which did not satisfy the conditions for exemptions u/s.12A,
namely, that the Audit report should be signed before the specified
date and the said Audit report in Form No.10B should be furnished
before the stipulated date. This is how the assessee’s appeal came
to be dismissed. Aggrieved thereby, the assessee has come up in
appeal before the Tribunal.
We have heard the rival submissions and gone through the
relevant material on record. The contentions about the late filing of
Audit report in Form No.10B and the need for still granting
exemption, were not seriously pressed. The ld. AR has raised an
additional ground to the effect that total income of the assessee
ought to have been determined on commercial principles and not by
charging the gross receipts to tax. The additional ground, being,
3 ITA No.320/PUN/2023 Dr. Sukumar J. Magdum Foundation
legal in nature and not requiring any fresh examination of the
factual matrix, is hereby admitted. As such, the only issue which
survives for our consideration is the examination of the manner of
assessment by the AO considering that it was not having any
registration so as to qualify for exemption u/s.11.
The AO has recorded in the order u/s.154 that the gross
receipts of the assessee were Rs.4,31,18,956/- and no deduction was
allowed for expenses to the tune of Rs.4,95,86,799/-. We have gone
through the Income and Expenditure account of the assessee, whose
copy has been placed at page 18 of the paper book. Total of gross
receipts on the Income side comes to Rs.4,31,18,955/-, which has
been correctly considered by the AO. However, the amount of total
deductions, as taken note of by the AO at Rs.4.95 crore, is not borne
out from the Expenditure side. It appears that the AO took the
amount of gross receipts at Rs.4.13 crore and added 15% at around
Rs.64.00 lakh, to compute the total expenditure at Rs.4.95 crore. In
fact, the assessee’s Income and Expenditure Account shows that
“Surplus of Income over Expenditure” at Rs.2,87,153/-. In
addition, there is “Amount transferred to Reserve or Specific
Funds” to the tune of Rs.9,54,000/-. The assessee has claimed
deduction for various expenses. It goes without saying that income-
tax is charged on the income and not the gross receipts. Income is
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determined by reducing the expenses incurred, described under
various sections in Chapter IV-D of the Act. If the benefit of
exemption u/s.11 is not available, the total income needs to be
computed in accordance with the regular provisions of the Act. In
the given circumstances, where the AO has charged tax on gross
receipts, we cannot countenance the same. The resultant impugned
order also deserves to be set aside. We order accordingly and remit
the matter to the file of the AO for deducing the total income in
accordance with the law after considering the deductibility of
various expenses noted in the Income and Expenditure Account.
Needless to say, the assessee will be allowed a reasonable
opportunity of hearing.
In the result, the appeal is allowed for statistical purpose. Order pronounced in the Open Court on 14th August, 2023.
Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; िदनांक Dated : 14th August, 2023 सतीश
5 ITA No.320/PUN/2023 Dr. Sukumar J. Magdum Foundation
आदेश की �ितिलिप अ�ेिषत/Copy of the Order is forwarded to: अपीलाथ� / The Appellant; 1. ��थ� / The respondent 2. The Pr.CIT concerned 3. 4. DR, ITAT, ‘B’ Bench, Pune गाड� फाईल / Guard file. 5.
आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune
Date 1. Draft dictated on 14-08-2023 Sr.PS 2. Draft placed before author 14-08-2023 Sr.PS 3. Draft proposed & placed before JM the second member 4. Draft discussed/approved by JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *
