TMI Blog2018 (11) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... e was filed by the assessee in capacity of Body of Individuals and automatically the provisions of section 11, 12 &13 will not apply in the case of the appellant unless the registration is granted by CIT which was granted later. Hence, the provisions of section 167B (1) of the Act clearly suggests that under this situation the appellant has to be taxed at maximum marginal rates. No infirmity in the order of CIT(A) in upholding the action of the CPC Bangalore in taxing the assessee at maximum marginal rate. Capital receipt - Held that:- CIT(A) has relied upon the order dated 16.5.2017 of ITAT, Delhi Bench in the case of Divine Educational Institute & Social Development Society vs. ITO [2017 (5) TMI 966 - ITAT DELHI] wherein, it has been held that corpus fund which is meant for specific purpose to meet out capital expenditure could not be part of annual receipts, even if the trust is not registered under section 12AA of the Income Tax Act. However, in the present case the assessee has shown the receipt towards corpus fund of building account which is a capital receipt which has been invested in FDR. Therefore, Ld. CIT(A) correctly followed the aforesaid decision of ITAT and hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. 4. The CIT(A) erred in law and on facts in including the amount of ₹ 94,323/- being interest earned on FDRs made out of corpus fund in taxable income ignoring the fact that interest earned on corpus fund has to be treated at par with the corpus fund. Thus the said amount should be excluded from taxable receipts. 5. The CIT(A) erred in law and on facts in holding the gross receipts as taxable income without allowing the expenses of ₹ 3,22,837/- incurred towards the said receipts and ignoring that only surplus is taxable as income and not the gross receipts. Thus the expenses should be allowed as deduction against the gross receipts. 6. The appellant craves the leave to add, substitute, modify, delete or amend all or any of the grounds of appeal either before or at the time of hearing. 2. The brief facts of the case are that assessee filed its return of income for the AY 2014-15 at an income of ₹ 2,39,350/- which was increased to ₹ 13,41,461/- u/s. 143(1)(a) while processing the return by CPC, Bangalore. As per the claim of the assessee, the assessee is entitled for the deduction of ₹ 5,69,100/- i.e. corpus fund of building account recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcluded from taxable receipts. Lastly he submitted that lower authorities have wrongly held that the gross receipts as taxable income without allowing the expenses of ₹ 3,22,837/- incurred towards the said receipts and ignoring that only surplus is taxable as income and not the gross receipts. Thus the expenses should be allowed as deduction against the gross receipts. In view of above, he requested that the appeal of the assessee may be allowed. 4. On the other hand, Ld. DR relied upon the order of the Ld. CIT(A) and stated he has passed a well reasoned order, which does not need any interference on our part. He further submitted assessee s claim is not acceptable due to the fact that the assessee has applied for registration under section 12AA of the Act on 27.11.2015 i.e. during AY 2016-17 whereas the present case of the assessee relates to AY 2014-15. He further submitted that the proviso section 12 A(2) will also not apply in the case of the assessee as the assessee has not shown any income derived from the property under trust. Beside this, the registration granted by CIT does not grant exemption u/s 11,12 13 automatic and it is conditional after the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Conditions for applicability of sections 11 and 12. 12A. (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:- (aa) the person in receipt of the income has made an application for registration of the trust or institution on or after the 1st day of June, 2007 in the prescribed form26 and manner to the27[Principal Commissioner or] Commissioner and such trust or institution is registered under section 12AA;] (b) where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year], the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the pres-cribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als unknown, etc. 167B. (1) Where the individual shares of the members of an association of persons or body of individuals other than a company or a co-operative society or a society registered under the Societies Registration Act, 1860 (21 of I860] or under any law corresponding to that Act in force in any part of India in the whole or any part qf the income of such association or body are indeterminate or unknown, tax shall be charged on the total income of the association or body at the maximum marginal rate 5.4 In view of above, I do not find any infirmity in the order of Ld. CIT(A) in upholding the action of the CPC Bangalore in taxing the assessee at maximum marginal rate. 5.5 Further, I note that Ld. CIT(A) has relied upon the order dated 16.5.2017 of ITAT, Delhi Bench in the case of Divine Educational Institute Social Development Society vs. ITO passed in ITA No. 380/Del/2017 wherein, it has been held that corpus fund which is meant for specific purpose to meet out capital expenditure could not be part of annual receipts, even if the trust is not registered under section 12AA of the Income Tax Act. However, in the present case the assessee has shown the receip ..... X X X X Extracts X X X X X X X X Extracts X X X X
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