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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 ..... claring 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 for scrutiny and during the assessment proceedings, the A.O. observed that the assessee had received gross receipts of Rs. 19,65,000/- and claimed the expenditure to the extent of Rs. 19,46,330/- under various heads such as salaries, vehicle maintenance, office expenses, insurance, depreciation, interest on loan, etc. and arrived at the net income over expenditure of Rs. 18,670/- and claimed the same as exemption u/s 10(23C) of the Act. The assessee claimed that it is an educational institution a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers, 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 assessee also did not produce any bank account statement and failed to prove the genuineness of the expenditure since it was incurred on self - made vouchers. The Ld. CIT(A) considered the remand report and the submissions made by the assessee and held that the assessee is not eligible for exemption u/s 10(23C) of the Act. The Ld.CIT(A) also held that the assessee failed to produce evidence in respect of the expenditure and has to be treated as not existing solely for educational purpose but exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation, 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 income as an alternative submission. 7. On the other hand, the Ld. D.R. strongly supported the order of the lower authorities. 8. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. In the instant case, though the assessee is claimed to have running educational institution solely for educational purpose, the assessee has not established with relevant evidences, books of accounts and the documents that the assessee is solel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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, accordingly, we direct the A.O. to estimate the income @ 20% on gross receipts and assesses the same as income. The assessee's appeal on this ground is partly allowed. 10. The next submission of the assessee is taxing the income at maximum marginal rate. As per section 167B of the Act, in case of an assessee registered under Societies Act, the same is excluded for taxing the income at for maximum marginal rate. For ready reference we extract relevant part of Section 167B(1) of the Act which reads as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rginal 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 of determination of share of each individual member does not arise. Hence, the CIT was not correct in coming to the conclusion that the rate of tax applicable to the assessee is maximum marginal rate of tax without understanding the provisions." 11. The assessee is a society registered under Societies Act, 1860 as evidenced from the registration certificate. The facts are similar in this case, therefore, following the decision of coordinate bench and section 167B of the Act, we hold that the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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