Net income taxation, not gross receipts, applied on remand where Section 11 exemption and Form 10B issues arose.

Where exemption under Section 11 was not being pursued and Form 10B had not been filed with the return, the Tribunal directed fresh examination so that tax is computed on net income rather than gross receipts. It held that gross receipts cannot be brought to tax without giving effect to allowable expenditure, and restored the matter to the Assessing Officer for reconsideration. The assessee was given liberty to file supporting evidence in aid of its claim.

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Issues: Whether the matter should be remitted for fresh consideration to assess tax on net income instead of gross receipts, in the context of the assessee not pursuing exemption under Section 11 and the earlier denial of exemption for non-filing of Form 10B.

Analysis: The Tribunal noted that the audit report in Form 10B had not been filed along with the return and that the assessee was not interested in pursuing the claim for exemption under Section 11. In these circumstances, it held that the Assessing Officer should examine the case afresh to bring only the net income to tax, as gross receipts cannot be taxed without giving effect to expenditure. The matter was therefore restored to the Assessing Officer for fresh consideration, with liberty to the assessee to file evidence in support of its claim.

Conclusion: The issue was answered in favour of the assessee to the extent of remand, with a direction to assess tax on net income and not on gross receipts.

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