DADASAHEB TIRODKAR SHAIKSHANIK ACADEMY,SINDHUDURG V. ITOD EXEMPTION WARD, KOLHAPUR

ITA 1016/PUN/2025

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The case involves Dadasaheb Tirodkar Shaikshanik Academy, an educational institution, appealing against the order of the CIT(A) which confirmed the denial of deduction under section 11 and exemption under section 10(23C)(iiiad) of the Income Tax Act, 1961 for the assessment year 2017-18. The Academy argued that it is eligible for exemption as it is a registered educational institution and claimed that the non-filing of the audit report along with the return was a procedural omission. The Tribunal, after reviewing the submissions and relevant provisions, concluded that the Academy is entitled to the claimed exemption and directed the deletion of the addition made as income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712750 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: EKNATH ABHANG
• Assessee Lawyers: NIKHIL PATHAK; MAYURESH
• Keywords: Condonation of delay
• Section: 11; 12AA; 12A; 12; 119(2)(b); 10B

Judgement Text

" आयकर अपीलीय अिधकरण ”एस एम सी” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “SMC” :: PUNE BEFORE DR.DIPAK P. RIPOTE, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1016/PUN/2025 िनधाᭅरण वषᭅ / Assessment Year: 2017-18 Dadasaheb Tirodkar Shaikshanik Academy, Pandurtitha Pandur, Kudal, Sindhudurg – 416520. Maharashtra. V s The Income Tax Officer, Exemption Ward, Kolhapur. PAN: AACTD5657Q Appellant/ Assessee Respondent / Revenue Assessee by Shri Nikhil Pathak & Shri Mayuresh Doshi – AR’s Revenue by Shri Eknath Abhang –Addl.CIT(DR) Date of hearing 23/07/2025 Date of pronouncement 30/07/2025 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by Assessee against the order of ld.Addl./Joint Commissioner of Income Tax(Appeal), Udaipur passed under section 250 of the Income Tax Act, 1961 for the A.Y.2017-18 dated 27.02.2025, emanating from order u/s.154 r.w.s 143(1) of the Income Tax Act, 1961, dated 09.07.2024. The Assessee has raised following grounds of appeal : Printed from counselvise.com ITA No.1016/PUN/2025 [A] 2 “1. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) is not justified in confirming the denial of deduction u/s 11 or exemption u/s 10(23C) (iiiad) of the Act as the assessee is educational institute and eligible for due exemption. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) is not justified in confirming the denial of deduction u/s11 when audit report obtained before the due date of filing of return and uploaded electronically afterwards which is available while deciding rectification application. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) failed to appreciate that non filing of Audit Report along with return of income is a procedural omission and cannot be an impediment in law in claiming the exemption. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) not justified in taxing receipts ignoring the application/expenses made as only net surplus is taxable as income. 5. The appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal.” Findings & Analysis : 2. We have heard both the parties and perused the records. In this case, Assessee had filed Return of Income in ITR-7 on 08.10.2018 for A.Y.2017-18. Assessee is running an Educational Institution duly approved by University and other Government Authorities. Assessee had claimed exemption u/s.10(23C)(iiiad) of Rs.33,28,804/- and shown total income at Rs.NIL. 2.1 The relevant page of the Return of Income of the Assessee is scanned and reproduced here as under : Printed from counselvise.com ITA No.1016/PUN/2025 [A] 3 2.3 However, the ADIT(CPS) processed the Return of Income and disallowed the assessee’s claim. Assessee filed an appeal before ld.CIT(A). The ld.CIT(A) held as under : Printed from counselvise.com ITA No.1016/PUN/2025 [A] 4 “5.1.4 I have carefully considered the issue under dispute, and examined the same in the light of the provision of the statute. At the outset, as discussed above, in terms of provisions of sec. 12A(1)(b) of the Act r.w. Rule 17B of the Income Tax Rules, 1962 (\"the Rules\" for short), it is mandatory to furnish the statutory audit report along with the return of income filed by the assessee in terms of provisions of sec. 139(1) of the Act. Further, as per Rule 12(2) of the Rules, such audit report shall be furnished electronically. Accordingly, failure on the part of the assessee to furnish the audit report within the specified date would lead to disentitlement of the assessee from claiming exemption u/s. 11 of the Act. ...................... 5.1.6 In order to get entitlement for claiming exemption of its income u/s.11 of the Act, it is mandatory on the part of the appellant to file the Form No.10B in due time or get a condonation of delay in filing the Form 10B from the CIT(Exemptions). The AO cannot allow the deductions u/s. 11 / 10(23C) on facts and in circumstances of the law except when a Court directs under alternative remedy or the CIT(Exemptions) condones the delay u/s 119(2)(b) of the Act. Keeping in view of the above, I am of the opinion that the AO has rightly denied exemption u/s 11 / 10(23C) of the I.T. Act and rightly determined total income at Rs.33,28,804/-. Therefore, ground No.1, 2, 3 and 4 are dismissed.” 2.4 Thus, it can be noted that ld.CIT(A) referred to Section 12A and Rule 17B of the Income Tax Rules and held that since assessee has not filed Form 10B along with the Return of Income, Assessee is not eligible for deduction u/s.11/10(23C) of the Act. The Section 12A of the Income Tax Act is reproduced here as under : “Conditions for applicability of section 11 and 12. 12A. (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:— Printed from counselvise.com ITA No.1016/PUN/2025 [A] 5 (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Principal Commissioner or Commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later and such trust or institution is registered under section 12AA : Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of section 11 and 12 shall apply in relation to the income of such trust or institution,— (i) from the date of the creation of the trust or the establishment of the institution if the Principal Commissioner or Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons; (ii) from the 1st day of the financial year in which the application is made, if the Principal Commissioner or Commissioner is not so satisfied: Provided further that the provisions of this clause shall not apply in relation to any application made on or after the 1st day of June, 2007; (aa) the person in receipt of the income has made an application for registration of the trust or institution on or after the 1st day of June, 2007 in the prescribed form and manner to the Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA; Following clause (ab) shall be inserted after clause (aa) of sub- section (1) of section 12A by the Finance Act, 2017, w.e.f. 1-4- 2018 : (ab) the person in receipt of the income has made an application for registration of the trust or institution, in a case where a trust or an institution has been granted registration under section 12AA or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)], and, subsequently, it has adopted or undertaken modifications of the objects which do not conform to the conditions of registration, in the prescribed form and manner, within a period of thirty days from the date of said adoption or modification, to the Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA; Printed from counselvise.com ITA No.1016/PUN/2025 [A] 6 (b) where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section 11 and section12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. Following clause (ba) shall be inserted after clause (b) of sub- section (1) of section 12A by the Finance Act, 2017, w.e.f. 1-4- 2018 : (ba) the person in receipt of the income has furnished the return of income for the previous year in accordance with the provisions of sub-section (4A) of section 139, within the time allowed under that section. (c) [***] (2) Where an application has been made on or after the 1st day of June, 2007, the provisions of section 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made: 2.5 Thus, it can be noted that Section 12A of the Act, is applicable only for claiming deduction u/s.11 of the Act. However, in this case, Assessee has claimed exemption u/s.10(23C)(iiiad) of the Act. Section 10(23C)(iiiad) is reproduced here as under : Incomes not included in total income. 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included— .............................. (23C) any income received by any person on behalf of— (i) the Prime Minister's National Relief Fund; or (ii) the Prime Minister's Fund (Promotion of Folk Art); or (iii) the Prime Minister's Aid to Students Fund; or Printed from counselvise.com ITA No.1016/PUN/2025 [A] 7 (iiia) the National Foundation for Communal Harmony; or (iiiaa) the Swachh Bharat Kosh, set up by the Central Government; or (iiiaaa) the Clean Ganga Fund, set up by the Central Government; or] 21[(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 (iiiab) any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government; 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 Government. 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, 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 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; or 2.6 There is no such condition as mentioned in Section 12A of the Act. Printed from counselvise.com ITA No.1016/PUN/2025 [A] 8 3. It is noted that Assessee is running an Educational Institute at Kudal, District Sindudurg, Maharashtra. The said Educational Institute is approved by Mumbai University. Copy of the approval letter is at page no.29 of the paper book. We have already reproduced copy of the return of income and it can be noted that the receipts of the assessee are only Rs.33,28,804/-. Therefore, assessee qualifies for exemption u/s.10(23C)(iiiad). We direct the Assessing Officer to delete the addition. Accordingly, Ground No.1 of the Assessee is allowed. Ground No.4 : 4. Alternatively, ld.AR also pleaded that the entire receipts of Rs.33,28,804/- cannot be taxed which has been done by CPC. The Assessee had taken this plea before ld.CIT(A) also. We have perused the Return of Income filed by Assessee which contains Profit and Loss Account also. On perusal of the Profit and Loss Account, it is noted that after considering the expenditures, there is hardly any surplus. However, since we have held that Assessee is eligible for exemption u/s.10(23C)(iiiad), we do not intend to adjudicate this ground. Printed from counselvise.com ITA No.1016/PUN/2025 [A] 9 4.1 Since we have already adjudicated Ground No.1, we do not intend to adjudicate other grounds raised by the Assessee. Accordingly, Ground Nos.2, 3 and 4 are dismissed as unadjudicated. 4.2 Ground No.5 is general in nature, does not need any adjudication, hence dismissed. 5. In the result, appeal of the assessee is partly allowed. Order pronounced in the open Court on 30 July, 2025. Sd/- Sd/- VINAY BHAMORE Dr.DIPAK P. RIPOTE JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 30 July, 2025/ SGR आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “एस एम सी” बᱶच, पुणे / DR, ITAT, “SMC” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune. Printed from counselvise.com "