Trust's Exemption Partially Allowed by ITAT for Late Return, Emphasizes Deductible Expenses

The Income Tax Appellate Tribunal (ITAT) partially allowed the appeal filed by a Trust against the disallowance of exemption claimed under sections 11 and 12 of the Income Tax Act. The ITAT ruled that despite the late filing of the return, as the Trust incurred a loss for the year, no tax should be charged on the entire receipts. The Tribunal emphasized the importance of deducting allowable expenditures to determine taxable income, setting aside the Commissioner of Income Tax (Appeals) order.

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Issues involved:
The appeal filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC) for the assessment year 2018-19.

Grounds of Appeal:
1. Challenge against orders of authorities as being opposed to law, equity, weight of evidence, and facts.
2. Disagreement with determination of income and disallowance of exemption claimed.
3. Dispute over disallowance of exemption due to late filing of return and non-compliance with provisions.
4. Dispute regarding disallowance of exemption claimed and filing of Form No. 10B.
5. Dispute over taxation of gross receipts without allowing expenses.
6. Denial of liability to be charged interest under specific sections of the Act.
7. General prayer for appeal to be allowed, justice to be rendered, and costs to be awarded.

Details of the Judgment:
The assessee, a Trust registered under section 12A of the Income Tax Act, filed a return of income claiming exemption under section 12AA. The Central Processing Centre (CPC) processed the return without granting the claimed exemption, leading to an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) upheld the disallowance of exemption due to late filing of the return, as per the provisions of section 139(4A) and section 12A(1)(ba) of the Act.

The Income Tax Appellate Tribunal (ITAT) considered the appeal challenging the tax charged on the entire receipts of the assessee. The Tribunal noted that the return was filed late, and the assessee did not comply with the conditions under section 12A(1)(ba) for claiming exemption under sections 11 and 12. The gross receipts of the Trust were analyzed, revealing a loss for the year. The ITAT emphasized that income tax should be levied on the income earned after deducting allowable expenditures, as per the Act. Despite the late filing of the return, the Tribunal acknowledged the excess of expenditure over income, resulting in a loss for the assessee. Therefore, the claim of deduction under sections 11 and 12(1)(ba) did not apply. The Tribunal partially allowed the appeal, setting aside the CIT(A)'s order and clarifying that no tax shall be charged on the entire receipts.

In conclusion, the ITAT partially allowed the appeal, recognizing the loss suffered by the assessee and emphasizing the deduction of allowable expenditures in determining taxable income.

Separate Judgment:
No separate judgment was delivered by the judges in this case.

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