INCOME TAX OFFICER, CHENNAI vs. BRINDAVAN EDUCATIONAL TRUST, NATRAMPALLI, VELLORE

The assessee is a trust and engaged in the educational activities and filed return of income declaring total income at Nil on 31.03.2019. The CPC, Bengaluru in the intimation u/s. 143(1) of the Income-tax Act, 1961 (hereinafter “the Act”) has determined the total income at gross receipts of Rs. 2,06,47674/-. The assessee filed rectification u/s. 154 of the Act which has been rejected by the A.O. The assessee has filed appeal before Ld. CIT(A) and the Ld. CIT(A) held that only the surplus of income over expenditure should be brought to tax and directed the juri ictional A.O to re-compute the total income by taking into account of the surplus shown in the audited income and expenditure account. Now, the Revenue is in appeal against the direction of Ld. CIT(A).

The Ld. Departmental Representative (DR) has argued that the Ld. CIT(A) does not have power to give direction and he can only confirm to reduce or onus or annual the assessment and therefore, the order of Ld. CIT(A) be set aside.

The Ld. Authorized Representative (A.R) of the assessee, on the other hand, has supported the order of Ld. CIT(A) and submitted that there is nothing wrong in the direction of Ld CIT(A), as even if the assessee is not eligible for exemption u/s. 11 of the Act, only the surplus of income over expenditure can be taxed not the gross receipt .

We have heard the rival submissions, and perused the materials available on record. We agree with the submissions of the Ld. AR that only surplus of income over expenditure is to be taxed not the gross receipts. We also agree with the Ld. DR that the CIT(A) can only confirm, reduce, enhance or annul the assessment but does not have power to give the direction. We accordingly set aside the orders of Ld. CIT(A) and remit the matter back to the file of AO to re-compute the income by taking into account the surplus shown in the audited income and expenditure account for the relevant year. Hence, the appeal filed by the Revenue is allowed for statistical purposes.

In the result, the appeal filed by the Revenue is allowed for statistical purposes. Order pronounced in the Open Court on 17th October, 2024. (महाबीर सिंह) (Mahavir Singh) उपाध्यक्ष / Vice President चेन्नई/Chennai, दिनांक/Dated: 17th October, 2024. (जगदीश) (Jagadish) लेखा सदस्य / Accountant Member EDN/- :- 4 -: आदेश की प्रतिलिपि अग्रेषित/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai 4. विभागीय प्रतिनिधि/DR 5. गार्ड फाईल/GF", "summary": {"facts": "The Revenue appealed against the order of the CIT(A) who directed the Assessing Officer (A.O) to re-compute the total income considering only the surplus from the income and expenditure account, not the gross receipts. The assessee, a trust, had filed its return declaring Nil income, but the CPC determined total income at Rs. 2,06,47,674. The assessee's rectification application was rejected by the A.O.", "held": "The Tribunal agreed with the assessee's AR that only the surplus of income over expenditure should be taxed. However, it also agreed with the DR that the CIT(A) cannot issue directions but can only confirm, reduce, enhance, or annul the assessment. Consequently, the CIT(A)'s orders were set aside.", "result": "Allowed", "sections": ["143(1)", "154", "11"], "issues": "Whether the CIT(A) has the power to direct re-computation of income based on surplus rather than gross receipts, and if the surplus alone is taxable for educational trusts."}} }} }} "}} "}} ."}}