Mahila Vidyalaya Society Vs ITO (ITAT Lucknow)
Summary: Bench of the Income Tax Appellate Tribunal (ITAT), in Mahila Vidyalaya Society Vs ITO, ITA No. 32/LKW/2026, dated 15 October 2026, restored an educational society’s claim for exemption under Section 10(23C)(iiiab) of the Income-tax Act, 1961 to the Commissioner of Income Tax (Appeals) for fresh adjudication. The society’s return for Assessment Year 2019-20 had been processed under Section 143(1), resulting in an addition of ₹10,50,35,101. The CIT(A) sustained the denial of exemption because the return and Form 10 had been filed beyond the prescribed due date. The Tribunal directed reconsideration in light of the coordinate bench ruling in Haringhata Mahavidyalay Vs ITO, which had examined whether exemption under Section 10(23C)(iiiab) could be denied solely for non-filing or late filing of an income-tax return.
The assessee society operated Mahila Vidyalaya Intermediate College and Mahila Vidyalaya Degree College. According to the Tribunal’s order, the institutions were fully government-financed and the society was controlled by the Government of Uttar Pradesh. The society filed its return on 30 November 2020 declaring nil income. It maintained that it existed solely for educational purposes and not for profit, and that its exemption eligibility arose from government financing. The society also argued that Form 10 under Rule 17(2), which concerns accumulation under Section 11(2), was not a requirement for its claim under Section 10(23C)(iiiab).
CIT(A) relied on delayed return and Form 10
Before the CIT(A), the society submitted that its consultant had inadvertently entered gross receipts in an incorrect column while filing the return, resulting in denial of exemption.
It also argued that an institution eligible under Section 10(23C)(iiiab) was not required to furnish Form 10 under Rule 17(2), which concerns accumulation under Section 11(2).
The CIT(A), however, noted that the return had been filed beyond the applicable due date and that Form 10 was furnished electronically on 30 November 2020. It held that the conditions for exemption had not been satisfied and confirmed the addition.
Society relied on government funding and educational objects
Before the Tribunal, the society contended that it existed solely for educational purposes and not for profit. It maintained that its eligibility under Section 10(23C)(iiiab), based on substantial government financing, was undisputed.
The society further argued that delayed filing could not defeat the exemption and relied on Haringhata Mahavidyalay Vs ITO, ITA No. 11/Kol/2024, dated 1 October 2024.
The Revenue supported the CIT(A)’s order.
Coordinate bench ruling required examination
The Tribunal referred to the decision in Haringhata Mahavidyalay, which had considered whether exemption under Section 10(23C)(iiiab) could be denied for non-filing or late filing of a return.
In that decision, the coordinate bench noted that the Revenue had not identified a statutory provision disentitling the institution from exemption on that ground.
The Lucknow Bench held that the society’s contentions required reconsideration by the CIT(A) in light of that ruling.
Exemption issue restored without final decision
The Tribunal set aside the appellate order and restored the grounds to the CIT(A) for fresh adjudication.
Accordingly, the appeal was allowed for statistical purposes. The Tribunal did not itself grant exemption, delete the ₹10,50,35,101 addition on merits or conclusively decide the society’s return-filing obligations; those matters remain for reconsideration by the CIT(A).
Cases Discussed
- Haringhata Mahavidyalay Vs ITO, Ward-43(1), ITA No. 11/Kol/2024, dated 01/10/2024 (ITAT Kolkata)
FULL TEXT OF THE ORDER OF ITAT LUCKNOW
This appeal, by the assessee, is directed against the order of the Learned Addl/Joint Commissioner of Income-tax (Appeals)-1, Bangaluru dated 12.11.2025 pertaining to the assessment year 2019-20. The assessee has raised the following grounds of appeal: –
“01. Because the CIT(A) has erred on facts and in law in upholding the order denying exemption as claimed by the assessee society under section 10(23C)(iiiab), the denial of exemption is contrary to the provisions of law, the exemption as claimed be allowed.
02. Because the CIT(A) has erred on facts and in law in holding that since the return of income filed by the assessee is belated, beyond the statutory time, the exemption claimed under section 10(23C) (iiiab) is not allowable, the order passed by the CIT(A) is erroneous, misconceived, bad in law, the same be quashed.
03. Because the CIT(A) has failed to appreciate that the assessee society is existing solely for educational purposes and not for the purposes of profit, wholly and substantially financed by the State Government having no element of profit, is eligible for exemption u/s.10(23C)(iiiab), the exemption as claimed be allowed.”
2. The facts, in brief, are that the appellant is a society registered in the office of the Registrar of Society, Uttar Pradesh. It is running a fully government financed educational institution in the name of Mahila Vidyalaya Intermediate College & Mahila Vidyalaya Degree College. The society is completely controlled by the Government of Uttar Pradesh and income is exempt u/s 10(23C)(iiiab) of the Income Tax Act, 1961 (“Act”, for short). For the year under consideration, the ITR of the assessee society was processed u/s 143(1) of the Act on 29.03.2021. While processing the return of income, the Assessing Officer (“AO”, for short) made an addition of Rs.10,50,35,101/- ignoring status of the society as stated in the Income Tax Return (ITR) for the A.Y. 2019-20. Aggrieved by this, the assessee filed an appeal before the Ld. CIT(A), who rejected the claim of the assessee on the basis that the income tax return was filed after the due date of filing of income tax return. Now the assessee is in appeal before this Tribunal.
3. Apropos the grounds of appeal, the Ld. Counsel for the assessee contended that the authorities below have misdirected themselves in not allowing the exemption claimed by the assessee under section 10(23C)(iiiab) of the Income-tax Act, 1961 (“Act”, for short). He further submitted that there is no dispute with regard to the fact that the assessee falls within the ambit of section 10(23C)(iiiab) of the Act, as the institutions are substantially financed by the Government of Uttar Pradesh. It was further contended that the assessee, being a society financed by the Government of Uttar Pradesh, is not liable to file Form No. 10 as prescribed under Rule 17(2) of the Income-tax Rules, 1962. He further submitted that, undisputedly, the assessee exists solely for the purpose of education and, therefore, is entitled to claim exemption u/s 10(23C)(iiiab) of the Act. Further, it is contended that the return of income for institution claiming exemption u/s 139(4C) of the Act. There is no outer time limit to file the return of income for the institutions claiming exemption u/s 10(23C)(iiiab) of the Act. Since the institution exists solely for the purposes of education, its income is wholly exempt. The Ld. Counsel also filed a brief synopsis and placed reliance on the decision of the Co-ordinate Bench of this Tribunal rendered in the case of Haringhata Mahavidyalay vs ITO, Ward-43(1) in ITA. No.11/Kol/2024.
4. On the other hand, the Ld. Departmental Representative (DR) vehemently opposed the submissions of the assessee. He strongly relied upon the decision of the Ld. CIT(A) and submitted that there is no error in the order passed by the Ld. CIT(A).
5. We have heard the rival submissions of the parties and perused the material available on record. The only issue which needs our determination is whether the authorities below were justified in denying the exemption u/s 10(23C)(iiiab) of the Act. As regards the facts of the case, there is no dispute that the assessee filed its return of income on 30.11.2020, declaring total income at Nil for the assessment year 2019-20. The submission of the Ld. Counsel for the assessee is that the assessee falls within the ambit of section 10(23C)(iiiab) of the Act and, therefore, there is no prescribed time limit for filing the return of income in the case of such institutions. It was further submitted that the denial of exemption claimed under section 10(23C)(iiiab) of the Act is unsustainable in the eyes of law. He relied upon the decision of the Co-ordinate Bench of this Tribunal in in the case of Haringhata Mahavidyalay vs ITO (supra). We find that the Ld. CIT(A) after recording the fact decided the issue by observing as under: –
“5.2 The Ground of Appeal No.1 is against the disallowance deduction claimed u/s 10(23C) (iiiab) of the Act.
5.2.1 The Appellant has submitted that the Appellant Educational Trust running a fully government financed educational institution and there fully exempt under section 10(23C) (iiiab) of the Act. The Appellant’s consultant made an inadvertent mistake while filing of the ITR and the g receipts were punched in the wrong column resulting in disallowance o same by CPC, Bengaluru. Further, the Appellant contended that provisions of section 10(23C) (iiiab) does not require to file Form 10 [i.e. Statement be furnished to the Assessing Officer/ Prescribed Authority under section (2) of section 11 of the Income Tax Act, 1961].
5.2.2 The contention of the Appellant is perused and it is learnt that for the relevant A.Y. 2019-20, the Appellant filed the ITR after the due date 30.09.2019 and extended due date 31.10.2019 prescribed u/s 139(1) of the Act. Also, the Appellant’s claim for eligibility u/s 10(23C)(iiiab) does not hold in case of the late filing of the ITR and Form 10 as prescribed under Rule 17(2) of the Income Tax Rules, 1962 It is learnt that the Appellant filed the Form 10 electronically on 30.11.2020 well after the due date of filing ITR. Therefore, it is evident that the Appellant Society failed to comply with all the conditions laid in the Act to claim deduction u/s 10(23C) (iiiab) of the Act. Accordingly, I hereby confirm the addition made by the AO. Hence, the ground of appeal is disallowed.”
6. The Ld. Counsel for the assessee has relied upon the decision rendered by the Co-ordinate Bench of this Tribunal in ITA. No.11/Kol/2024 dated 1st Oct, 2024. The relevant findings of the Co-ordinate Bench are reproduced as under: –
“3. The Ld. Counsel for the assessee has contended that there is no provision under the Income Tax Act vide which the exemption u/s 10(23C)(iiiab) of the Act can be denied to an assessee for non-filing or late filing of the income tax return as required u/s 139 of the Act and within the period specified u/s 139(1) of the Act.
4. The Ld. DR could not point out any relevant provision or section under the Income Tax Act, which disentitles the assessee from claiming exemption u/s 10(23)(iiiab) of the Act for non-filing/late authorities in denying the exemption to the assessee on this ground is not sustainable.”
7. The contention of the assessee is that, sofar as the assessee is concerned, there is no requirement under law to file income tax return and, therefore, there is no default on the part of the assessee. The contention of the assessee requires reconsideration by the Ld. CIT(A) in the light of the decision rendered by the Co-ordinate Bench of this Tribunal. Therefore, the impugned order is hereby set aside and restore the grounds to the file of the Ld. CIT(A) to decide it afresh. The grounds raised in this appeal are allowed for statistical purposes.
8. In the result, the appeal of the assessee in ITA. No.32/LKW/2026 is allowed for statistical purposes.
Order pronounced in the open Court on 15/10/2026.
