SHRI SANT RAM MEMORIAL EDUCATION AND WELFARE SOCIETY,KARNAL, HARYANA vs. EXEMPTION WARD, AMBALA, AMBALA

ITA 61/CHANDI/2026Status: DisposedITAT Chandigarh03 August 2026AY 2018-199 pages

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the exemption under Section 10(23C)(iiiad) is for genuinely small educational institutions and cannot be used to fragment a composite institution. Since the assessee failed to prove independent existence and accounting of its institutions, the aggregation of receipts was upheld.

What were the facts?

The assessee, a society running educational institutions, claimed exemption under Section 10(23C)(iiiad) for AY 2018-19. The Assessing Officer and CIT(A) denied the exemption, aggregating the receipts of all institutions, which exceeded the prescribed limit.

What were the issues?

Whether the receipts of multiple educational institutions run by a single society should be aggregated or considered individually for the purpose of exemption under Section 10(23C)(iiiad).

Which sections of the Income-tax Act were involved?

Section 10(23C)(iiiad), Rule 2BC

AI-generated summary — verify with the full judgment below

आयकर अपीलीय अिधकरण,च�ीगढ़ �ायपीठ , च�ीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “SMC”, CHANDIGARH HEARING THROUGH: VIRTUAL HEARING �ी लिलत कुमार, �ाियक सद� BEFORE: SHRI. LALIET KUMAR, JM आयकर अपील सं./ ITA No. 61/Chd/2026 �नधा�रण वष� / Assessment Year : 2018-19 Shri Sant Ram Memorial बनाम Exemption Ward, Education and Welfare Society, Amabla 250, Sector 6, Karnal 132001 �ायी लेखा सं./PAN NO: AAITS831E अपीलाथ�/Appellant ��थ�/Respondent िनधा�रती की ओर से/Assessee by : Sh. Sameer Kapoor, CA राज� की ओर से/ Revenue by : Dr. Ranjit Kaur, Addl. CIT, Sr.DR सुनवाई की तारीख/Date of Hearing : 06.07.2026 उदघोषणा की तारीख/Date of Pronouncement : 03.08.2026 आदेश/Order

This appeal by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, dated 14.11.2025 for the assessment year 2018-19.

The ground raised by the Assessee are as under:- 1. Ld. CIT(A) has erred in law and facts of the case in upholding an assessment order u/s 143(3) of the Income Tax Act 1961. 2. Ld. CIT(A) has erred in law and facts of the case in in dismissing the appeal filed by the assessee by

2 61/Chd/2026 confirming the disallowance of exemption w/s 10(23C)(iiiad) of Rs. 9.70.139/-made by the Id AO.

The assessee may please be allowed the right to add/DLEETE/modify any of the grounds of appeal at any stage.

Brief Facts of the Case 3.1 The assessee is a society/trust registered under the Societies Registration Act and is engaged in imparting education through various educational institutions. For the Assessment Year 2018-19, it filed its return of income declaring Nil income after claiming exemption under section 10(23C)(iiiad) of the Income-tax Act. During the relevant previous year, the assessee was running educational institutions namely Infinity Public School, SSR College of Education, Bachpan Play School and the Society itself. The assessment was selected for complete scrutiny primarily on the issue relating to the claim of exemption under section 10(23C)(iiiad).

Findings of the Assessing Officer 4.1 During the course of assessment proceedings, the Assessing Officer noticed that the assessee had claimed exemption of ₹23,21,776/- under section 10(23C)(iiiad). The Assessing Officer observed that the assessee had furnished only consolidated financial statements and had not produced any working demonstrating the

3 61/Chd/2026 eligibility of the exemption claimed. On examination of the consolidated Income & Expenditure Account, the Assessing Officer found that the aggregate annual receipts of the educational institutions run by the assessee amounted to ₹1,85,10,445/-, which exceeded the prescribed monetary limit of ₹1 crore under Rule 2BC applicable for the relevant assessment year.

4.2 The Assessing Officer further observed that the assessee's application for registration under section 12A had earlier been rejected by the Commissioner of Income-tax (Exemptions). Proceeding on the premise that all the educational institutions constituted one composite educational institution, the Assessing Officer aggregated the receipts of all such institutions and held that the assessee failed to satisfy the conditions prescribed under section 10(23C)(iiiad). Consequently, the exemption claimed under the said provision was denied and the surplus of ₹9,70,139/- was brought to tax. Penalty proceedings under section 270A were also initiated separately.

Findings of the Learned CIT(A) 5.1 The learned CIT(A) affirmed the action of the Assessing Officer. While adjudicating the appeal, the learned CIT(A) observed that the central controversy was whether the receipts of the educational institutions were required to be considered individually or on an

4 61/Chd/2026 aggregate basis. The appellate authority noted that all the institutions were operating from the same campus with common infrastructure, common management and common ownership. According to the learned CIT(A), merely because different courses or levels of education were being imparted from separate buildings did not result in creation of separate educational institutions.

5.2 The learned CIT(A) further observed that the assessee had failed to establish that each institution maintained independent books of account, separate management or separate administrative structures. It was also noticed that only consolidated financial statements of the society had been produced. The judicial precedents relied upon by the assessee were distinguished on facts by holding that in those cases the institutions were independently identifiable with separate management and accounts. Accordingly, the learned CIT(A) upheld the denial of exemption under section 10(23C)(iiiad) and dismissed the appeal.

Submissions of the Learned AR 6.1 At the time of hearing, the learned Authorised Representative vehemently submitted that both the lower authorities had misdirected themselves in law by clubbing the receipts of all the educational institutions for determining the monetary threshold

5 61/Chd/2026 prescribed under section 10(23C)(iiiad). It was argued that the statute contemplates examination of the annual receipts of each educational institution independently and not the aggregate receipts of the society as a whole.

6.2 The learned AR further submitted that, in reality, the assessee was running only three educational institutions, namely, one School, one Montessori School and one College. The Society itself could not be treated as a separate educational institution. Therefore, according to the learned AR, the receipts of each institution were below the prescribed monetary limit and each institution was independently entitled to exemption under section 10(23C)(iiiad). It was contended that the authorities below had wrongly aggregated the receipts of all the institutions and thereby denied the statutory exemption, which is contrary to the settled legal position and, therefore, the addition deserved to be deleted.

Submissions of the Learned DR 7.1 Per contra, the learned Departmental Representative strongly relied upon the orders of the Assessing Officer as well as the learned CIT(A). It was submitted that the authorities below had correctly appreciated the factual matrix and the provisions of section 10(23C)(iiiad). The learned DR contended that all the educational

6 61/Chd/2026 activities were being carried out by one society from the same campus under common management and infrastructure and, therefore, the receipts were rightly aggregated for determining the prescribed monetary limit. It was accordingly prayed that the orders of the authorities below be upheld.

Findings of the Tribunal 8.1 We have heard the rival submissions and carefully perused the material available on record. We have also gone through the relevant provisions of section 10(23C)(iiiad) of the Act. 8.2 For ready reference, the relevant part of section 10(23C)(iiiad) provides exemption in respect of:

"Any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed." A plain reading of the aforesaid provision makes it abundantly clear that the Legislature intended to grant exemption to educational institutions having comparatively small annual receipts. The legislative object behind prescribing a monetary threshold is to extend the benefit to genuinely small educational institutions without requiring them to undergo the rigours of obtaining approval under the other clauses of section 10(23C). At the same time, the provision

7 61/Chd/2026 cannot be interpreted in a manner which permits fragmentation of what is, in substance, one integrated educational institution into several artificial units merely to remain within the prescribed monetary limit.

8.3 In the present case, both the Assessing Officer and the learned CIT(A), after examining the factual position, have concurrently recorded a finding that all the educational activities are being carried on by the same society from a common campus with common infrastructure, common management and common ownership. The assessee has not been able to demonstrate before us that the alleged institutions maintain separate books of account, possess independent administrative or managerial structures or function as distinct educational entities. On the contrary, the material on record indicates that only consolidated financial statements of the society were maintained and produced before the authorities below.

8.4 The contention of the learned AR that there are only three educational institutions and that the receipts of each institution should be examined independently does not persuade us in the facts of the present case. Whether separate educational institutions exist is essentially a question of fact. In the absence of cogent evidence establishing their independent existence, administration and

8 61/Chd/2026 accounting, mere nomenclature assigned to different wings or levels of education cannot be determinative. Accepting such an argument without supporting material would defeat the very object of section 10(23C)(iiiad), which is intended to benefit genuinely small educational institutions and not situations where receipts of one composite educational establishment are sought to be fragmented in a manner not contemplated by law.

8.5 We, therefore, find ourselves in agreement with the concurrent findings recorded by the authorities below that the aggregate receipts of the educational institution run by the assessee exceeded the prescribed monetary limit during the relevant previous year and, consequently, the assessee was not entitled to exemption under section 10(23C)(iiiad) of the Act.

Accordingly, finding no infirmity in the impugned order of the learned CIT(A), we uphold the same. The grounds raised by the assessee are dismissed. Order pronounced in the open court on 03.08. 2026 Sd/- (LALIET KUMAR) JUDICIAL MEMBER rkk

9 61/Chd/2026 आदेश की �ितिलिप अ�ेिषत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��थ�/ The Respondent 3. आयकर आयु�/ CIT 4. िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�ीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File

सहायक पंजीकार/ Assistant Registrar

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