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2023 (1) TMI 277 - HC - Income TaxMaximum marginal rate of tax to the appellant/assessee u/s 167B - Exclusion of the amount received towards building fund from the income of the appellant/assessee - whether the CPC was right in taxing gross receipts as against income? - Respondent relies upon the order of the CIT(A) as well as the Tribunal to highlight the fact that the entire case set up by the appellant/assessee was that it was entitled to claim exemption under Section 11 and 12 of the 1961 Act, having regard to the first proviso to Section 12A(2) of the Act? HELD THAT:- Respondent is right to the extent that the appellant/assessee is, perhaps, responsible for its own woes. The return filed by the appellant/assessee did indicate the appellant/assessee’s status as AOP/BOI. However, having said that, the CIT(A) failed to exercise powers which were available with him and examine a specific ground of appeal raised by the appellant/assesseee. Clearly, the assertion made by the appellant/assessee in one of the grounds taken in the appeal was that it was constituted as a society. If this position is correct, [something which is not disputed before us by the revenue] then, as indicated hereinabove, the maximum marginal rate of tax could not have been applied to the appellant/assessee. Whether the CIT(A), having concluded that the provisions of Sections 11 and 12 of the Act were not applicable to the appellant/assessee in the AY in issue, he ought to have then gone on to rule on what was, really, an alternate ground, i.e., should gross receipts, simpliciter, be brought to tax . In other words, should gross receipts or the taxable income arrived at, after adjusting deductible expenses be subjected to tax? - Concerning this aspect as well, according to us, CIT(A) side-stepped the contention, although, a specific ground had been raised by the appellant/assessee in the appeal filed before the CIT(A). Respondent cannot but accept that in the succeeding AY i.e., AY 2015-16, CPC has brought to tax that amount which constitutes excess of income over expenditure i.e., from gross receipts, deductible expenses have been adjusted. We are also of the view that since the return of the appellant/assessee was processed under Section 143(1) of the 1961 Act, if there were any doubts, scrutiny should have been carried out and the necessary powers available under the 1961 Act should have been taken recourse to. Evidently, this was not done and therefore, the order was passed by the CPC and confirmed by the CIT(A) without delving into the specific grounds raised by the appellant/assessee, which remain unrebutted, cannot be sustained. It is also a matter of record that the Tribunal also failed to take into account similar grounds raised by the appellant/assessee consistent with what was averred in the appeal preferred before CIT(A). This is evident upon perusal of ground incorporated in the appeal instituted before the Tribunal. Thus, having regard to the aforesaid, the questions of law are decided in favour of the appellant/assessee and against the respondent/revenue.
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