The Bangalore bench of Income Tax Appellate Tribunal (ITAT) has recently held that, no tax should be charged on entire receipts if the income is below threshold limit.
Assessee H M V Educational is a Trust registered under section 12A of the Income Tax Act, 1961. The assessee Trust has been running educational institutions since 2008. The assessee filed a return of income claiming exemption under section 12AA of the Income Tax Act.
Without giving any deduction of expenditure incurred, the return was processed under section 143(1) of the Income Tax Act. Against the order, assessee filed an appeal before CIT(A).
The CIT(A), did not grant exemption since the assessee did not file his return of income within the time limit prescribed under Section 139(4A) of the Income Tax Act. Thereafter, the assese filed a second appeal before the tribunal.
V.Srinivasan, counsel for the assessee submitted that the assessee has filed condonation of delay under Section 119(2)(b) of the Income Tax Act, which has not been disposed off yet. Also the assessee had genuine hardship for not filing return of income within the time specified.
Further, the counsel submitted that tax should be charged only on the net income but not on the entire gross receipts of the assessee.
Sunil Kumar Singh, counsel for the revenue submitted that the assessee has not fulfilled the conditions as prescribed under section 12A(1)(ba) of the Income Tax Act for filing the return of income within the due date for getting exemption under Sections 11 and 12 of the Income Tax Act.
The tribunal observed that as per the amendment made in section 12A(1)(ba) of the Act, the assessee was required to file return of income within the due date for getting exemption under section 11 and 12 of the Income Tax Act.
Moreover, the income tax is levied on the income of the assessee during the impugned assessment year. The CPC has charged the income tax on the entire gross receipts without giving effect of the expenditures incurred by the assessee towards earning of the income. in the present case the total receipts declared by the assessee mentioned that there is excess expenditure over income of Rs.6,62,324/-, which is loss suffered by the assessee during the year Therefore, in this case, the claim of deduction from income under section 11 and 12(1) (ba) of the Income Tax Act did not arise.
Further, the bench determined that “No doubt that the assessee has filed his return of income belatedly but he was required to compute his income and the income is below the threshold limit and in this case no tax shall be charged on the entire receipts.”
George George K, (Judicial Member) and Laxmi Prasad Sahu, (Accountant Member) of the tribunal set aside the order of the CIT(A) and allowed the appeal of the assessee.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
