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TMI Blog2018 (4) TMI 2007X X X X Extracts X X X X X X X X Extracts X X X X ..... nal institution solely for educational purpose, the assessee has not established with relevant evidences, books of accounts and the documents that the assessee is solely engaged for the education. Therefore, we do not find any infirmity in the order of the lower authorities, hence, the assessee's ground for treating the institution as educational institution existing solely for the purpose of education is dismissed. Accordingly, the assessee is not entitled for exemption u/s 10(23C) of the Act. Submission of the assessee is that the entire gross receipts should not be treated as income and only the profit element required to be assessed to tax - Once it is believed that the assessee is carrying on business activity, the expenditure relatab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER For the Appellant : Shri I. Kama Sastry, AR For the Respondent : Shri V. Appala Raju, DR ODER PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against order of the Commissioner of Income Tax (Appeals)-2, {CIT(A)},Guntur vide ITA No. 130/2011-12 dated 15.6.2016 for the assessment year 2009-10. 2. The assessee is an educational institution and filed the return of income for the AY 2009- declaring Nil income on 26.10.2010. The assessee claimed exemption u/s 10(23C) of the Income Tax Act, 1961 (hereinafter called as 'the Act') stating that the gross receipts of the assessee does not exceed Rs. 1.00 crore. The case was selected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income is exempt u/s 10(23C) of the Act since the gross receipts do not exceed Rs. 1.00 crore. The assessee also submitted that in the absence of registration u/s 12A of the Act, the A.O., cannot deny the exemption u/s 10(23C) of the Act. The Ld. CIT(A) called for the remand report from the A.O. and the A.O. furnished the remand report stating that the assessee produced books of accounts at remand stage i.e. cash book and ledger and on verification of the books of accounts with relevant vouchers, it was found that the entire expenditure was incurred in cash and on self-made vouchers. Further the A.O., stated in the remand report that the assessee failed to produce bills even for payment of electrical charges, telephone charges etc. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence argued that the assessee's income is entitled for exemption u/s 10(23C) of the Act, thus requested for exemption u/s 10(23C) of the Act. 6. The third argument of the assessee is even if it is presumed that the assessee is existing for profit motive and for the benefit of management, the A.O. has taxed the entire receipts which is not correct. The assessee has incurred the expenditure under the head salaries, vehicle maintenance, telephone charges, electrical charges, office expenses, depreciation, etc. Therefore, even if it is presumed that the assessee is carrying on business activity, the entire receipts cannot be treated as income and only the profit element should be assessed to tax, hence requested to estimate the reasonable in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss account, the gross receipts of the assessee were Rs. 19,65,000/- and the expenditure was Rs. 19,64,330/- resulting in profit of Rs. 18,670/-. As per the assessment order, the assessee has claimed the expenditure such as salaries, vehicle maintenance, office expenses, insurance, depreciation, interest on loans and telephone charges, etc., but there was no proper evidence. During the appeal hearing, for a query from the bench, the Ld. A.R. expressed no objection for estimation of income @ 20% of the gross receipts. We have gone through the submissions of the assessee as well as orders of the lower authorities and the arguments of the Ld.DR and of the view that the estimation of income @ 20% of the gross receipts is reasonable, accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ximum marginal rate does not arise. For ready reference, we reproduce the extract of relevant part of the order of the Tribunal in para No. 13 which reads as under: "13. ...........As regards the applicability of maximum marginal rate of tax is concerned, the CIT was of the opinion that the A.O. ought to have applied maximum marginal rate of tax to the income of the society. But, the fact is that once the society is registered under the Societies Registration Act, the applicability of maximum marginal rate does not arise, it is because the societies are registered under the Societies Registration Act are prohibited from distribution of any surplus to its members. Once the distribution of profit to its members is prohibited, the question o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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