TaxTMI 
TaxTMI 
2010 (1) TMI 782
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....on 6.7.2001. During the year under consideration, it claimed its income as exempt u/s 10(26B) which was declined by the AO by recording a finding that assessee-society was not specifically established or formed for promoting the members of scheduled castes or scheduled tribes or backward classes of the society. The AO assessed it as AOP. It was also contended before the AO that it has no income of its own but a hypothetical income has been shown in the income and expenditure account, therefore same is not liable to tax. The AO found that assessee-society was just doing work for general urban public as a whole and was not promoting schedule caste or tribe, therefore not eligible for exemption u/s 10(26B). The AO also found that assessee was ....
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....n of income u/s 139(1) of the Income Tax Act, 1961. ii) That the learned CIT(A)-1, Dehradun has erred in law and on facts that, the surplus as per the income and expenditure agreement amounting to Rs.14,31,044/- is not taxable, especially when the assessee is not having registration u/s 12AA of the I.T. Act and it is a case of Registered Society registered under the Society's Registration Act. 4. Shri D.N.Kar, CIT-DR appeared on behalf of the Revenue and contended that CIT(A) was not correct in observing that assessee-society was not obliged to file return u/s 139(1). As per learned DR, under provisions of Section 139(4A), every person in receipt of income from property held under trust wholly for charitable or religious....
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....auditor that assessee was having surplus of Rs.14,31,044/-, but the same could not be carried forward because of the non filing of the income tax return. Learned DR submitted that CIT(A) was not justified in brushing aside all these observations contained in audit report qualifying the same. As per learned DR, the assessee-society was having surplus of income amounting to Rs.14.31 lakhs, which remained after incurring all expenses like interest on borrowings, administrative expenses, expenses on repairs, maintenance etc. Since the income was above the maximum limit not liable to tax, in terms of provisions of Section 139(4A), the assessee-society was very much obliged to file the return of income and the CIT(A) was wrong in observing that a....
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....s not doing any work in the interest of scheduled castes or scheduled tribes or backward classes, but doing the work for general urban public as a whole. Accordingly, it was not entitled for claim of exemption u/s 10(26B). 7. As per the income and expenditure account enclosed with the return, it has surplus of income amounting to Rs.14,31,044/-. Its main source of income was out of grants received from government and interest income on the funds deposited with bank and HUDCO. After incurring administrative expenses and interest expenditure on the loan taken by it, the surplus of income and expenditure account amounting to Rs.14,31,044/- was taken to the balance sheet. The auditor of the company has given its notes on account as pe....
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.... of the Act. Once the CIT(A) has also confirmed the finding with respect to wrong claim of exemption u/s 10(26B) there was no reason with the CIT(A) for holding that assessee was not liable to file return of income and that it had filed return of income under misconception. Since the assessee-society had been granted registration u/s 12A only w.e.f. 24.4.2006, no exemption can be granted u/s 12A with respect to the period falling within the relevant assessment year under consideration i.e. 1.4.2004 to 31.3.2005. The contention of learned AR to the effect that assessee society was not having any source of income and it was just a channelising agency for transfer of government funds, therefore, not liable to file return of income, is devoid o....