ACIT., CIRCLE-1(1), HYDERABAD, TELANGANA vs. CH VENUGOPAL REDDY EDUCATIONAL SOCIETY, HYDERABAD

At the outset Learned AR submitted that the assessee is an educational society running educational institutions; that against the order dated 17/10/2019 passed under section 143(1) of the Income Tax Act, 1961 (“Act”), whereunder the entire receipts of the assessee, ignoring the expenditure were brought to tax; and that when the assessee preferred appeal, learned CIT(A) held that when the assessee claimed the expenditure in the financials as per the provisions of the Act and were audited by competent persons, disallowing the expenditure incurred for the purpose of earning the revenue is not justified. Learned AR submitted that Revenue preferred appeal against the learned CIT(A) allowing the expenditure, whereas, assessee filed cross objections justifying the same.

Learned AR placed reliance on the decisions of in the case of Annadaneshwara Charitable Trust vs. ITO [2023] 156 taxmann.com 270 (Bang.Trib.) and Sri Ramalingeswara Swamy Temple Vs. ADIT in & 492/Hyd/2023 dated 12/01/2024 and argued that when the assessee, according to the Revenue, does not enjoy the registration under section 12AA or 10(23) of the Act and exemption thereunder, instead of taxing the gross receipts, the net income alone is required to be taxed, after allowing the allowable expenditure and the assessee is required to be assessed as AOP and entitled to the deduction of expenses.