2013 (10) TMI 1500 - AT - Income Tax

Summary

Issues involved:
The appeal and cross objection were filed against the order of ld CIT(A)-Cuttack for assessment year 2008-09 u/s 143(3)/147 of the I.T.Act, 1961.

Issue 1: Treatment of gross receipt as income
The revenue contended that the entire gross receipt of &8377; 18,74,400/- should be taxed as income due to the non-registration of the assessee society u/s 12A of the I.T.Act. The AO assessed the gross receipts under the head "income from other sources" as the assessee failed to provide details of expenditure. The ld CIT(A) directed to tax the net income instead of the gross receipt, considering the voluntary nature of contributions and grants.

Issue 2: Exclusion of expenses from gross receipt
The ld CIT(A) allowed the claim of the assessee by stating that expenses claimed in the receipt and expenditure accounts should be excluded from the gross receipt. The trust's income was to be determined based on commercial principles, deducting all outgoings, including income tax paid, to arrive at the surplus income for application or accumulation.

Judgment Summary:
The assessee trust, not registered u/s 12A, received donations treated as income by the AO. The ld CIT(A) directed taxing the net income, following precedents. The revenue's appeal was dismissed, and the cross objection was also rejected due to delay. The decision upheld the ld CIT(A)'s order, emphasizing the net income over gross receipts for taxation purposes.