M/S GOPALAKA TRUST ,BANGALORE vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-17(1), BANGALORE

O R D E R

Per Shri A.K. Garodia, Accountant Member

by the assessee are as under. “1. The CPC erred in taxing the entire Gross receipts of Rs. 2,08,704/- without allowing the expenses as in Income & Exp Account amounting to Rs. 2,05,603/-.

2. The learned CIT(Appeal) erred in not allowing the expenses of Rs. 2,08,704/- despite admitting the Addl. ground to that effect.

3. It is prayed that the Hon’ble Tribunal may direct the AO allow the expenditure of Rs. 2,05,603/- and tax only the net income of Rs. 3,101/- at the maximum rate u/s 164 of the Act.”

3. It was submitted by ld. AR of assessee that an additional ground was raised by the assessee before CIT(A) which is reproduced by CIT(A) in para 2.3 of his order and as per this additional ground raised before CIT(A), this was the Page 2 of 4 issue raised by assessee that the AO/CPC erred in taxing the gross receipts of Rs. 2,08,704/- being the donation received by the Trust during the year ended on 31.03.2014 without allowing the expenses of Rs. 2,05,603/- as per Income & Expenditure Account enclosed with the return of income. He submitted that as per para 2.4 of his order, ld. CIT(A) has stated that he has kept in view the additional grounds and submissions but still he decided only this aspect that the assessee is not eligible for exemption u/s. 11 of the IT Act because in the present year, the assessee was not registered u/s. 12A of the IT Act and there is no decision of CIT(A) on this aspect of the matter raised by assessee by way of additional ground that gross receipts cannot be taxed by the AO and deduction regarding expenditure should be allowed. He submitted that the matter may be restored back to the file of CIT(A) for a decision on this aspect of the matter. The ld. DR of revenue supported the order of CIT(A).

6. It is prayed that the Hon'ble Commissioner may kindly admit the Addl. Ground arid direct the AO to tax only the net income of Rs.3,101/ - as against the gross receipts of Rs.2,08,704/ - Sir. 2.4 Upon careful examination of the case and keeping in view the additional grounds and submissions, it is noticed that the assessee is not found to be recognised as a charitable organisation falling within the meaning of Section 2(15) of the Act by obtaining registration u/s 12A of the Act. Thus, the basic requirement of recognition and registration from the IT Department u/s 12A/ 12AA of not satisfied for claiming exemption u/s 11 of the Act. However, as seen from the record as filed by the appellant, the AOP has obtained registration u/s 12A and 80G (5) of the Act on 22.06.2016, which will have effect from the A.Y.'s 2016-17 onwards. Thus, for the under consideration the institution is not recognised u/s 12A of the Act. Further, in my considered view that unless the trust obtains registration from the concerned authority u/s 12A the provisions of Section 11(1)(a) or 11(2) of the Act are not applicable and consequently, the income cannot be brought under exemption category. Even the case laws relied upon by the appellant are found inapplicable to the facts of the present case and are distinguishable .

2.5 In view of the facts and circumstances of the case, I find that the assessee's argument of allowance of accumulation u/s 11(2) and consequential exemption is not acceptable and therefore, the Grounds of appeal and additional grounds of appeal are dismissed As a result, the appeal is hereby dismissed.”

5. From the above paras reproduced from the order of CIT(A), it is seen that this issue was raised by assessee before CIT(A) by way of additional ground that deduction should be allowed in respect of expenses but on this aspect, there is no decision of ld. CIT(A) and we therefore, set aside the order of CIT(A) and restore the matter back to his file for a decision on additional ground of the assessee raised before CIT(A).