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Facts
The assessee, a society running a primary and secondary school, claimed exemption under Section 10(23C)(iiiad) of the Income Tax Act, arguing its total receipts were below Rs.1 crore. The Revenue denied the claim, stating the assessee was running one integrated institution, not two separate ones, and its total receipts exceeded the threshold.
Held
The Tribunal held that the assessee was operating a single composite educational institution, as evidenced by a single composite license and affiliation certificate showing classes from 1 to 10. Therefore, the total receipts exceeded the Rs.1 crore limit for exemption under Section 10(23C)(iiiad).
Key Issues
Whether the assessee's primary and secondary school operations constitute a single educational institution for the purpose of Section 10(23C)(iiiad) exemption, and if its aggregate receipts exceed the prescribed limit.
Sections Cited
10(23C)(iiiad), 143(1)
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: HON’BLE SHRI MANU KUMAR GIRI & HON’BLE SHRI AMITABH SHUKLA
assessee for AY-2020-21 and 2021-22 contesting the order of Ld. First Appellate Authority indicated Column-E, herein below:-
S. Appeal AYs Appellant CIT(A) Order Details Respondent No. Nos. A B C D E F DIN & Order No. ITBA / APL / The Additional / ITA S / 250 / 2024-25 / joint No. ICF Vidyaniketan, 1068084102(1) dated Commissioner 1 2020-21 KH Road, ICF 2745 / Chny Colony S.O 28.08.2024 of Income Tax / 2024 IFC Colony, (Exemptions), Chennai-600 038. Ward-3, [PAN: DIN & Order No. ITBA / APL / 34. AABA17364M] S / 250 / 2024-25 / 2 2021-22 2746 / Chny 1068084530(1) dated / 2024 28.08.2024 Both the above appeals are centering around common issues and hence for the purposes of convenience were heard and are adjudicated together. We have taken for AY-2020-21 as lead year to consider facts and figures. The decision taken in shall apply mutatis mutandis in ITA No.2746 for AY-2021-22. 2.0 The Ld.Counsel for the assessee submitted that the only issue raised through its grounds of appeal is regarding the addition of Rs.1,60,84,315/- on account of disallowance of exemption claimed u/s 10(23C(iiiad) of the Act. The Ld.Counsel for the assessee drew our attention to the following brief factual matrix of the case. The assessee is a Society running two streams of schooling namely primary school from classes-1 to 5 and secondary school classes 6 to 10. The appellant had earned receipts of Rs.94,29,499/- and Rs.78,15,883/- in AY-2020-21 and AY-2021-22 respectively from the primary school and had earned receipts of Rs.65,54,816/- and Rs.56,26,193/- in AY-2020-21 and AY- 2021-22 respectively from the secondary school. Since, according to the assessee, the total receipts were below Rs.1 crore, it was entitled for allowance of deduction u/s 10(23C(iiiad) of the Act. The Revenue however passed order u/s 143(1) denying the claim of deduction on the premise that assessee is running one integrated educational institution and not two separate entities as claimed. The Ld.Counsel for the assessee submitted that it had indicated in its return of income that it was Page - 2 - of 7 running two entities viz primary and secondary schools. The Ld.Counsel argued that once the assessee had made the claim in its return of income, it was not open for Revenue to have made any disturbance. The Ld.Counsel argued that the Ld.CIT(A) has erroneously sustained the order of the Ld.AO by ignoring the facts and judicial precedents relied upon by the assessee, inter-alia, including that of a coordinate bench of this tribunal in the case of ICF Silver Jubilee Nursery and Primary school ITA No.126/Chny/2024. 3.0 Per contra, the Ld.DR relied upon the order of lower authorities. It was stated that the decision in the case of ICF Silver Jubilee Nursery and Primary school supra was distinguished since in the said case the assessee therein was having two separate licenses. The Ld. DR argued that in the present case the assessee is having one composite educational institution running classes from 1 to 10 and that the distinction of primary and secondary school has been made by the assessee only as a clever ploy for claim of deduction u/s 10(23C(iiiad) of the Act. It was also argued that the other case laws relied upon by the appellant assessee are clearly distinguished.
4.0 We have heard rival submissions in the light of material available on records. Before proceeding further we deem it appropriate to reproduce the statutory provisions of section 10(23C(iiiad) of the Act: Page - 3 - of 7
“…..any income received by any person on behalf of- (i) the Prime Minister’s National Relief Fund 3[or the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND)]; or (ii) the Prime Minister’s Fund (Promotion of Folk Art); or (iii) the Prime Minister’s Aid to Students Fund; 4[or] 5[(iiia) the National Foundation for Communal Harmony; or] 6[(iiiaa) the Swachh Bharat Kosh, set up by the Central Government; or (iiiaaa) the Clean Ganga Fund, set up by the Central Government; or] 7[(iiiaaaa) the Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund in respect of any State or Union territory as referred to in sub-clause (iiihf) of clause (a) of sub-section (2) of section 80G; or] 8[(iiiab) any university or other educational institution 9 existing 9 solely for educational purposes and not for purposes of profit, and which is 9wholly or substantially financed by the Government 10-11; or (iiiac) any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, and which is wholly or substantially financed by the Govern-ment 10-11. 12[Explanation.-For the purposes of sub-clauses (iiiab) and (iiiac), any university or other educational institution, hospital or other institution referred therein, shall be considered as being substantially financed by the Government for any previous year, if the Government grant to such university or other educational institution, hospital or other institution exceeds such percentage of the total receipts including any voluntary contributions, as may be prescribed 10-11, of such university or other educational institution, hospital or other institution, as the case may be, during the relevant previous year]; or (iiiad) any university or other educational 13 institution existing 13 solely for educational purposes and not for purposes of profit if the aggregate annual 14[receipts of the person from such university or universities or educational institution or educational institutions do not exceed five crore rupees]; …….”
5.0 On perusal of the above it is clear that the deduction u/s. 10(23C(iiiad) is available to an institution, existing for exclusive educational purposes only, if the receipts do not exceed the amount of Page - 4 - of 7 Rs.1 crore. The principal hypothesis behind the benefit is that there should be an institution or one single institution whose receipts do not exceed the amount of Rs.1 crore. In the present case, the appellant assessee has claimed that it is running a primary and secondary school and thus there are two separate educational institutions. The same is not evident from the facts on records. The assessee is one charitable society which has got one composite license from the appropriate authority to run a school from class-1 to 10. The total receipts from the school have been Rs.1,59,84,315 and 1,34,42,076 for AY-2020-21 and 2021-22 respectively. As the impugned receipts exceed the threshold limit of Rs.1 crore, the deduction u/s 10(23C(iiiad) would not be applicable to the assessee. It is trite law that if the beneficial provisions of the Act are unambiguously clear, than they are to be construed as they are without any interpretation. We have noted that in the case of the assessee it has been given an affiliation by the District Educational Officer of Egmore, Chennai bearing No.1931167 dated 05.08.2024 to the assessee namely ICF Vidya Niketan. Column No.4 of the said certificate clearly shows that the school is running classes from class 1 to 10 only. There is nothing on the said approval to allude that there are two institutions running therein. Merely because the assessee has reported in its return of income separate receipts bifurcating them from class 1 to 5
Page - 5 - of 7 and 6 to 10 would not mean that there are two separate educational entities operating therefrom.
6.0 The decision in the case of ICF Silver Jubilee Nursery and Primary school supra has been found to be distinguished since in the said case the assessee therein was having two separate licenses and not one as in present case. Similarly, Hon’ble Karnataka High Court in the case of Children Education Society decided the case wherein the assessee had 28 separate approvals and not one as in present case. The decision in the case of Manav Seva Samiti is on the issue of income of the society. Similarly, the decisions in other cases cited by the assessee have also been found to be distinguished on facts and therefore no reliance can be placed. Accordingly, we are of the considered view that the order of the Ld.CIT(A) does not require any interference at this stage. We therefore sustain the same and dismiss all the grounds of appeal raised by the assessee. 7.0 As the facts of the case for AY- 2021-22 are identical, the decision taken in shall apply mutatis mutandis. Accordingly, we sustain the order of the Ld.CIT(A) for AY-2021-22 also and dismiss all the grounds of appeal.
Page - 6 - of 7 & 2746/Chny/2025 8.0 In the result, the appeal of the assessee for / Chny / 2024 for AY-2020-21 and for AY-2021-22 is dismissed. Order pronounced on 18th , July-2025 at Chennai.