Gandharva Mahavidhyalaya Trust Vs ITO (ITAT Ahmedabad)
Income Tax Appellate Tribunal (ITAT) Ahmedabad has ruled in favor of Gandharva Mahavidhyalaya Trust, allowing the exemption claim of ₹57.57 lakh under Section 10(23C)(iiiad) of the Income Tax Act. The case involved the Centralized Processing Centre (CPC) Bangalore rejecting the trust’s exemption claim during the processing of its return for Assessment Year (AY) 2014-15. The trust, which has been providing music education since 1961, challenged this decision through rectification under Section 154, but the Commissioner of Income Tax (Appeals) [CIT(A)] dismissed the appeal, citing the issue as debatable and beyond rectification.
The trust contended that its education in music falls under the definition of an educational institution as per Section 10(23C)(iiiad) and that the rejection of its exemption claim was erroneous. It argued that the CIT(A) misinterpreted the law, as Section 246A allows an appeal against an order under Section 154. Further, the trust maintained that its net surplus of ₹57.57 lakh was part of its educational activities and should not have been taxed. The revenue authorities, however, held that the matter involved a debatable issue and did not fall under rectification provisions.
The ITAT examined the trust’s credentials, noting that it has been recognized by the Gujarat Government, offers degree and postgraduate courses in music, and is registered under Section 12AA. The tribunal referred to Section 10(23C)(iiiad), which provides exemption to educational institutions with annual receipts not exceeding ₹5 crore, stating that the trust met these criteria. Judicial precedents have held that institutions solely engaged in education qualify for exemptions, and rectification can be sought where an error is apparent on record.
