SHRI BHADRESHWAR EDUCATION AND SOCIAL WELFARE TRUST ,BENGALURU V. ITO, WARD-1 , BIJAPUR

ITA 700/BANG/2025

AI Insights

The case involves Shri Bhadreshwar Education and Social Welfare Trust, which operates more than 10 educational institutions and filed a return declaring nil income for the assessment year 2020-21. The return was processed under section 143(1) of the Income Tax Act, 1961, where the entire gross receipts were considered as income without allowing any deductions for expenditures. The Trust appealed this decision, arguing that the expenditures incurred should be deducted from the gross receipts, as the Trust is engaged solely in charitable activities and education. The CIT(A) dismissed the appeal due to the absence of Form 10B, which is not required as the Trust was not registered under the Income Tax provisions during the relevant year. The Tribunal remitted the issue back to the JAO for verification of the claimed expenditures.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633288 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRATIBHA R
• Keywords: Opportunity of being heard
• Section: 11; 12A; 37; 12

Judgement Text

"IN INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI. LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI. SOUNDARARAJAN K, JUDICIAL MEMBER ITA No.700/Bang/2025 Assessment Year : 2020-21 Shri Bhadreshwar Education and Social Welfare Trust, Khagateshwar Nagar, AT Post Talikoti Tq, Muddebihal, Bijapur – 586 214. PAN :AANTS 2522 G Vs. ITO, Ward –1, Bijapur. APPELLANT RESPONDENT Assessee by : Smt. Pratibha R, Advocate Revenue by : Shri. Subramanian S, JCIT(DR)(ITAT), Bangalore. Date of hearing : 10.06.2025 Date of Pronouncement : 13.06.2025 ORDER Per Laxmi Prasad Sahu, Accountant Member : This is an appeal filed by the assessee challenging the Order of the learned CIT(A) vide DIN and Order No.ITBA/APL/S/250/2024-25/1073032764(1) dated 07.02.2025, on the following grounds of appeal: 1. On the facts and in the circumstances of the case, the intimation under section143(1) of the Act as confirmed by the CIT(A) is opposed to law and same is required to becancelled. 2. The ld.CIT(A) ought to have appreciated that the disallowance of the claimswhile issuing the intimation under section 143(1) of the act was withoutjurisdictionandopposedtolawand accordingly liable to be deleted. ITA No.700/Bang/2025 Page 2 of 4 3. The ld.CIT(A) ought to have appreciated thatclaim of the Appellant was in accordance with law and was also supported by the jurisdictional precedence and accordingly disallowance was liable to be deleted. 4. The ld. CIT(A) ought to have appreciated that the Appellant has not claimed any exemption u/s 11 of the Act since there was no 12A registration with the Appellant trust during the year. Further the ld. CIT(A) ought to have appreciated that the income received by the Appellant was from tuition fees, bus fees and other income and accordingly expenditure was also incurred paying in salaries to staff bus drivers etc. Thus, the Addition confirmed has to be deleted. 5. The ld. CIT(A) erred in not considering the submission made by Appellant, explaining the facts of the case. The addition confirmed by the CIT(A) ought to have deleted. 6. Without prejudice the addition is excessive arbitrary and unreasonable and liable to be reduced substantially. 7. The learned assessing authority erred in levying the interest us 234 of the Act 8. For these and other grounds that may urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed. 2. Briefly stated, the facts of the case are that assessee filed return of income declaring Nil income. The assessee has more than 10 educational institutions. The total income shown in the income tax return as gross total receipts is Rs.2,85,27,154/- and the expenditure claimed of Rs.3,18,38,743/-. While processing the return under section 143(1) of the Act on 24.12.2021, the entire gross receipts of Rs.2,85,27,154/-was considered as income and benefit of expenditure was not given to the assessee. Resultantly, there is a demand of Rs.1,39,13,110/-. 3. Being aggrieved from the above processing of return/s 143(1) order, assessee filed appeal before the learned CIT(A) and learned CIT(A) noted that ITA No.700/Bang/2025 Page 3 of 4 the assessee has not filed Form 10B. Resultantly, its entitlement of the claim from exemption under section 11 & 12 of the Act and dismissed the appeal of the assessee. 4. Aggrieved from the above Order, assessee filed appeal before the Tribunal. The learned Counsel reiterated the submissions made before the lower authorities and submitted that the CPC has wrongly considered the entire receipts as income. However, there are no expenditures were allowed. The observation of the learned CIT(A) is completely wrong. The assessee is not registered under the Income Tax provisions. Therefore, it is not required to submit Form 10AB. The assessee is solely engaged in charitable activities and for education purposes and it has more than 10 educational institutions. The main source of the Trust is fee receipts from the students and during the impugned Assessment Year, the assessee has incurred expenditures of Rs.3,18,38,743/- towards salary and other operating expenses. The CPC has ignored the basic principle theory of taxation that the net income should have been considered for the net income tax purpose. However, in the impugned Assessment Year, assessee is in loss. Therefore, no addition should have been made. 5. The learned DR relied on the Order of the lower authorities. 6. We have considered the rival submissions. Assessee is running more than 10 educational institutions and it has shown gross receipts of Rs.2,85,27,154/- and the expenditure claimed is Rs.3,18,38,743/-. However, while processing the return, the entire gross receipts have been considered as income without giving any benefit of expenditures incurred towards earning of such gross receipts. The basic cardinal principle for charging income tax on the income tax proceedings is on the net income calculated as per the income tax Act1961 after considering eligible deductions/exemptions/ set off of loss if any as per the provisions of the income tax Act. . The income should be considered in commercial theory and ITA No.700/Bang/2025 Page 4 of 4 real income theory should be considered for the income tax purpose. As per the provisions of the Income Tax Act, the income has been defined under section 2(24) of the Act. The income should be calculated after deducting the allowable expenditures as per the Income Tax Act from the gross receipts. However, in the case of the assessee, no benefit of expenditures has been examined by any of the authorities below. Therefore, for the verification of the genuineness of the expenditure claimed by the assessee as per section 37 or 57 of the income tax Act, the issue is remitted back to the JAO (Jurisdictional Assessing Officer) for examination in terms of above and JAO is directed to give reasonable opportunity of being heard to the assessee and assessee is directed to substantiate its case and not seek unnecessary adjournments, for early disposal of the case. 7. In the result, appeal filed by the assessee is allowed for statistical purposes. Pronounced in the court on the date mentioned on the caption page. Sd/- Sd/- Sd/- (SOUNDARARAJAN K) (LAXMI PRASAD SAHU) Judicial Member Accountant Member Bangalore, Dated : 13.06.2025. /NS/* Copy to: 1. Appellant 2. Respondent 3. Pr.CIT4.CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. "