JCIT(OSD), EXEMPTIONS CIRCLE, AURANGABAD, AURANGABAD vs. SHRI DATTAKRUPA SHAIKSHANIK AND KRUSHI GRAMVIKAS PRATISHTHAN, AHMEDNAGAR

PER ASTHA CHANDRA, J.M.:

The captioned three appeals filed by the Revenue are directed against the separate order(s) of Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)/NFAC”], u/s. 250 of the Income Tax Act, 1961 (the “Act”), pertaining to Assessment Years (“AY”) 2015-16, 2016-17 & 2017- 18. Since common issues are involved, all these appeals were heard together and are being disposed of by this common order.

ITA No.1631/PUN/2026, AY. 2015-16: 2. Briefly stated, the facts of the case are that the assessee is a trust registered under the Bombay Public Trust Act, 1950 and engaged in running educational institutions. For AY. 2015-16, the assessee did not file its return of income. Based on the information available with Department, the Ld.AO found that the assessee has shown total receipt of Rs. 13,53,29,232/- during the relevant AY under consideration. However, since the assessee had not filed its return of income during the relevant

2 ITA Nos. 1630, 1631 & 1632/PUN/2026 assessment year, the Ld.AO added the entire receipt of Rs. 13,53,29,232/- as escaped income to the total income of the assessee for the AY. 2015-16, vide his order passed u/s. 147 r.w.s. 144B of the Act, dt. 27-03-2022.

“Core Issue Decided: Whether exemption under section 10(23C)(iiiad) is to be examined by clubbing the receipts of all educational institutions run by a society/trust or by applying the 1 crore threshold institution-wise, and consequentially whether gross receipts can be taxed if exemption is denied. Ratio/Legal Principle Laid Down 1. 1 crore limit under section 10(23C) (iiiad) is institution-specific The Court held that the phrase "aggregate annual receipts of such university or other educational institution" refers to each educational institution independently. There is no legislative intent to club receipts of multiple institutions run by a society or trust. 2. Society and institution are distinct for the purpose of exemption A society/trust may be a juridical person, but exemption under section 10(23C)(iad) attaches to the educational institution, not to the society as a whole. 3. If legislature intended clubbing, it would have said so expressly The judgment clearly records that absence of express words permitting aggregation of receipts of all institutions is decisive. Courts cannot read such clubbing into the provision. 4. Meaning of "aggregate annual receipts" clarified "Aggregate" means total receipts of that institution for the year, "Annual" signifies yearly receipts,

3 ITA Nos. 1630, 1631 & 1632/PUN/2026 It does not mean aggregation across multiple institutions. 5. Where exemption is denied, only 'total income' can be taxed Even assuming exemption is not available, gross receipts cannot be taxed. Income must be computed on commercial principles, allowing expenditure and excluding exempt agricultural income. 6. Approach of taxing gross receipts held legally unsustainable The Court approved the principle that once exemption is denied, the case falls into normal computation provisions, and only surplus/total income is chargeable to tax. Final Outcome  Interpretation of section 10(23C) (iiiad) held in favour of institution- wise application  Clubbing of receipts of all institutions held impermissible  Taxing gross receipts instead of total income disapproved  Matter liable to be recomputed on commercial basis, if exemption is denied For the purposes of section 10(23C) (iad), the prescribed monetary limit of 1 crore is to be applied institution-wise and not by aggregating the receipts of all institutions run by a society; further, even where exemption is denied, only the total income computed on commercial principles can be brought to tax and not the gross receipts. Even if exemption is not allowable in view of non-registration u/s. 12AA of Income-tax Act, the income of the Trust is required to be computed not in accordance with the provisions of Act but in accordance with the normal rule of accountancy, in a commercial sense without reference to the head of income specified in See. 14. This is a matter of settled law. The Hon'ble Supreme Court in CIT Vs. Programme for community organization, 248 ITR 1 (SC) had approved Kerala High Court's decision in the same case in 228 ITR 620 (Ker) as to the manner of computation stating that income has to be computed on commercial basis and not head wise or statutory basis wherein Expenditure would be charge on the income, while the net income along with donations other than corpus donations will form eligible base out of which the appellant is expected to apply 75% (now 85%). Therefore, in my opinion, the manner of computation of income will be the same though the appellant will not be entitled to exemption u/s. 11 & 12 of the Income-tax Act being not registered u/s. 12AA of Income-tax Act and the question of taxability of donation u/s. 57 and deduction u/s. 57(iii) of Income-tax Act does not arise. Accordingly, the Assessing Officer is directed to delete the addition of 40,92,237/-."184.2 Thus, in the light of the above decision and the decision of Hon'ble Apex court, it became settle law that even though even though exemption is not allowed under section 11 & 12 in view of the non-registration under section 12AA or under section 10(23C) of the Act, the income of the Trust is required to be computed not in accordance with the provisions of Act but in accordance with the normal rule of accountancy, in a commercial sense. Reopening under section 147: The validity of reopening has been challenged. On perusal of the assessment records, it is evident that the notice under section 148 was duly issued and served, and the appellant participated in the reassessment proceedings. The reassessment was initiated on tangible material and the issue of exemption under section 10(23C) had not been examined in scrutiny earlier. Jurisprudence consistently holds that where no opinion was formed earlier, the doctrine of change of opinion does not apply. Accordingly, following judicial precedents in favour of the Revenue, the reopening is held to be valid and the grounds challenging initiation of proceedings under section 147 are rejected. Ground relating to exemption under section 10(230)(iiiad):

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The core dispute relates to the interpretation of section 10(23C)(iiiad) and the manner of computing the prescribed monetary limit. The Assessing Officer has denied the exemption by aggregating the receipts of all institutions run by the trust and comparing the same with the prescribed threshold. The appellant, on the other hand, has contended that the limit is to be applied institution-wise and not trust-wise. On careful consideration, it is observed that judicial authorities have consistently held that for the purposes of section 10(23C)(iiiad), the expression "aggregate annual receipts" refers to the receipts of each educational institution and not the cumulative receipts of the trust running multiple institutions. However, it is equally settled that the onus is on the assessee to demonstrate that each institution exists solely for educational purposes and not for purposes of profit, and that the receipts of each institution independently satisfy the prescribed limit. the present case, while the appellant has furnished a tabulation of receipts of various units, the assessment order records that the Assessing Officer has not examined the matter on the basis of commercial principles and has also included agricultural income and other receipts while computing taxable income based on gross income after disallowing 10(23C)(iiiad) due to time barring reason. Further, the Hon'ble ITAT, in the above-mentioned case (Supra), has issued a categorical direction that income is to be computed on commercial basis on total income and not by adopting gross receipts. In view of the above and considering the binding nature of the directions of the Juridictional Hon'ble ITAT and High Court/ Supreme Court (Supra), I am of the considered view that the issue relating to computation of income requires fresh examination at the level of the Assessing Officer strictly in accordance with law and in consonance with the directions of the Hon'ble ITAT. Accordingly, while the legal contention that income cannot be assessed merely on the basis of gross receipts is accepted in principle, the matter of verification of institution-wise receipts, exclusion of agricultural income, and computation of income on commercial principles is set aside to the file of the Assessing Officer. The Assessing Officer shall recompute the total income after allowing expenses incurred, strictly on commercial basis, as per the audited statement of accounts and computation of income are Rs. 10,43,29,232 including agricultural income of Rs.2,52,73,640 and excluding agricultural income the gross receipts are to the tune of Rs. 7,90,55,592 and after excluding agricultural income after verification of agricultural income proofs submitted like crop showing certificate issued from revenue authorities/Tehsildar/agricultural department as a proof of any agricultural income, in accordance with law and judicial precedents, and in strict compliance with the directions of the Hon'ble ITAT and Hon'ble High Court and Supreme Court Judgements.”

5 ITA Nos. 1630, 1631 & 1632/PUN/2026 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in setting aside the order which was not passed under section 144 of the Act.” 5. The Ld.DR, at the outset submitted that the Ld.CIT(A)/NFAC has no power to set aside the assessment order under the amended provisions of section 251(1)(a) of the Act effective from 01-01-2024. He submitted that the impugned assessment order dt. 27-03-2022 passed u/s. 147 r.w.s. 144B of the Act has been set aside by the Ld.CIT(A)/NFAC to the Ld.AO which is contrary to the amended provisions as under the amended law, the power to set aside the assessment order by the Ld.CIT(A)/NFAC is confined to such cases where the order is passed u/s. 144 of the Act.

6 ITA Nos. 1630, 1631 & 1632/PUN/2026 and in accordance with fact and law, after affording a reasonable opportunity of being heard to the assessee. Needless to say, the assessee shall comply with the notices issued by the Ld.AO and make his submissions before him on the appointed date without seeking any adjournment under any pretext, unless required for the sufficient cause, failing which the Ld.AO shall be at liberty to pass appropriate order as per law. We hold and direct accordingly. The effective grounds raised by the Revenue are accordingly allowed for statistical purposes.

ITA Nos.1630 & 1632/PUN/2026, AYs. 2016-17 & 2017-18: 9. Since the facts of the present appeals are identical to the facts in ITA No.1631/PUN/2026 for the AY. 2015-16 (supra) and, therefore, our findings in the said appeal, mutatis mutandis, would apply to these appeals as well. Accordingly, in these two appeals also, we restore the issue to the file of the Ld.AO to re-adjudicate the same as per the directions given by the Ld.CIT(A)/NFAC and in accordance with fact and law, after affording a reasonable opportunity of being heard to the assessee. The effective grounds raised by the Revenue in these two appeals are accordingly allowed for statistical purposes.

Sd/- Sd/- (RAMA KANTA PANDA) (ASTHA CHANDRA) VICE PRESIDENT JUDICIAL MEMBER पुणे/Pune; दिन ांक/Dated : 28-07-2026 Tadepalli Naga Digitally signed by Tadepalli TNMM Naga Murali Mohan Murali Mohan Date: 2026.07.29 11:15:37 +05'30'

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आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘B’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune