Universal Education Missions Trust Vs ITO (ITAT Mumbai)
Three School Sections, One Recognised Institution: ₹1 Crore Limit Crossed, but Gross Receipts Cannot Be Taxed
Mumbai ITAT rejects section 10(23C)(iiiad) exemption while directing computation of actual taxable income
Can a trust divide a school’s pre-primary, primary and secondary receipts to remain within the ₹1 crore limit under section 10(23C)(iiiad)? And if exemption is unavailable, can the Department tax the school’s entire collections without considering its expenditure? The Mumbai ITAT answered both questions in Universal Education Missions Trust v. ITO, ITA No. 5394/Mum/2026, decided on 23 September 2026.
The trust conducted educational activities at three levels. For AY 2015–16, it reported receipts of ₹21,68,941 from the pre-primary section, ₹57,96,193 from the primary section and ₹22,18,327 from the secondary section. Each figure was below ₹1 crore, but together they amounted to ₹1,01,83,461.
While filing its return, the trust claimed exemption under section 11. It subsequently explained that it had selected that provision inadvertently and had intended to claim exemption under section 10(23C)(iiiad). By then, the time to revise the return had expired. CPC, while processing the return under section 143(1), did not allow the amount shown as application of income towards the trust’s educational objects. It treated the full ₹1,01,83,461 as taxable income, resulting in tax and interest of ₹45,89,060.
