Net income computation and exemption eligibility remanded for verification; taxable income cannot be assessed on gross receipts alone.

Where exemption under section 11 was not pressed, the Tribunal treated the assessee's alternate claim under section 10(23C)(iiiad) and the computation of taxable income on a net basis as legal issues requiring verification. It reiterated that income-tax is levied on income, not on gross receipts, and that if exemption is unavailable, total income must be computed under the Act after allowing deductible expenditure. As the appellate authority had not examined the alternate exemption claim or the proper basis of computation, the matter was restored to the Assessing Officer for fresh verification of eligibility and, if needed, recomputation of income after allowable expenses.

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Issues: Whether the assessee was entitled to exemption under section 10(23C)(iiiad) of the Income-tax Act, 1961 and, if not, whether only net commercial income and not gross receipts could be brought to tax.

Analysis: The assessee's primary claim for exemption under section 11 was not pressed before the Tribunal. The additional ground on computation of income was admitted as a legal ground not requiring fresh factual enquiry. The Tribunal noted that income-tax is levied on income and not on gross receipts, and that where exemption under section 11 is unavailable, total income must be computed under the regular provisions of the Act after allowing deductible expenses. Since the appellate authority had not examined the alternate claim under section 10(23C)(iiiad) or the computation of taxable income on a net basis, the matter required verification by the Assessing Officer.

Conclusion: The issue was restored to the Assessing Officer for verification of eligibility under section 10(23C)(iiiad) and, failing that, for recomputation of income after considering allowable expenditure.

Final Conclusion: The assessee obtained a partial and procedural relief by way of remand, with directions for fresh examination of exemption eligibility and, if necessary, assessment of taxable income on the proper income basis.

Ratio Decidendi: Where exemption is not available, tax must be computed on income after allowing deductible expenditure and not on gross receipts alone; a purely legal additional ground on the mode of computation may be admitted at the appellate stage.

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