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2025 Supreme(Online)(ITAT) 7427
INCOME TAX APPELLATE TRIBUNAL (RAIPUR BENCH)
SHRI PARTHA SARATHI CHAUDHURY, JM, SHRI ARUN KHODPIA, AM
Chhattisgarh Swami Vivekanand Technical University – Appellant
Versus
Assistant Commissioner of Income Tax (Exemption) – Respondent
ITA No: 581/RPR/2025
For the Appellants/Petitioners: None
For the Respondents: Shri Ram Tiwari, CIT-DR
Tax exemptions under specific sections are contingent upon substantial government financing and adherence to educational purposes criteria for institutions.
Headnote:(A) Income Tax Act, 1961 - Sections 10(23C)(iiiab), 11, 12, and 12A - Denial of exemption to statutory university established by the State Legislature - The appellant university claimed exemption under relevant sections arguing it is wholly financed by government and exclusively for educational purposes. The CIT(A) upheld a taxable surplus assessment stating the university wasn't substantially financed by the government. The Tribunal finds discrepancies in CIT(A)'s findings regarding applicability of the provisions under section 12A(2). (Paras 1, 5, 9)
(B) Appeal - The matters are restored back to the Ld. CIT(A) for fresh examination in light of provisions of law. This aims to ensure compliance with legal standards for institutions seeking tax exemptions. (Paras 10)
| Table of Content |
|---|
| 1. appellant claims tax exemption based on government financing and educational purpose. (Para 1 , 3 , 4) |
| 2. arguments raised against denial of exemption by the cit(a). (Para 2) |
| 3. court finds discrepancies in lower court's findings. (Para 5 , 8) |
| 4. matter remanded for further examination. (Para 10) |
| 5. appeal allowed for statistical purposes. (Para 11) |
ORDER
Per Arun Khodpia, AM:
The captioned appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeal), NFAC, Delhi, [in short “Ld. CIT(A)”] passed under section 250 of the Income Tax Act, 1961 (in short “the Act”), dated 31.07.2025 for the Assessment Year 2012-13, which in turn arises from the assessment order u/s 143(3) r.w.s. 147 of the Act, dated 24.10.2019 passed by ACIT, Exemption Circle, Raipur (in short “Ld. AO”).
2. The grounds of appeal raised by the assessee are as under:
1. That the learned CIT(A), NFAC erred both on facts and in law in upholding the denial of exemption under section 10(23C)(iiiab) of the Income-tax Act, 1961 to the appellant-University, which is a statutory University established by the State Legislature of Chhattisgarh and existing solely for educational purposes and not for purposes of profit.
2. That the learned CIT(A) failed to appreciate that Rule 2BBB should be read in a more liberal manner and must be analysed beyond the mechanical scrutiny of receipt and payment account. The appellant university is under complete control of the government of Chhattisgarh. The university is fully adhering to the guidelines set by the Government of Chhattisgarh regarding admission of students, fees structure and management. The accumulated funds are kept as per the directions of the state government and therefore the appellant is eligible for exemption u/s 10(23C)(iiiab).
3. That the learned CIT(A) erred in rejecting the contention that fees collected from students as per fee structure approved and notified by the State Government amounts to indirect financing by Government. The fixation and regulation of fee by Government establishes pervasive Government control, and such receipts must be considered as part of Government support. The appellant university is under complete control of the government of Chhattisgarh. The Hon'ble Governor of Chhattisgarh State is the Chancellor of the University. Surplus funds if any are being reinvested into the university's educational objectives rather than being distributed for personal gain. It is kept by the university as Government Fund. It reflects the institution's commitment to its mission and shows that the university is operating in line with its non- profit status and educational focus. Therefore the appellant is eligible for exemption u/s 10(23C)(iiiab).
For claiming exemption u/s 10(23C)(iiiab) any university or other educational institution should exist solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government. The appellant university qualifies all the said criteria and is eligible for exemption.
4. That the benefit of exemption under section 11 and 12 of the Act to the appellant should be allowed in view of the second proviso to section 12A(2), since the appellant has been granted registration under section 12AA by Ld. CIT, Exemptions, Bhopal on 02.01.2020 and the assessment for AY 2012-13 was pending in appeal on that date. As per law, the benefit of registration should be available for this pending year also.
In order to get the benefit of second proviso to Section 12A(2), three conditions have to be satisfied viz. (i) the registration must have been granted to assessee, (ii) the preceding year must be such whose assessment- proceedings were pending before the Assessing Officer as on the date of such registration, and (iii) the object and activities of the trust or institution remain the same for such preceding assessment year. Admittedly, the appellant university has been granted registration u/s 12AA by
