ICF Silver Jubilee Nursery & Primary School Vs DCIT (ITAT Chennai)
Summary: The Chennai ITAT allowed the appeal of ICF Silver Jubilee Nursery & Primary School and held that exemption under section 10(23C)(iiiad) of the Income Tax Act, 1961 read with Rule 2BC of the Income Tax Rules, 1962 could not be denied merely by aggregating the receipts of its nursery school and primary school. The assessee was a society registered under the Societies Registration Act, 1860, formed by the Central Government in 1964 and existing solely for educational purposes and not for profit. It was running two educational institutions at Chennai: a nursery school for Kinder Garten, LKG and UKG and a primary school for Standards 1 to 5.
For Assessment Year 2018-19, the Assessing Officer noticed cash deposits of Rs.1,25,22,839/- and interest income of Rs.51,055/- and reopened the assessment under sections 147 and 148. The assessee explained that fees collected from students were deposited into its bank account and that the two schools had separate gross receipts below the then applicable Rs.1 crore threshold. The nursery school’s receipts were Rs.66,71,450/- and the primary school’s receipts were Rs.91,38,932/-. The total receipts of the two institutions were Rs.1,58,10,382/-. The AO, however, treated the receipts collectively and denied exemption, assessing income at Rs.60,07,830/-. The CIT(A), NFAC upheld the denial on the reasoning that the same society was running the educational institutions and their receipts could not be bifurcated.
