MAHARANI DEVI AHILYABAI HOLKAR EDUCATION SOCIETY,SANGLI vs. CIT (EXEMPTION), PUNE

Briefly stated, the facts of the case are that the assessee filed an application in Form No. 10AB under sub clause (B) of (iv) of first proviso to sub-section (5) of Section 80G of the Act on 28-03-2025. With a view to verify the genuineness of the activities of the assessee-trust and fulfillment of conditions laid down in clause (i) to (v) of section 80G(5) of the Act, a notice was issued and duly served upon the assessee through ITBA portal on 07-05-2025 requesting the assessee to upload certain information/clarification contained therein by 21-05-2025. The Ld.CIT(E) on verification of the details submitted by the assessee in response to the 2 said notice and documents filed along with the application, found various discrepancies for which he issued another notice on 07-07-2025 asking the assessee for necessary compliance by 15-07-2025. The said discrepancies recorded by the Ld.CIT(E) is reproduced below:

As the assessee failed to respond to the above notice, another notice was issued on 30-07-2025, seeking compliance by 07-08-2025. After considering the details/documents furnished by the assessee in response to the above notice vide its reply dt. 08-08-2025, the Ld.CIT(E) rejected the application of the assessee for grant of approval u/s. 80G of the Act by observing as under:

Aggrieved, the assessee is in appeal before the Tribunal raising the following grounds of appeal:

The Ld.AR submitted that the assessee‟s application has been rejected solely on the ground that the assessee is not having regular registration u/s. 12AB of the Act. The Ld.AR submitted that the assessee is an educational institution, which is eligible for exemption u/s. 10(23C)(iiiab) of the Act. Since the assessee is entitled to exemption u/s. 10(23C)(iiiab) of the Act, there is no requirement for the assessee to obtain registration u/s. 12AB of the Act.

The Ld.AR further submitted that the assessee is a substantially financed by the Government of Maharashtra as per Rule 2BBB of the Income Tax Rules, 1962 (“Rules”). An institution is considered “substantially financed” if Government grants exceed 50% of its total receipts in a financial year. In the present case of the assessee, Government grants consistently ranged between 91% and 95% of total receipts across 2019-20 to FY. 2024-25 thereby satisfying statutory conditions in order to claim exemption u/s. 10(23C)(iiiab) of the Act. The Ld.AR referred to the details of total receipts and Government grants (reproduced below) contained in the grounds of appeal to demonstrate the assessee‟s contention to be correct:

He further submitted that the assessee has filed its return(s) of income u/s. 139(4C)(e) of the Act from AY. 2016-17 onwards as mandated for institutions claiming exemption u/s. 10(23C)(iiiab) of the Act. Prior to AY. 2016-17, return filing was not legally required. The assessee‟s accounts are audited annually and it maintains full compliance with applicable laws and regulations governing educational institutions. He submitted that the assessee had furnished all the details such as audited financials, activity reports, affiliation certificates and Government grant sanction letters before the Ld.CIT(E), but still he rejected the assessee‟s application solely on the ground that the assessee did not possess registration u/s. 12AB of the Act without appreciating its eligibility u/s. 10(23C)(iiiab) of the Act. The assessee therefore, satisfies the substantive conditions of exemption and is eligible for approval u/s. 80G(5) of the Act.

In support of his claim, the Ld.AR relied on the following judicial precedents, wherein it has been held that Government financed educational institutions covered u/s. 10(23C) of the Act cannot be denied approval u/s. 80G of the Act purely on technical grounds and that registration u/s. 12AB of the Act is not a prerequisite when the institutions exemption status and charitable educational activities are otherwise established:

The Ld.DR, on the other hand, supported the order of the Ld.CIT(E).

We have heard the Ld. Representatives of the Parties and perused the material available on record as well as the Paper Book filed by the Ld.AR on behalf of the assessee. We have also considered various judicial precedents cited by the Ld.AR. Admittedly, the assessee is a public charitable trust established in the year 1960 and registered under the Bombay Public Trust Act, 1950. The assessee-trust operated recognized educational institutions in Sangli District, Maharashtra and is engaged exclusively in imparting education without any profit motive. It is substantially financed by the Government of Maharashtra i.e. the Government grants exceeds 50% of total receipts. It is the contention of the Ld.AR that across FY. 2019-20 to 2024-25, Government grants consistently ranged between 91% and 95% of total receipts which is demonstrated by the details of the total receipts and Government grants provided in the table reproduced above in para 5 of this order. Hence, the assessee is eligible for claiming exemption u/s. 10(23C)(iiiab) of the Act. It is the further submission of the Ld.AR that the assessee is covered u/s. 10(23C)(iiiab) of the Act and not required to obtain registration u/s. 12AB of the Act, which is the sole basis of rejection of assessee‟s application for grant of approval u/s. 80G(5) of the Act by the Ld.CIT(E). We find some force in the arguments advanced by the Ld.AR. In light of facts in the present case and the various judicial precedents (supra) cited by the Ld.AR, we are of the considered view that rejection of assessee‟s application filed u/s. 80G(5) of the Act merely on the ground of non- registration u/s. 12AB of the Act by the Ld.CIT(E) is not justified when its status as a Government financed educational institution and the genuineness of its educational activities are not in dispute. However, at the same time, the said claim of the assessee needs verification. Thus, considering the totality of facts and in the circumstances of the case and in absence of any contrary material brought on record by the Revenue, we

In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.

The concerned Pr.CIT, Pune

DR, ITAT, „B‟ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, ////