INCOME TAX OFFICER, FARIDABAD vs. MANAV SANSKAR SHIKSHA SANSTHA, FARIDABAD

Brief facts of the case are that the assessee is a registered society, doing charitable activity of imparting education and registered u/s 12AA of the Act in terms of approval granted by Ld. CIT(A), Faridabad dt 15.04.2013 and subsequently, renewed by PCIT vide order dated 08.07.2024. The return of income for the year under

Against the said order, assessee preferred an appeal before ld. CIT(A) who vide order dated 21.03.2025 has held that the assessee has filed the return of income showing excess of expenditure over income of IRN 1376228/- and not claimed any exemption u/s 11 of the Act. Ld. CIT(A) further observed that assessee since registered u/s 12A of the Act therefore, is also eligible for exemption u/s 11 of the Act. However, as the assessee has net deficit therefore, observed that there is no reason to tax the entire gross receipts and accordingly, deleted the addition made and allowed the appeal of the assessee.

Against the said order, Revenue is in appeal before the Tribunal wherein the Revenue has challenged the action of Ld. CIT(A) in holding that tax is to be levied on net income and further allowed the

Before us, Ld. Sr. DR submits that the assessee though granted approval u/s 12A of the Act which fact is not in dispute however, the assessee has never filed Audit Report in Form 10B therefore, the assessee is not entitled for the benefit exemption u/s 11 and 12 of the Act. The Ld. CIT(A) submits that under these circumstances, the gross receipt of the assessee should be brought to tax. He, therefore supported the order of CPC and requested for the restoration of the same.

On the other hand, Ld.AR for the assessee submits that assessee is having registration u/s 12A of the Act and filed the return of income within the due date. Ld. AR submits that since the assessee has deficit from the activities and there was no surplus, it has not claimed exemption u/s 11/12 of the Act and therefore, merely non-filing the Audit Report in Form 10B, gross receipt cannot be taxed. For this, reliance is placed on the judgment of Hon’ble Delhi High Court in the case of Petroleum Sports Promotion

Heard the parties and perused the material available on record. In the instant case, admittedly, assessee has never filed Audit Report in Form 10B for claiming exemption u/s 11/12 of the Act. Though it is registered u/s 12A of the Act since 2013 and claiming exemption on regularly u/s 12A of the Act which was allowed to it in preceding Assessment years where in some of the years, orders were passed u/s 143(3) of the Act. As the assessee has not filed the Audit Report mandatory for claiming exemption u/s 12A in Form 10B, the assessee society is not entitled for such exemption. However, it is settled law that in any case, the gross receipts cannot be brought to tax when the expenditure incurred were for the purpose of achievement of objects of the society and this fact was never be in dispute.

Since there is no dispute about the application of the receipts for the furtherance of the objects of the society, thus, by following the order of Hon’ble Jurisdictional High Court in the case of Petroleum Sports Promotion Board (supra), we are of the considered view that Ld. CIT(A) has rightly allowed deduction towards the expenditure incurred against the gross receipts. Accordingly, though the assessee is not entitled for exemption u/s 12 of the Act as no Audit Report was filed as prescribed under the Act, however, we find no error in the

In the result, appeal of the Revenue is partly allowed.