Query related to ITR-7 of educational trust

Can an educational institution file ITR-7 under section 139(4A) in one financial year and under 139(4C) in another financial year, if total gross receipt falls below 1 crore.

In short can an educational trust is eligible to take benefit of section 10(23C)(iiiad) in one financial year if its aggregate receipt falls below 1 crore as compared to previous financial year in which aggregate receipt was greater than 1 crore.

Example in FY 2018-19, gross receipt was 1.5 crore and ITR was file under section 139(4A) taking benefit of section 11 and 12. If gross receipt falls to 0.90 crore in FY 2019-20, can the same educational trust file ITR under section 139(4C) and takes benefit of section 10(23C)(iiiad)???

Hi Manish,

Your question about filing ITR-7 under different sections and eligibility for exemption under section 10(23C)(iiiad) based on fluctuating receipts is quite relevant. Here’s a detailed explanation:

Background:

Section 139(4A) filing is generally for trusts/institutions claiming exemption under section 11 (income from property held for charitable/religious purposes).
Section 139(4C) filing is for educational and medical institutions registered under section 10(23C) claiming exemption under relevant clauses.
Section 10(23C)(iiiad) provides exemption to educational institutions subject to prescribed conditions, often linked to their recognition and aggregate receipts.

Your Scenario:

FY	Gross Receipts	ITR Filing Section	Benefit Claimed
2018-19	₹1.5 crore	139(4A)	Section 11 & 12 benefits
2019-20	₹0.90 crore	? (139(4C)?)	Section 10(23C)(iiiad) benefits?

Can the Trust switch between 139(4A) and 139(4C) filings?

The nature of exemption claimed is the key factor, not just aggregate receipts.
If the trust is primarily an educational institution registered under section 10(23C)(iiiad), it should file under section 139(4C) for claiming exemption under that clause.
If the trust claims exemption under section 11, then filing under section 139(4A) is appropriate.
The mode of exemption claimed should be consistent with the institution’s registration and nature of activities.

Impact of aggregate receipts falling below ₹1 crore:

The ₹1 crore limit you refer to is likely related to presumptive taxation or certain reporting thresholds.
Section 10(23C)(iiiad) exemption eligibility does not get withdrawn if receipts fall below ₹1 crore; rather, it depends on the registration status and activities.
If the institution is registered under 10(23C)(iiiad), it can claim exemption under this section by filing ITR-7 under section 139(4C) regardless of receipt fluctuations, subject to compliance conditions.
The trust cannot switch exemptions arbitrarily between section 11 and section 10(23C) unless there is a corresponding change in registration or nature of activities.

Practical Takeaway:

For FY 2019-20, if the trust continues to be registered and operating as an educational institution under 10(23C)(iiiad), it should file under section 139(4C) to claim exemption under that section.
Simply having receipts below ₹1 crore does not disqualify it from claiming exemption under 10(23C)(iiiad).
If the trust continues to claim exemption under section 11, then 139(4A) filing is appropriate, but that would typically require it to be registered as a charitable trust and comply with section 11 conditions.

Suggestion:

Verify the registration status of the trust with the concerned authorities (e.g., Charity Commissioner or Income Tax Department).
File the return consistently according to the nature of exemption being claimed.
If unsure, it’s advisable to consult the income tax department or legal counsel for clarity on registration and exemption claims.

If you want, I can help prepare a note or checklist for compliance under both sections or assist with ITR filing requirements. Let me know!