Sec. 10(23C)(iiiad) Exemption Not Denied for Drop-Down Error | ITAT

Case Details: Sri Shivaganga Yoga Centre vs. Income-tax Officer (Exemption) [2025] 181 taxmann.com 867 (Bangalore - Trib.)

Judiciary and Counsel Details

• Prashant Maharishi, Vice President
• Gowrish, CA for the Appellant.
• Ganesh R. Ghale, Adv.,SC for the Respondent.

Facts of the Case

The assessee, Sri Shivaganga Yoga Centre, a charitable trust running a Yoga Centre and conducting a postgraduate diploma course, filed its return of income for A.Y. 2019-20 claiming exemption under section 10(23C)(iiiad) in respect of course fees collected from students. The Central Processing Centre processed the return under section 143(1).

The CPC denied the exemption on the ground that the assessee had not selected section 10(23C)(iiiad) in the relevant drop-down menu under “section under which exemption claimed” in Schedule – Personal Information and had not filed Schedule IE-4. The assessee explained that the omission occurred due to a technical issue in the return-filing utility and that its aggregate annual receipts did not exceed the monetary limit prescribed under rule 2BC.
A rectification application filed under section 154 was rejected on the ground that the issue was debatable. The Commissioner (Appeals) upheld the denial of exemption. The matter reached before the Tribunal.

High Court Held

The Tribunal observed that if an issue is debatable, it could not have been adjusted while processing the return under section 143(1). It was noted that the denial of exemption was based solely on non-selection of the relevant drop-down option and non-filing of Schedule IE-4, and not on any inconsistency or incorrect claim in the return of income.

The Tribunal held that mere technical or procedural lapses in filling the return could not be the basis for denial of a substantive exemption, particularly when the necessary information was otherwise available on record, and the assessee satisfied the conditions prescribed under section 10(23C)(iiiad).

Accordingly, the Tribunal directed the Assessing Officer to verify the factual eligibility of the assessee and allow the exemption under section 10(23C)(iiiad), or under section 11, if otherwise admissible in accordance with law. The appeal was allowed for statistical purposes.