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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 ..... the institutions in the same premises and maintaining one bank account and depositing fee receipts.
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 also note that the annual income is less than Rs. 1.00 crore from each school i.e., Nursery school and Primary school and existing solely for educational purposes, is exempted from tax in the hands of the assessee as per the provisions of section 10(23C)(iiiad) of the Act r.w.r. 2BC of I.T. Rules, 1962.
Thus, we are of the considered opinion that the CIT(A) has erred in confirming the denial of exemption u/s.10(23C)(iiiad) to the assessee for the impugned assessment year and hence we are setting aside the order of the CIT(A) by allowing the grounds of appeal of the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... cational purposes, is exempted from tax in the hands of Appellant as per the provisions of Section 10(23C)(iiiad) of the Act read with Rule 2BC of the Income Tax Rules, 1962 ("the Rules") 8. The Appellant has placed reliance on the following judgements which have similar set of facts of that of the Appellant wherein the courts have held that, i. CIT vs Children's Education Society [2013] 358 ITR 373/34 taxmann.com 285 (Kar.) Section 10(23C) of the Income-tax Act, 1961 - Charitable/religious purpose (Society running institutions for educational purpose) - Assessment year 2005-06 - Whether where assessee- society runs several educational institutions, in terms of section 10(23C)(iii)(ad), income from each educational institution if they are not receiving any aid from government wholly or substantially in respect of which aggregate annual receipt does not exceed Rs. 1 crore received by assessee, is not included while computing annual total income of assessee - Held, yes [Para 22] [In favour of assessee] ii. DCIT vs. Jat Education Society [2011] 10 taxmann.com 127 (Delhi) Section 10(23)(iiiab) of the Income-tax Act, 1961, r.w.r 2BC of the Income-tax Rules, 1962 - Educatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and such other grounds that may be adduced at the time of hearing, it is prayed that the addition may be directed to be deleted. " 3. The brief facts of the case are that, the assessee is a society duly registered under Societies Registration Act, 1860 for the year 1964 and running two educational institutions providing quality education. It is formed by the Central Government in the year 1964 existing solely for education purposes and not for the purpose of profit. The management and administration are taken care by the Integral Coach Factory School Management Committee consists of ICF (Railways) and the Principals/Head Masters of the schools, employee, union of ICF. The main objective of the assessee is to provide education to the children of around 10,000 employees of the ICF and to the general public. The assessee is running a nursery and primary schools situated at Chennai, offering education to nursery (kinder garden, LKG & UKG) and primary (1st to 5th Standard) of around 1,000 students. During the assessment year 2018-19, the assessee has not filed return of income. Based on the information, the Assessing Officer found that the assessee has deposited cash of Rs. 1,25,22, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, shall be one crore rupees.] From the above, it is clear that as per section 10(23C)(iiad) of the IT Act, 1961 the educational institutes who received below Rs. 1.00 Cr. annually are eligible for exemption, but the assessee society has annual received Rs. 1,25,22,839/- which is more than Rs. 1 Cr., hence, the society is not qualifying for exemption as per section 10(23C)(iiad) of the I.T. Act, 1961. 9. In view of the above and facts and circumstances of the case the income is assessed is as follows: Returned Income Rs. NIL Add: Difference as discussed above Rs. 60,07,821 Total Income Rs.60,07,821 Assessed Income Rs.60,07,830" Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the ld.CIT(A), NFAC. 5. During the appellate proceedings before the ld.CIT(A), the assessee submitted that the society has earned gross receipts from both the schools during the assessment year 2008-09 as detailed below: Streams of Education Nature of Education Amount Primary Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 51,055/-, The assessee has submitted their reply along with Registration of Society, Memorandum of Association, list of members list of Key persons, Balance Sheet, Total Income Statement, and Computation of Income, etc. 7. After perusal of assessee's submission it is found that the assessee got Rs. 1,25,22,839/- as total receipt. The assessee was not filed their ITR for the year under consideration. As the assessee is not eligible for exemption u/s.10(23C)(iiad). Hence Rs. 60,07,821/- (1,58,10,382-98,02,561) is to be disallowed and added, and assessed as income of the assessee. Penalty proceeding u/s.270A of the I.T. Act, 1961 for under reporting inconsequent misreporting of income is initiated separately." 7.2.3 It is noticed by me that the appellant has made contention before the A.O. that his annual receipts is less than Rs. 1 crore. During the appellate proceedings, the appellant claims that his receipts are at Rs. 66,71,450/- and it is due to common bank account of primary and nursery school so the said amount exceed Rs. 1 crore. However, it is further noticed by me that once the society is same and an education institute is being running how the receipts can be bifu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rposes of sub-clause (iiiad) of clause (23C) of section 10, the amount of annual receipts on or after the 1st day of April, 1998, of any university or other educational institution, existing solely for educational purposes and not for purposes of profit, shall be one crore rupees." 9. Further, the ld.AR submitted that in support of the claim of the assessee for treating both the institutions independently for the purpose of eligibility of exemption u/s.10(23C)(iiiad) of the Act relied on the decision of Hon'ble High Court of Karnataka in the case of CIT vs Children's Education Society [2013] 358 ITR 373/34 taxmann.com 285 (Kar.), wherein the Hon'ble Court held as under: "Each educational institution is a separate entity controlled under various statutes for various purposes. May be the Management of these educational institutions would be in the hands of the Societies or the Trust, but for all other purposes they are different, independent entities. That is the reason why Section 1023C) is worded as under: "Any income received by any person on behalf of .. " Here "any person" refers to the assessee and "on behalf of" refers to such institutions. It may be a University, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns being run by the assessee society whereas the claim of the assessee was that the same should be considered separately and accordingly the income of those institutions was fully exempt under section 10(23C)(iiiad). The case of the assessee was to be accepted and it was to be held that the claim of the assessee was to be considered on the basis of each educational institution separately. Hence, for the purpose of section 1023C)(iiiad), the annual gross receipts of three educational institutions being run separately by the assessee society could not be clubbed together for examining the fulfilment of the conditions of receipt being fess than the prescribed limit of annual gross receipts. If the annual gross receipts of those three educational institutions were considered separately, the same was below Rs. 1 crore in each year for each of those educational institutions". The Appellant also places its reliance on the judgement made by Hon'ble High Court of Punjab-Haryana in the case of Commissioner of Income Tax vs. Shanti Devi Educational Trust. The extract of the case was given below for your consideration "As the trust was neither registered under section 12AA nor under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gral Coach Factory School Management Committee consists of ICF (Railways) and the Principals/Head Masters of the schools, employee, union of ICF. The main objective of the assessee is to provide education to the children of around 10,000 employees of the ICF and to the general public. The assessee is running a nursery and primary schools situated at Chennai, offering education to nursery (kinder garden, LKG & UKG) and primary (1st to 5th Standard) of around 1,000 students. 12. During the assessment year 2018-19, the assessee has not filed return of income. Based on the information, the Assessing Officer found that the assessee has deposited cash of Rs. 1,25,22,839/- to the bank account and also earned interest of Rs. 51,055/- during the year and issued a notice u/s. 148 of the Act for reopening of assessment u/s. 147 of the Act. In response to the statutory notices issued by the Assessing Officer, the assessee filed a detailed reply on 30.01.2023 stating that the assessee's society is providing two streams of education i.e, nursery (kinder garden, LKG & UKG) and primary (1st to 5th standard) under the State Government syllabus to the students at Chennai. Further, the assessee stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation Society [2013] 358 ITR 373/34 taxmann.com 285 (Kar.) Section 10(23C) of the Income-tax Act, 1961 - Charitable/religious purpose (Society running institutions for educational purpose) - Assessment year 2005-06 - Whether where assessee- society runs several educational institutions, in terms of section 10(23C)(iii)(ad), income from each educational institution if they are not receiving any aid from government wholly or substantially in respect of which aggregate annual receipt does not exceed Rs. 1 crore received by assessee, is not included while computing annual total income of assessee - Held, yes [Para 22] [In favour of assessee] 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.) 15. Therefore, in the present facts and circumstances of the case and following the judicial precedents cited supra, we are of the considered opinion that the ld.CIT(A) has erred in confirming the denial of exemption u/s. 10(23C)(iiiad) of the Act to the assessee for the impugned assessment year and hence we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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