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TMI Blog2025 (3) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... Nursery school lCF Silver Jubilee Primary school. 3. The ld. CIT(A) has not considered the Grounds of Appeal filed by the Appellant and has adjudicated on the wrong grounds which is irrelevant to the case of the Appellant. Reference is drawn to Page No. 2 of the Appellate Order dt. 20.11.2023. A copy of our Grounds of Appeal submitted before the ld. CIT(A) is attached as Annexure. 4. The ld. CIT(A) has failed to consider the entire Grounds of Appeal, Statement of Facts, written submissions and judicial pronouncements relied on by the Appellant and has denied the rightful exemption u/s.10(23C)(iii)(ad) of the Income Tax Act, 1961. 5. The ld. CIT(A) has passed the order without application of mind by not considering the Statement of facts produced by the Appellant and has dismissed the appeal by vaguely stating that the contentions of the Appellant are unclear and that the claim of the Appellant is not in compliance with the provisions of the Income Tax Act, 1961. 6. The ld. CIT(A) did not consider the fact that the Appellant Society is running two separate educational institutions i.e. Nursery school (Kinder Garten - LKG and UKG) and Primary school (1st Standard to 5th Stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal institution was having annual gross receipt of less than Rs. one crore, income of those institutions was exempt from tax -Held, yes iii. CIT vs. Shanti Devi Educational Trust [2019] 102 taxmann.com 141 obtaining registration under Section 12AA of the Act was not mandatory for claiming exemption under section 10(23C)(iiiad) of the Act. According to this provision, any income received by any person on behalf of any university or other educational institution existing solely for educational purposes and not for the purpose of profit is exempt if the aggregate annual receipt of such university or educational institute does not exceed the amount of annual receipt as may be prescribed". "It is held that, Total income of society running that school or university is not to be considered under that section. Income from interest and FDRs was an additional income of society and cannot be considered to be part of annual receipt of the school. It was held that the assessee was eligible for exemption under section 10(23C)(iiiad) of the Act as annual school receipts did not exceed 1 crore." iv. Pawan Hans Swami Uma Bharti Mission vs. ACIT [2013] 29 taxmann.com 223 (Delhi - Trib.) Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee also stated that during the assessment year 2018-19 i.e., (financial year 2017-18) has earned commission amounting to less than Rs. 1.00 crore from primary school and nursery school respectively. The assessee is existing solely for educational purpose and annual income earned during the year does not exceed Rs. 1.00 crore from each school i.e., nursery school and primary school and hence, the society is exempted from tax as per the provisions of section 10(23C)(iiiad) of the Act r.w.r. 2BC of I.T. Rules, 1962. 4. On perusal of the submissions made by the assessee, the Assessing Officer was not convinced and passed an order dated 11.03.2023 u/s.147 r.w.s. 144 r.w.s. 144B of the Act by holding as under: "8. The Assessee has submitted its response dated 06.03.2023 against show cause notice dated 03.03.2023. Assessee's reply is considered but found unacceptable As per Section 10(23C)(iad) of the IT Act, 1961. Amount of annual receipts for the purposes of sub-clauses (iiiad) and (iiiae) of clause (23C) of section 10. 2BC. (1) For the purposes of sub-clause (iiad) of clause (23C) of section 10, the amount of annual receipts on or after the 1st day of April, 1998, of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 10(23C)(iiiad) of the Act r.w.r. 2BC of I.T. Rules, 1962. Further, the assessee relied on various judicial precedents wherein the Hon'ble Courts have held that each educational institution is a separate entity controlled under various status for various purposes even though the management of these institutions would be in the hands of one society, but for all other purposes they are different and independent entities. i. CIT vs Children's Education Society [2013] 358 ITR 373/34 taxmann.com 285 (Kar.) ii. DCIT vs. Jat Education Society [2011] 10 taxmann.com 127 (Delhi) iii. CIT vs. Shanti Devi Educational Trust [2019] 102 taxmann.com 141 iv. Pawan Hans Swami Uma Bharti Mission vs. ACIT [2013] 29 taxmann.com 223 (Delhi - Trib.) 7. After perusal of the submissions made by the assessee, the ld.CIT(A), NFAC not convinced and hence, upheld the order of the Assessing Officer by dismissing the appeal of the assessee vide order dated 20.11.2023 by holding as under: "7.2.1 The Ld. A.O. further given his observation in para 5 & para 7, which is reproduced as under:- "5. It is submitted by the as namely ICF Silver Jubilee Nursery & Primary School, Konnur High Road, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has provided details of both the institutions which are running independently before us, the ld.AR furnished the return of income which has been filed on 07.03.2023 for the assessment year 2018-19 u/s. 139(4c) of the Act, wherein the assessee has shown the details of institution separately as nursery school which had an aggregate annual receipt of Rs. 66,71,450/- and primary school which had aggregate annual receipt of Rs. 91,38,932/-. Further, the ld.AR submitted that the assessee is running two schools for providing education to the children of ICF employees along with general public in the form of nursery school and primary school separately. The ld.AR also stated that as per the Article 21A of the Constitution of India, the basic education is provided to the children of age group from 6 to 14 years mandatorily and the nursery education is provided separately with a state regulations and hence, both the streams of education are different from each other and hence, for the purpose of exemption u/s.10(23C)(iiiad) of the Act both are separate entities and hence, eligible for gross collection of Rs. 1.00 crore. The relevant extract of section 10(23C)(iiiad) of the Act r. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be understood as suggested by the Revenue as the annual receipts of such educational institutions put together, probably, the said provision regarding exemption would be of no use at all. Especially, if the society is running a medical college or any engineering college or other professional courses, then the annual receipt of each institution would run to few crores and therefore, the very object of granting exemption to such genuine institution would be lost. Therefore, the word "aggregate annual receipt" has to be understood with the context in which it is used and the purpose for which the said provision was inserted, keeping in mind, the Scheme of the Act. Therefore, if an assessee is running several educational institutions, if any of them is wholly or substantially financed by the Government, then the income from such educational institution received by the assessee is not included while computing his total income. Similarly, income from each educational institution if they are not receiving any aid from the Government wholly or substantially in respect of which the aggregate annual receipt does not exceed Rs. 1 crore received by the assessee, is also not included while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucational institute does not exceed the amount of annual receipt as may be prescribed". "It is held that, Total income of society running that school or university is not to be considered under hat section. Income from interest and FDRs was an additional income of society and cannot be considered to be part of annual receipt of the school It was held that the assessee was eligible for exemption under section 1023Ciiiad) of the Act as annual school receipts did not exceed '1 crore," The Appellant has also placed its reliance on the judgement made in the case of Pawan Hans Swami Uma Bharti Mission vs. ACIT [2013] 29 taxmann.com 223 (Delhi Trib.) it has been held by the Delhi bench of the ITAT that only annual receipt of school or university would be considered for deciding the exemption limit under section 10(23C)(iiiad). and prayed for deleting the addition. 10. Per contra, the ld.DR stated that the assessee is running educational institution in the same building and the same teaching staff is teaching for both the entities as seen in the website of the society and hence, the decision of the ld.AO and that of the ld.CIT(A) in disallowing the exemption as claimed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and filed the return of income on 07.03.2023 u/s.139(4C) of the Act showing the gross receipts of Rs. 66,71,450/- from Nursery school and Rs. 91,39,932/- fr4om Primary School. The AO has considered the entire receipts as revenue of the organization and hence assessed to tax without giving the benefit of section 10(23C)(iiiad) of the Act. The same was confirmed by the ld.CIT(A) stating that the assessee is having run both the institutions in the same premises and maintaining one bank account and depositing fee receipts. 13. We note that the assessee is running two institutions during the assessment year 2008-09 and has collected the fees receipts as detailed below: Streams of Education Nature of Education Amount Primary School 1st std to 5th Std Rs.91,38,932 Nursery School Kinder Garten - LKG & UKG Rs.66,71,450 Total Rs.1,58,10,382 The said receipts have been deposited to the common bank account held by the society. The cash deposited into bank account, receipts of fees collected in the educational institutions and the same has been shown in the audited financial statements along with the supported bank statements furnished before the lower authorities. We als ..... X X X X Extracts X X X X X X X X Extracts X X X X
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