2026 (4) TMI 266 - AT - Income Tax

Lower-threshold education exemption available where gross receipts stay below the prescribed limit, despite dispute over the primary claim.

An educational society running a school was discussed in the context of exemption under section 10(23C) of the Income-tax Act, 1961. Although exemption ... Exemption for educational institution u/s 10(23C)(iiiad) -Threshold-based exemption - HELD THAT: - The Tribunal recorded that the assessee was carrying on educational activity by running a school and that its gross receipts for the relevant year were below the prescribed limit of Rs 5 crores. On that admitted factual position, it held that even if exemption claimed under section 10(23C)(vi) was not to be allowed, the assessee would still be legally entitled to exemption under section 10(23C)(iiiad). The alternative plea was therefore accepted on the basis of the nature of activity and the receipts being within the statutory threshold. [Paras 8] The alternative claim for exemption under section 10(23C)(iiiad) was allowed. Final Conclusion: The appeal was allowed by accepting the assessee's alternative plea that, being engaged in educational activity and having gross receipts below the prescribed limit, it was entitled to exemption under section 10(23C)(iiiad). In view of that conclusion, the other grounds were left open. Issues: Whether the assessee was entitled to exemption under section 10(23C)(iiiad) of the Income-tax Act, 1961, where exemption claimed under section 10(23C)(vi) was disputed and the gross receipts were below the prescribed limit.Analysis: The assessee was an educational society running a school. The return had been filed claiming exemption under section 10(23C)(vi), but the record showed gross receipts of Rs. 2,74,05,110, which were below the statutory limit of Rs. 5 crore relevant for the alternative exemption category. On that factual basis, the assessee satisfied the conditions for exemption under section 10(23C)(iiiad). Since the alternative claim was legally available on the admitted figures, the addition made in rectification was not sustainable to that extent.Conclusion: The assessee was held entitled to exemption under section 10(23C)(iiiad) of the Income-tax Act, 1961, and the alternative plea was accepted in favour of the assessee.Final Conclusion: The appeal succeeded on the alternative exemption claim, and the assessee obtained relief from the addition made in the rectification proceedings.Ratio Decidendi: An educational institution whose gross receipts are below the prescribed monetary limit can validly claim exemption under the applicable lower-threshold clause even if the primary exemption claim is disputed.