AMAR SANSTHA ,JALGAON vs. ITO EXEMPTION WARD-2 , NFAC, NASHIK

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ITA 23/PUN/2026Status: DisposedITAT Pune15 October 2026AY 2020-2116 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found merit in the assessee's arguments. It acknowledged that the assessee's object was education, its receipts were applied for educational purposes, and it was substantially financed by the government. The Tribunal noted that the denial of exemption was based solely on a technical mistake in mentioning the wrong sub-section of Section 10(23C) in the return of income, despite the substantive conditions for exemption being fulfilled. The Tribunal also considered that the assessee had been allowed exemption under Section 10(23C) in AY 2015-16 and subsequent years. Furthermore, all necessary details supporting the exemption claim were available with the Revenue. Citing the decision in M/s. D. Banumaiah's Educational Institutions vs. ITO, the Tribunal held that the exemption claim should not be denied on technical grounds when substantive conditions are met. Consequently, the Tribunal set aside the order of the ADDL/JCIT(A) and directed the AO to grant exemption under Section 10(23C)(iiiab) of the Act to the assessee.

What were the facts?

The assessee, Amar Sanstha, a trust established in 1991 for educational purposes, appealed against the order of the ADDL/JCIT(A) for Assessment Year 2020-21. The assessee claimed exemption under Section 10(23C)(iiiab) or (iiiad) of the Income Tax Act, 1961, stating its total receipts were Rs. 4,25,14,030, including government grants of Rs. 2,91,03,551, which was below the Rs. 5 crore limit applicable from AY 2022-23. The Assessing Officer/CPC initially denied the exemption without reason. The CIT(A) directed the AO to verify the facts. Subsequently, the AO denied exemption, citing that the Rs. 5 crore limit was applicable only from AY 2022-23, and for AY 2020-21, the limit was Rs. 1 crore. The ADDL/JCIT(A) upheld this denial, stating the assessee's receipts exceeded the Rs. 1 crore limit for AY 2020-21 and that the assessee had not claimed exemption under the correct sub-section in its return.

What were the issues?

1. Whether the assessee is eligible for exemption under Section 10(23C)(iiiad) or 10(23C)(iiiab) of the Income Tax Act, 1961, for AY 2020-21, considering its total receipts of Rs. 4,25,14,030 and the applicable limits for that assessment year. 2. Whether a technical error in mentioning the wrong sub-section of Section 10(23C) in the return of income should lead to the denial of an otherwise legitimate exemption claim, when the substantive conditions are met. Assessee's Arguments: The assessee argued that its dominant object is imparting education, it is substantially financed by the government, and its receipts are applied solely for educational purposes. It contended that its total receipts of Rs. 4,25,14,030 were less than the Rs. 5 crore limit applicable from AY 2022-23, and that the previous CIT(A) had allowed exemption under Section 10(23C)(iiiad). The assessee also argued that any error in mentioning the sub-section was a procedural inadvertence, and the authorities should have considered the claim based on factual merits, especially since it had complied with all legal provisions. It relied on the case of M/s. D. Banumaiah's Educational Institutions vs. ITO and noted that exemption was allowed in prior years. Revenue's Arguments: The Revenue supported the orders of the AO and the ADDL/JCIT(A), contending that the assessee was not eligible for exemption under Section 10(23C)(iiiad) as the Rs. 5 crore limit was applicable only from AY 2022-23, and for AY 2020-21, the limit was Rs. 1 crore, which the assessee's receipts exceeded. The Revenue also pointed out that the assessee had not claimed exemption under the correct sub-section in its return.

Which sections of the Income-tax Act were involved?

Section 11,Section 12,Section 154,Section 250,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE

Before: SHRI RAMA KANTA PANDA & Ms. ASTHA CHANDRA

For Appellant: Shri Nikhil Pathak
For Respondent: Shri Rajesh Haladkar, Addl.CIT

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER

ITA No. 23/PUN/2026 Assessment Year : 2020-21 Amar Sanstha, Income Tax Officer, Near Old Datta Mandir, Exemption Ward-2, Chopda-425107. vs. Room No. 307, 3rd Floor, Dist.Jalgaon (MS) Aayakar Bhawan, PAN : AADTA0619G Gadkari Chowk, Nashik-422002. (Appellant) (Respondent) Assessee by : Shri Nikhil Pathak Department by : Shri Rajesh Haladkar, Addl.CIT Date of Hearing : 13-08-2026 Date of Pronouncement : 15-10-2026 O R D E R PER ASTHA CHANDRA, J.M.:

The appeal filed by the assessee is directed against the order dated 11-12-2025 of the Ld.ADDL/JCIT(A)-1, Visakhapatnam, u/s. 250 of the Income Tax Act, 1961 (the “Act”), pertaining to Assessment Year (“AY”) 2020-21.

2.

Briefly stated, the facts of the case are that the assessee is a trust incorporated in the year 1991. It is in existence solely for educational purposes and not for the purpose of profit. It is eligible for exemption u/s. 10(23C)(iiiab) of the Act as it is substantially financed by the Government. The trust is also registered u/s. 12A of the Act and accordingly, its total receipts are also exempt u/s. 11 & 12 of the Act. For AY.2020-21, the assessee filed its return of income on 07-12-2020 and audit report in Form-10B on 05-12-2020 which is within the extended time limit. For the relevant AY, the total receipts as per audit report was Rs. 4,25,14,030/- including Government grants of Rs. 2,91,03,551/-. As the trust‟s total

2 ITA No. 23/PUN/2026 receipts were less than Rs. 5 crores, it claimed exemption u/s.10(23C)(iiiad) of the Act. The return of the assessee was processed by the Ld. Assessing Officer/Central Processing Centre (“AO/CPC”) and the assessee‟s claim of exemption u/s.10(23C)(iiiad) of the Act was denied without assigning any reason. The Ld.AO/CPC determined the status of the trust as AOP/BOI and raised demand of Rs. 2,04,02,970/-. The assessee filed an application u/s. 154 of the Act for rectification of the said intimation order passed by the Ld.AO/CPC. However, no rectification was carried out. In appeal, the Ld.CIT(A) directed the Ld.AO as follows “in the absence of any reason given by the CPC, I direct the AO to verify the arguments put forward by the appellant which are purely fact based and allow exemption, if deem fit.” While giving effect to the said order of the Ld.CIT(A), the Ld.AO/CPC denied the exemption u/s.10(23C)/11 of the Act as it exceeded the specified limit of Rs. 1 crore.

3.

Thereafter, the assessee once again filed an appeal before the Ld.ADDL/JCIT(A), who dismissed the appeal by observing as under:

“5. Decision: The brief facts of the case are that the appellant filed return of income on 07.12.2020 and the ROI was processed by the CPC denying the appellant's claim of exemption. A rectification application u/s. 154 of the Act, was made to the CPC by the appellant, which after reprocessing the return, did not grant exemption as claimed. Aggrieved with this order, the appellant filed the appeal before CIT(A) and requested the appellate authority to grant exemption u/s 10(23C) (iiiab) of the Act. The Learned CIT(A) vide order dated 04.06.2024 DIN ITBA/NFAC/S/250/2024- 25/1065380438(1) directed AO to verify the arguments put forward by the appellant, which are purely fact based, and allow exemption, if deemed fit. Subsequently, the AO has passed the giving effect order u/s 154 rws 250 of the IT Act on 13.08.2024 and denied exemption u/s 10(23C)(iiiad) as the specified limit u/s 10(23c) (iiiad) of the Act was Rs.1 crore only for A.Y. 2020-21 and the enhanced limit of Rs. 5 Crores u/s. 10(23C)(iiiad) of the Income Tax Act, 1961 is applicable from the A.Y. 2022-23. The relevant extract of the giving effect order is reproduced as below: 03. The submission of the assessee trust was perused. The assessee trust has submitted that the trust is eligible for exemption u/s 10(23C)(illed) of the Act. In support of the same the assessee trust has attached the audit report for the year under consideration.

3 ITA No. 23/PUN/2026 On perusal of audit report for AY 2020-21, It is found that the gross receipts of the trust for the year under consideration is at Rs. 4,25,14,030/- out of which Rs. 2,91,03,551/- was shown as Grants. 04. It is pertinent to mention here that, the assessee made a fresh claim of exemption u/s 10(23C)(iiiab) of the Income Tax Act, 1961, however the ld.CIT(A) allowed the claim u/s 10(23C)(iiiad) of the Act. While allowing the claim the ld CIT(Appeal) made an observation that, "The appellant on the other hand claims that the total receipts are Rs.4,25,14,030/-, which is much less than the limit prescribed in section 10(23C)(illad) i.e. Rs.5 Crores and Government grants of Rs.2,91,03,551/- and hence, it is covered and eligible for exemption u/s.10(23C)(iiiad) of the IT Act." The ld. CIT(A) further directed the AO to allow the exemption, if deemed fit. In this regard it is seen that the impugned ROI is in respect of the A.Υ. 2020-21 and the enhanced limit of Rs. 5 Crores u/s. 10(23C)(iiiad) of the Income Tax Act, 1961 is applicable from the A.Y. 2022-23. Before the amendment, the specified limit u/s. 10(23C)(iiiad) of the Income Tax Act, 1961 was Rs. 1 crore. In this case cumulative of Total Contributions and Aggregate of income derived during the previous year is reported at Rs.4,21,33,570/-. Out of this, grants received from the Government is reported at Rs. 2,91,03,551/- i.e. 69%. Therefore, it is apparent that the assessee is not eligible to claim exemption u/s. 10(23C)(iiiad) of the Income Tax Act, 1961 as not allowable. Aggrieved with this order giving effect dated 13.08.2024, the appellant filed the present appeal and requested the appellate authority to grant exemption u/s 10(23C) of the Act. 5.1 I have gone through the facts of the case, grounds of appeal and submissions made by the appellant. As seen from the ROI, the appellant has mentioned the details of projects/activities are as below:

Further, in the ROI, the appellant has not claimed any exemption u/s 10(23C)(iiiab), 10(23C)(iiiac), 10(23C)(iiiad), 10(23C)(iiiae), 10(23D), 10(23DA), 10(23FB), 10(24), 10(46), 10(47) in the column of Part B-TI. The relevant extract is reproduced as below:

4 ITA No. 23/PUN/2026

Further, in this case cumulative of Total derived during the previous year is reported at Rs.4,21,33,570/- for F.Y. 2019-20 relevant to the A.Y. 2020-21. The exemption is allowable u/s 10(23c) (iiiad) of the Act for A.Y. 2020-21, if the total receipts is less than Rs. 1 Crore. But in the case of appellant the total receipts are Rs. 4,21,33,570/-. The enhanced limit of Rs. 5 Crores u/s. 10(23C)(iad) of the Income Tax Act, 1961 is applicable from the A.Y. 2022-23 only. In view of the above discussion, the action of AO was justified in denying the exemption u/s 10(23c) (iiad) / 10(23C) (iiiab) of the IT Act. Thus, the grounds of the appeal on this issue are "dismissed"

4.

Aggrieved by the above order of the Ld.ADDL/JCIT(A), the assessee is in appeal before the Tribunal raising the following grounds of appeal:

“1. On the facts and in the circumstances of the case and in law, the ld. CIT(A), NFAC was incorrect in confirming that the action of the AO was justified in denying the exemption u/s. 10(23C) (iiiad)/10(23C)(iiiab)/11 of the Act, and thus, dismissed the appeal of the appellant ignoring the fact that the appellant assessee is an educational trust created for general public and its object of education is not confined to a particular section of people. The application of its total receipts is only for educational purposes. It is in existence only for imparting education and not for the purpose of profit. 2. On the facts and in the circumstances of the case and in law, the AO and the ld. CIT(A), NFAC has failed to take into account that the total receipts of the appellant educational trust is Rs. 4,25,14,030/-, which is less than 5 crores and it includes Government Grants at Rs.2,91,03,551/- and hence, covered and is eligible for exemption u/s. 10(23C)/11 of the IT Act, 1961. Further, the appellant educational trust

5 ITA No. 23/PUN/2026 had filed its return of income well before the extended time soalso Audited Report in Form No. 10B. 3. On the facts and in the circumstances of the case and in law, the AO and the ld. CIT(A), NFAC, both have erred in denying the legitimate claim, when the educational trust is eligible for exemption u/s. 10(23C)(iiiad)/10(23C)(iiiab), because the wrong sub section was mentioned in the return of income due to inadvertence the authorities were expected to consider the claim based on the factual facts and when the present trust had complied with all the legal provisions of such claim, ignoring the technical errors. 4. The appellant most humbly prays before this Hon'ble ITAT to take judicious and holistic view of all the facts of the appellant's case and ignore the technical errors and direct the lower authorities to grant the exemption u/s.10(23C)/11 as the appellant trust is created for the noble work of imparting education only and is not engaged in any other activity of earning profit. 5. The appellant craves liberty to raise additional grounds, evidences and to modify/amend/delete the grounds of appeal at the time of hearing.”

5.

We have heard the Ld. Representatives of the Parties and perused the material available on record and the paper book filed by the Ld.AR on behalf of the assessee. We have also considered the judicial precedents relied by the Ld.AR. The facts of the case are not in dispute. It is an undisputed fact that the assessee is an educational trust and substantially financed by the Government. It has no profit motive object. During the AY. 2020-21, total receipts are Rs. 4,21,33,570/- and the amount expended on the object of the trust i.e. education is Rs. 4,25,14,030/-, leaving a deficit of Rs. 3,80,460/-. For AY. 2020-21, the assessee claimed exemption u/s.10(23C) of the Act which was denied by the Ld.AO while giving effect to the appellate order of the Ld.CIT(A) passed in the first round of appeal, recording the following findings:

“a. The assessee has made a fresh claim of exemption u/s. 10(23C) (iiiab) as against 10(23C) (iiiad). b. The enhanced limit of Rs. 5 crores u/s. 10(23C)(iiiad) of the Act, is applicable from AY. 2022-23. c. Aggregate receipts derived during the year is Rs. 4,21,33,570/-, out of which Government Grant is Rs. 2,91,03,551/-, which is about 69%. Therefore, the appellant assessee is not eligible to claim exemption u/s. 10(23C)(iiiad). From the order of the AO, dtd. 13.08.2024, it is evident that the exemption has been denied only on account of mistake in mentioning sub- clause to exemption to main section 10(23C) i.e. 10(23C) (iiiad) or 10(23C)(iiiab).”

6 ITA No. 23/PUN/2026 6. The Ld.CIT(A) has also dismissed the appeal of the assessee for the reasons which we have already reproduced in the preceding paragraphs. The Ld.CIT(A) has disallowed the assessee‟s claim of exemption, observing that exemption u/s.10(23C)(iiiad) of the Act is allowable for AY. 2020-21 if the total receipts are less than Rs. 1 crore and enhanced limit of Rs. 5 crore is applicable from AY. 2022-23. According to him, since the total receipts in the instant case are Rs. 4,21,33,570/- which is more than Rs. 1 crore applicable for AY. 2022-23 as per the provisions of section 10(23C)(iiiad) of the Act and, therefore, the AO has rightly denied the exemption u/s.10(23C)(iiiab)/(iiiad) of the Act.

7.

In light of the above factual matrix, the Ld.AR submitted before us that the assessee‟s claim of exemption has been denied merely for the reason that the assessee claimed exemption inadvertently u/s.10(23C)(iiiad) of the Act as against 10(23C)(iiiab) of the Act. Referring to the provisions of section 10(23C) of the Act, the Ld.AR submitted that the primary condition for grant of exemption u/s.10(23C) of the Act is that the income/receipts of the trust has been applied for the object of education for which the trust has been created. Further, drawing our attention to section 10(23C)(iiiab) and 10(23C)(iiiad) of the Act, he submitted that in order to claim exemption under these sections, the trust must exist for educational purposes and not for profit. Hence, the first and the foremost condition for eligibility of exemption either u/s.10(23C)(iiiab) or 10(23C)(iiiad) of the Act is fulfilled by the assessee. He submitted that the fact that the assessee is eligible for claiming exemption u/s.10(23C)(iiiab) of the Act was duly brought to the attention of the Ld.CIT(A), however, whilst passing the impugned order, he has referred to the provisions of section10(23C)(iiiad) of the Act and dismissed the appeal of the assessee. Highlighting the key differences between the provisions of

7 ITA No. 23/PUN/2026 section10(23C)(iiiab) and 10(23C)(iiiad) of the Act, the Ld.AR placed the following chart showing its applicability to the present case in hand:

8.

The Ld.AR agrued that dominant object of the trust is only imparting education. For such purposes, it is running about 13 school and colleges in advasi area of Chopda Taluka. It is substantially financed by the Government and its income/receipts are fully exempt u/s. 10(23C) of the Act. Any initial error in such claim of exemption is procedural one, when the main section is correctly mentioned. Such technical error can be excused in presence of educational object of the trust. He submitted that the lower authorities have not denied the object of the assessee trust being education/imparting education but rejected the claim of exemption only on account of wrong mentioning of sub section in the return of income due to "inadvertence". Such legitimate claim of exemption cannot be denied on technical grounds when the substantive conditions are fulfilled. Thus, the legitimate claim of the appellant trust for exemption u/s. 10(23C) (iiiab) or

8 ITA No. 23/PUN/2026 10(23C) (iiiad) of the Act, cannot be denied on this count and the same may kindly be allowed.

9.

He further argued that since all the details about the receipts of the trust as well as the projects/institutions run by the trust were available with the Ld.AO, he should have allowed the assessee‟s claim irrespective of the fact that there is mistake in mentioning the sub-clause of main section 10(23C) of the Act. In support of his above contention, he relied on the decision in the case of M/s. D. Banumaiah‟s Educational Institutions vs. ITO in ITA No. 911/Bang/2023, dt. 09-01-2024.

10.

The Ld.AR also submitted that for AY. 2015-16 and subsequent years in which the assessments have been finalized u/s.143(3) of the Act, exemption u/s.10(23C) of the Act has been allowed to the assessee. Copy of the assessment order for AY. 2015-16 was placed on record on pgs.46- 47 of the paper book.

11.

The Ld.DR on the other hand, supported the order of the Ld.AO and Ld.ADDL/JCIT(A)

12.

We find some force in the arguments advanced by the Ld. Counsel for the assessee. Admittedly, originally the assessee claimed exemption u/s.10(23C)(iiiad) of the Act and later on the assessee made a fresh claim of exemption u/s.10(23C)(iiiab) of the Act before the Ld.AO, but the assessee‟s claim was denied holding that the assessee is not eligible for claiming exemption either u/s.10(23C)(iiiab) or 10(23C)(iiiad) of the Act for the reason that the specified limit u/s.10(23C)of the Act was only Rs. 1 crore. The Ld.CIT(A)/NFAC has also denied the said exemption solely for the reason that enhanced limit of Rs. 5 crore u/s.10(23C)(iiiad) of the Act

9 ITA No. 23/PUN/2026 is applicable for the AY. 2022-23 and not for the relevant AY under consideration. There is also no dispute to the fact that the object of the assessee-trust is to impart/spread education which is not confined to a particular section of people. The application of its whole receipts is towards educational purposes and not for the purpose of making profits. It is also substantially financed by the Government as evident from the chart reproduced in para 7 above. The Revenue has not brought on record anything to prove otherwise. The assessee‟s claim of exemption has been rejected only on technical mistake of mentioning wrong sub-section of section 10(23C) of the Act in the return of income. We, therefore, find some force in the arguments advanced by the Ld. Counsel for the assessee and in our view, the assessee‟s claim of exemption u/s.10(23C) of the Act should not be denied merely on account of technical mistake when the substantive conditions for claiming exemption u/s.10(23C) of the Act have been fulfilled by the assessee. It is also worthwhile to note that the assessee has been allowed exemption u/s.10(23C) of the Act in AY. 2015- 16 and subsequent years u/s.143(3)proceedings. For the relevant AY. 2020-21, the assessee filed complete details in its return of income stating therein that it is having 13 educational institutions and the gross receipts of Rs. 4,25,14030/-. It has also been mentioned in ITR-7 under the head “Details of Projects/institutions run by you, section under which exemption is claimed, amount of exemption claimed etc.” It is thus evident that all the requisite details in support of the assessee‟s claim of exemption were already available on records of the Revenue and hence, the assessee‟s claim of exemption ought to have been allowed. The case of the assessee finds support from the decision of the Bangalore Bench of the Tribunal in the case of M/s. D. Banumaiah‟s Educational Institutions vs. ITO (supra), wherein under similar facts, the assessee‟s claim was allowed. The relevant observation and finding of the Tribunal is reproduced below:

10 ITA No. 23/PUN/2026

11 ITA No. 23/PUN/2026

12 ITA No. 23/PUN/2026

13 ITA No. 23/PUN/2026

14 ITA No. 23/PUN/2026

15 ITA No. 23/PUN/2026

13.

Thus, considering the totality of facts and the decision of the Bangalore Tribunal (supra), we set aside the order of the Ld.ADDL/JCIT(A) and direct the Ld.AO to grant exemption u/s.10(23C)(iiiab) of the Act to the assessee. The grounds raised by the assessee are accordingly allowed.

14.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open Court on 15-10-2026

Sd/- Sd/- (RAMA KANTA PANDA) (ASTHA CHANDRA) VICE PRESIDENT JUDICIAL MEMBER पुणे/Pune; दिन ांक/Dated : 15-10-2026 TNMM

16 ITA No. 23/PUN/2026

आिेश की प्रदिदिदप अग्रेदिि / Copy of the Order is forwarded to: 1. अपीि र्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, 4. DR, ITAT, „A‟ Bench, Pune 5. ग र्ड फ ईि / Guard file. आदेशानुसार/ BY ORDER, Sunil Kumar Digitally signed by Sunil Kumar More // True Copy // More Date: 2026.10.25 10:27:08 +05'30' Assistant Registrar आयकर अपीिीय अदिकरण ,पुणे / ITAT, Pune

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