TaxTMI 
TaxTMI 
2020 (2) TMI 1139
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.... 2. All the grounds of appeal of the assessee are related to the rejection of assessee's claim for exemption u/s 10(23C) (iiiad) of the Income Tax Act, 1961 (in short 'Act'). The assessee filed the return of income on 30.09.2015, declaring total income of Rs. 'Nil'. The return of income was processed u/s 143(1) and the case was selected for scrutiny. During the assessment proceedings, the AO found as per the Receipts and Payments account, the gross receipt of the assessee was 2,29,35,127/-, thus, viewed that the proviso to section 10(23C)(iiiad) is not applicable to the assessee in the absence of registration u/s 12AA of the Act. Therefore, the AO completed the assessment treating the assessee as AOP and taxed the income over expenditure....
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.... 10(23C)(iiiad), therefore, argued that the Ld.CIT(A) has committed an error, hence requested to set aside the order of the Ld.CIT(A) and allow the appeal of the assessee. 5. Per contra, the Ld.DR argued that the assessee is a society running educational institutions with single PAN, therefore, argued that the gross receipts of the assessee required to be considered for the purpose of section 10(23C)(iiiad) of the Act. The Ld.DR further argued that the assessee neither made claim before the AO nor claimed in the return of income that the receipts of each institution does not exceed one crore and thus entitled for exemption u/s10(23iiiad). Hence, submitted that the argument of the assessee is colorable device to claim ineligible deduction....
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.... 10(23C)(iiiad) vide letter dated nil filed before the AO in response to the notice u/s 142(1) which was placed in page No.14 to 21 of the paper book. Hon'ble Karnataka High Court considered the similar issue and held that if the receipt of each educational institution does not exceed Rs. 1 crore, the same required to be not to be included in computing the total income of the assessee. For the sake of clarity and convenience, we extract para No.23 of the decision of Hon'ble Karnataka High Court which reads as under : "23. No doubt, education has become a business, a very profitable business also. But it requires huge investment. It is the duty of the Government to provide education to all its citizens, as the Government is not able....
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....Section 10. The test prescribed under the aforesaid provision is not the income of the educational education. It is the aggregate annual receipts of such educational institution that is prescribed at Rs. 1 crore. Therefore, irrespective of expenditure incurred by those institutions, the exemption is based on the total receipts. Even if the word "aggregate" has to be understood as suggested by the Revenue as the annual receipts of such educational institutions put together, probably, the said provision regarding exemption would be of no use at all. Especially, if the society is running a medial college or any engineering college or other professional courses, then the annual receipt of each institution would run to few crores and therefore, ....