TMI Blog2019 (2) TMI 1842X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of registration u/s.12A the assessee should be assessed in the capacity of AOP on the commercial principles, wherein, the total gross receipts/income cannot be treated as income of the assessee without allowing revenue expenditure incurred by the assessee during the relevant same period and thus, I am inclined to hold that the authorities below were not right in disallowing the claim of expenditure of the assessee. However, AO has framed assessment u/s.143(1) 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, direct the Assessing Officer to allow the claim of expenditure of the assessee pertaining to the relevant financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue expenditure incurred by the society should be allowed to the appellant before ascertaining the taxable income of the assessee in absence of registration u/s.12A of the I.T.Act, 1961 (in short Act ). Ld A.R. of the assessee has placed reliance on the decision of Hyderabad Benches of the Tribunal in the case of Nirmal Agricultural Society vs ITO, (1999) 71 ITD 0152 (Hyd) to submit 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. He further submitted that for ascertaining the net income/surplus, the Assessing Officer has to allow expenditure incurred by the assessee out of gross receipts. Therefore, the Assessing Officer may kind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that the expenditure actually incurred by the assessee for its objects/business are allowable amount out of total receipts received by the assessee during the financial period. Ld A.R. vehemently pointed out that allowability of application of funds/incurring of expenditure for charitable purposes cannot be taken into consideration while processing return of income u/s.143(1) of the Act but this claim of the assessee could have been allowed by the CIT(A) after considering the submission of the assessee and following the proposition laid down by the ITAT Hyderabad Benches in the case of Nirmal Agricultural Society (supra). Ld A.R. also submitted that the jurisdictional Assessing Officer in this case is Income Tax Officer, Ward 1(2), Bhuba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action of the Assessing Officer taxing the entire amount of receipts without allowing claim of expenditure. 8. In the light of the above factual position and keeping in view the principles laid down by the Hyderabad Benches of the Tribunal in the case of Nirmal Agricultural Society (supra), I have no hesitation to hold 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 receipts because in absence of registration u/s.12A of the Act, the assessee should be assessed in the capacity of AOP on the commercial principles, wherein, the total gross receipts/income cannot be treated as income of the assessee without allowing revenue expenditure incurred by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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