Mohan Lal Sukhadia University Vs ITO (Exemption) (ITAT Jodhpur)
Jodhpur ITAT: University Denied Section 10(23C)(iiiab) Exemption-Government Grants Were Only 36.47% Against Mandatory 50% Threshold
The Jodhpur ITAT dismissed the appeal of Mohan Lal Sukhadia University challenging denial of exemption under Section 10(23C)(iiiab).
The University had total receipts of ₹105.78 crore, including Government grants of ₹38.59 crore. Thus, Government funding constituted only 36.47% of the total receipts. The AO held that for the relevant year, exemption under Section 10(23C)(iiiab) required Government grants to constitute not less than 50% of the total receipts. Since the prescribed threshold was not met, the exemption was denied.
The matter also involved persistent non-compliance by the University. Despite repeated opportunities before the CIT(A), it failed to appear and the appeal was decided ex parte. The same conduct continued before the ITAT: although the appeal had been pending for nearly three years, the assessee repeatedly remained absent or sought adjournments. The Tribunal described this as a “recalcitrant attitude” and proceeded ex parte.
In the absence of any effective representation or material demonstrating that the conditions of Section 10(23C)(iiiab) had been satisfied, the ITAT upheld the CIT(A)’s order and dismissed the University’s appeal.
FULL TEXT OF THE ORDER OF ITAT JODHPUR
This is an appeal by the assessee against order dated 20.01.2023 passed by National Faceless Appeal Centre, NFAC, Delhi for the Assessment Year 2017-18.
2. The dispute in the present appeal is confined to rejection of deduction/exemption claimed u/s 10(23C)(iiiab) of the Income Tax Act, 1961.
3. Before we proceed to deal with the issue arising in the appeal, it is necessary to observe, this appeal was received by the registry on 16.02.2023. On perusal of record, it is noticed that it was fixed for hearing for the first time on 16thAugust, 2023. Thereafter, it has been listed for hearing on multiple occasions.
However, on each of the dates the appeal was fixed for hearing, the assessee either remained absent or sought adjournment. Even after lapse of three years, the assessee is not ready to represent its case. When the matter was called for hearing today i.e. 4th August, 2026, on repeated call, no one came to represent the assessee. The appeal involves denial of exemption u/s 10(23C)(iiiab) of the Act, however, even after lapse of three years, the assessee has not shown even a iota of seriousness in getting the appeal heard and disposed of. This reveals the recalcitrant attitude of the assessee. Since, sufficient opportunities have already been extended to the assessee, no further leniency should be shown. Accordingly, we proceed to dispose of the appeal ex-parte qua the assessee with the assistance of Ld. Departmental representative and based on material available on record.
4. We have heard Ld. Departmental representative and perused the materials on record. As could be seen, the assessee, stated to be an educational institution filed its return of income on 31.03.2018 claiming exemption u/s 10(23C)(iiiab) of the Act. In course of assessment proceeding, the Assessing Officer noticed that in the year under consideration, the assessee had total receipts of Rs. 1,05,78,42,878/- which includes grants in aid from Government amounting to Rs. 38,58,68,598/-. Thus, from the aforesaid facts the Assessing Officer found that the grants received from the Government constitutes 36.47% of total receipts. Whereas, as per the conditions of Section 10(23C)(iiiab), for claiming exemption under the said provision. The assessee must have received during the year grants from Government not less than 50% of the total receipts. Therefore, the Assessing Officer issued a show cause notice to the assessee to explain why the exemption claimed should not be disallowed. The explanation furnished by the assessee was not to the satisfaction of the Assessing Officer. Hence, he proceeded to complete the assessment disallowing assessee’s claim of exemption. While doing so, he disallowed expenditure claimed to the extent of Rs. 3,90,00,000/-. Thus, the total income was determined at Rs. 6,35,357/-. Against the assessment order so passed, assessee preferred an appeal before the First Appellate Authority. As could be seen from the observations of the First Appellate Authority, despite multiple opportunities being given to the assessee to represent its case, the assessee never complied. Hence, the First Appellate Authority was compelled to dispose of the appeal ex-parte and while doing so, he confirmed the decision of the Assessing Officer. The situation remains identical before us. Despite more than reasonable opportunities having been given, the assessee has failed to appear and represent its case before us. Thus, in absence of any effective representation by the assessee to establish its claim that it has fulfilled the conditions of Section 10(23C)(iiiab) of the Act, we are constraint to uphold the decision of Ld. First Appellate Authority.
5. In the result, appeal is dismissed.
Order pronounced in the open court on 07/08/2026.
