Only Surplus Can be Taxed, Not Full Gross Receipts: ITAT Gives Relief to AOP
The Income Tax Appellate Tribunal (ITAT), Delhi, has ruled that the surplus could be brought to tax instead of the entire gross receipts, even if the assessee is an AOP (Association of Persons).
The assessee trust, Tripura Bambu and Cane Development Centre, had filed ITR-7 and had claimed exemption under section 11 of the Income Tax Act, as over 85% of the receipts were applied for charitable purposes. The CPC (Centralised Processing Centre) processed the return of the assessee trust, where it taxed the entire gross receipts without giving a deduction for application of funds for charity purposes.
The trust filed a rectification application, but the same was rejected. Therefore, the assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT), Delhi.
The assessee argued that for the previous and the subsequent years, the assessee had been treated as AOP and only the surplus was taxed instead of the entire gross receipts, for these years, so the same should be followed for AY 2018-19 as well.
The Tribunal agreed with the contention of the assessee and held that even if the assessee is is AOP, only the surplus part can be taxed, not the full gross receipts. The tribunal also noted that the revenue has been taxing only the surplus for the previous and subsequent years. Upholding the principle of consistency, the tribunal directed the assessing officer to tax only the surplus amount and then recalculate the income.
Case Citation: Tripura Bambu and Cane Development Centre Vs ITO (ITAT Delhi); ITA No. 2380/Del/2025; 15/12/2025; 2018-19
