Exemption u/s 10(23C)(iiiad) by ITAT

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Discussion on whether ITAT can allow exemption under Section 10(23C)(iiiad) when not claimed in the ITR and after denial under Section 11. Experts clarified that ITAT can grant such relief based on substantive eligibility, supported by CBDT Circulars and judicial precedents.

Subhash

Subhash (Querist)

19 January 2026 Whether ITAT can allow exemption to an educational institution u/s 10(23C)(iiiad), if AO and CIT(A) had disallowed exemption u/s 11 and also did not allowed exemption u/s 10(23C)(iiiad), being not claimed in ITR ?

Also share the relevant case laws to be cited while appealing to ITAT.

TIA

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

20 January 2026 Yes, the Income Tax Appellate Tribunal (ITAT) has the power to allow an exemption under Section 10(23C)(iiiad) of the Income Tax Act even if it was not claimed in the original Income Tax Return (ITR), provided the assessee is substantively eligible.
Key legal principles and precedents supporting this include:
Duty of Tax Authorities: The ITAT has held that it is the duty of tax authorities to assist taxpayers in claiming eligible reliefs. According to CBDT Circular No. 14(XL-35), officers must not take advantage of a taxpayer's ignorance and should grant a benefit if all legal conditions are fulfilled, even if not specifically claimed by the assessee.
Alternative Claims: If an exemption under Section 11 is disallowed (e.g., due to lack of registration), the assessee can claim exemption under Section 10(23C)(iiiad) for the first time during appellate proceedings if they meet the criteria (e.g., being an educational institution existing solely for education with annual receipts below the prescribed limit).
Procedural vs. Substantive Compliance: Recent ITAT rulings (e.g., St Patricks Educational Society v. ITO, 2025) have emphasized that exemption under Section 10(23C)(iiiad) should not be denied solely on procedural grounds, such as failing to select a specific drop-down menu in the ITR or filing a belated return, as long as the aggregate receipts are within the limit.
Tribunal's Wider Powers: Unlike the Assessing Officer, whose powers are restricted by the ruling in Goetze (India) Ltd. v. CIT (which requires a revised return for new claims), the ITAT has the jurisdiction to entertain new claims that were not raised in the return if the necessary facts are available on record.

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

20 January 2026 - ITR Format Issue
- ITAT has recognized that earlier ITR forms did not have a specific column for claiming exemption u/s 10(23C)(iiiad). Hence, denial on this ground is unjustified.
- Judicial Precedents
- Kumar Memorial Educational Trust vs ITO (ITAT Chennai): Exemption u/s 10(23C)(iiiad) allowed; denial by clubbing receipts of multiple institutions was quashed, amendment held prospective.
- Sri Govinddeo Educational Institute vs ITO (ITAT Kolkata): Tribunal emphasized that exemption cannot be denied when the institution exists solely for education.
- ABCAUS Case Law Citation 3736 (2023): ITAT deleted adjustment denying exemption u/s 10(23C)(iiiad) since no relevant column existed in ITR. (https://abcaus.in/income-tax/exemption-us-1023ciiiad-allowed-no-provision-itr-showing-computation.html)

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