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2020 (6) TMI 296 - AT - Income TaxDetermination of income of trust - Ascertaining the taxable income of the assessee in absence of registration u/s.12A - Revenue taxing the entire amount of receipts without allowing claim of expenditure - assess only net income of the assessee and not the entire gross receipts - CIT(A) did not give the benefit of provisions of Section 11 - HELD THAT:- In the case of Nirmal Agricultural Society vs ITO. [1998 (12) TMI 106 - ITAT HYDERABAD-B] has held that even in absence of registration u/s.12A of the Act, the Assessing Officer could assess only net income of the assessee and not the entire gross receipts. Accordingly, we have no hesitation to hold that even in absence of registration u/s.12A AO could assess only net income of the assessee and not the entire receipts because in absence of registration u/s.12A assessee should be assessed in the capacity of AOP on the commercial principles, wherein, the total gross receipts cannot be treated as income of the assessee without allowing revenue expenditure incurred by the assessee during the relevant same period and thus, we are inclined to hold that the authorities below were not right in disallowing the claim of expenditure of the assessee. AO has framed assessment u/s.143(1) of the Act without verifying the quantum of expenditure claimed by the assessee and the CIT(A) has not verified the same during the relevant appellate proceedings. Therefore, we direct the Assessing Officer to verify the quantum of expenditure claimed by the assessee. If the AO finds that the expenditures have been incurred for the object of the society then the AO is directed to allow the same and decide the issue as per law. - Appeal of the assessee is allowed for statistical purposes.
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