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Facts
The assessee, a charitable trust, filed its return of income for AY 2015-16 but did not file Form 10B. The CPC taxed the entire gross receipts instead of net commercial income. The assessee contended that there was a loss during the year and thus no tax liability.
Held
The Tribunal held that since the Income and Expenditure Account showed a deficit, there could not be any tax liability as calculated by the CPC. The Tribunal allowed the alternative ground raised by the assessee.
Key Issues
Whether the entire gross receipts can be taxed when the assessee has incurred a loss, despite not filing Form 10B for exemption under Section 11.
Sections Cited
250, 12AA, 143(1), 11
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
Assessee by Shri Pramod S Shingte - AR Revenue by Shri Ratnakar Shelake – Addl.JCIT(DR) Date of hearing 29/04/2025 Date of pronouncement 29/04/2025 आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal filed by the assessee is against the order of ld.Addl.Joint Commissioner of Income Tax(Appeals), Prayagraj passed under section 250 of the Income Tax Act, 1961, dated 25.02.2025 for Assessment Year 2015-16. The Assessee has raised the following Grounds of Appeal : “1. On the facts and circumstances of the case and in law the Addl.CIT(A) erred in not considering the submissions of the appellant and confirming the action of the Income Tax Officer, CPC, Bengaluru (hereinafter referred to as the 'AO) of: Disallowing exemption under S. 11 apparently for non-filing of Form 10B. Bringing to tax entire gross receipts as against Net Commercial Income of the appellant. The appellant prays that the AO be directed accordingly in the matter. The appellant craves leave to add to, amend, alter, modify, delete or add a new ground of appeal before or at the time of hearing.” Submission of ld.AR :
2. Ld.AR for the Assessee filed a paper book. At the outset, ld.AR that ld.CIT(A) has not adjudicated the Ground No.1(b) raised by the Assessee. In this case, assessee is a Charitable Trust duly registered u/s.12AA of the Act. Assessee had filed Return of Income for A.Y.2015-16. However, the Form No.10B was not filed along with the Return of Income. This is a procedural requirement. However, the Centralized Processing Center(CPC) taxed the entire receipt of the Assessee. Assessee had raised a ground without prejudice before ld.CIT(A) that only the Net Profit should have been taxed. Ld.AR took us through the Profit and Loss Account and Return of Income to demonstrate that there is a loss during the year. Therefore, there cannot be any tax liability. Ld.AR relied on the decision of ITAT Pune in of DCIT Vs. Audyogik Shikshan Mandal vide order dated 07.03.2022. [A] Submission of ld.DR :
3. Ld.DR for the Revenue relied on the order of the Assessing Officer and ld.CIT(A).
Findings & Analysis : 4. We have heard both the parties and perused the records. We specifically asked ld.AR whether Form No.10B was filed before ld.CIT(A) or not! Ld.AR could not specifically answer it. However, ld.AR pleaded for the alternate ground that only the Net Profit shall be taxed. In this case, it is observed that CPC has taxed the entire Gross Receipt of Rs.30,29,895/- without considering the expenditure claimed by the Assessee in the Return of Income. Ld.CIT(A) has not adjudicated the Ground No.1(b) by assessee. However, ld.CIT(A) has reproduced the Income and Expenditure Account of the assessee in his order. On perusal of the Income and Expenditure Account reproduced by ld.CIT(A) in his order, we find that there is a deficit of Rs.1,80,090/- in the said Income and Expenditure Account. The said Income and Expenditure Account is reproduced as under :
4.1 It is observed that ITAT Pune in the case of Dr. Sukumar J. Magdum Foundation Vs. ITO in has held as under :
4……………….. 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. ……………………………….
4.2 In this case, ld.CIT(A) has reproduced the Income and Expenditure Account showing deficit. It means, ld.CIT(A) has accepted the Income and Expenditure Account submitted by the assessee. Since there is a loss in the case of assessee as per the Income and Expenditure Account, there cannot be any tax liability as calculated by CPC in the order u/s.143(1) of the Act. In these facts and circumstances of the case, the Alternative Ground raised by the assessee is allowed.
In the result, appeal of the assessee is allowed.