NALANDA EDUCATION TRUST,AHMEDABAD vs. INCOME TAX OFFICER, WARD 1 (EXEMPTIONS), AHMEDABAD, AHMEDABAD

PDF · subscribers
ITA 1289/AHD/2026Status: DisposedITAT Ahmedabad29 July 2026AY 2023-244 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the AO incorrectly treated the assessee as an 'AOP' because the assessee was subsequently granted registration under section 12AB. The matter was set aside to the AO to reframe the assessment in the correct status and allow admissible exemptions.

What were the facts?

The assessee, a charitable trust, had its application for registration under sections 12AB and 80G rejected, leading to its assessment as an 'AOP'. The Assessing Officer disallowed activity expenses and added loan transactions. The CIT(A) dismissed the assessee's appeal.

What were the issues?

Whether the assessee's status was correctly determined as 'AOP' and whether expenses and loan additions were validly made, considering subsequent registration.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 80G,Section 143(3),Section 144B,Section 37(1),Section 68,Section 10(23C),Section 11,Section 12

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Pamil H Shah, AR
For Respondent: Shri Rameshwar P Meena, SR-DR
Hearing: 16.06.2026Pronounced: 29.07.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the Assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 20.03.2026 for the Assessment Year (A.Y.) 2023-24 in the proceeding u/s 143(3) r.w.s 144B of the Income Tax Act [hereinafter referred as “The Act”].

2.

The brief facts of the case are that the assessee is a charitable trust engaged in imparting education and running a school under the name of Gyanjot Public School in Ahmedabad. The return of income for A.Y. 2023-

ITA No. 1289/Ahd/2026 Nalanda Education Trust Vs ITO(E), AY- 2023-24 2

24 was filed on 31.10.2023 declaring Nil income. The case of the assessee was selected for the reason that the application of registration u/s. 12AB and u/s. 80G of the Act was rejected for the year under consideration. The assessment was completed u/s. 143(3) on 07.03.2025 at total income of Rs. 76,49,340/-. The AO had completed the assessment in the status of the assessee as ‘AOP’. The AO had disallowed activity expense of Rs. 8,11,871/- and also made addition of Rs. 80,90,000/- in respect of unexplained loan transactions.

3.

Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed. Th

4.

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:

1.

The order passed by ld CIT(A) is bad in law and therefore illegal. The hon ble CIT(A) has erred in confirming the assessment of the appellant in the status of "AOP" instead of "Charitable Trust". It is submitted that it is requires to be suitably modified OR be cancelled. It is submitted that it be so held now. 2. The Id CIT(A) has erred in confirming disallowance of activity expense of Rs. 8,11,871/- u/s 37(1) of the income tax act on account of lack of supporting evidence. Your appellant submits that the provisions of section 37 are not applicable to the facts of case of the appellant as it is trust. The said expense were incurred for educational activities as per the objects of the trust and therefore allowable as application. It is submitted that it be so held now. 3. The Id CIT(A) has erred in confirming addition of Rs. 80,90,000/- on account of unexplained loan receipt under section 68 of income tax act. Your Appellant submits that the identity, genuineness and capacity of the lenders is proved and therefore the disallowance be deleted. It is submitted that it be so held now.

5.

Shri Pamil H Shah, the Ld. AR of the assessee submitted that the AO had completed the assessment in the status as ‘AOP’ for the reason

ITA No. 1289/Ahd/2026 Nalanda Education Trust Vs ITO(E), AY- 2023-24 3 that application seeking registration u/s. 12AB and u/s 80G of the Act, was rejected by the Ld. CIT(Exemption). He submitted that the assessee had filed an appeal against the rejection of registration and the matter was remanded back to CIT(Exemption) by the Ld. ITAT for reconsideration. Accordingly, the Ld. CIT(Exemption) had passed an order on 10.04.2026 granting registration u/s. 12AB of the Act. He explained that considering the fact that the assessee trust was duly registered u/s. 12AB of the Act, the action of the AO in treating the status of the assessee as AOP was incorrect. Further, the assessee was also entitled to exemption u/s. 10(23C) of the Act. He, therefore, requested that the matter may be set aside to the file of the Jurisdictional AO with a direction to reframe the assessment in the correct status as “trust” and also to allow exemption u/s. 10(23C)/11/12 of the Act. He further submitted that the assessee has all the evidences in support of activity expenses and is also in a position to establish the genuineness and credit-worthiness of the loan transactions.

6.

Per Contra, Shri Rameshwar P Meena, the Ld. SR-DR had no objection if the matter was set aside to the file of the AO for completing the assessment under the correct status.

7.

We have considered the submissions of the assessee. The AO had treated the status of the assessee as ‘AOP’ for the reason that the application seeking registration u/s. 12AB of the Act was rejected by the Ld. CIT(Exemption). However, the assessee was allowed registration u/s. 12AB of the Act vide subsequent order of the Ld. CIT(Exemption) dated 10.04.2026, a copy of which has been brought on record in the paper book filed by the assessee. It is found that this registration is valid for the A.Ys. 2022-23 to 2026-27. Thus, the assessee now has a valid registration u/s.

ITA No. 1289/Ahd/2026 Nalanda Education Trust Vs ITO(E), AY- 2023-24 4

12AB of the Act for the A.Y. 2023-24. Therefore, the AO was not correct in treating the status of the assessee as ‘AOP’ and denying the exemption u/s. 10(23C) of the Act. We, therefore, deem it proper to set aside the matter to the file of the Jurisdictional AO with a direction to reframe the assessment under the correct status, considering the registration granted by the Ld. CIT(Exemption) u/s. 12AB of the Act vide letter dated 10.04.2026. The assessee should also be allowed the exemption / deduction u/s. 10(23C) or u/s. 11 and 12 of the Act, as admissible as per law. As regards, disallowance made u/s. 37(1) and u/s. 68 of the Act, the assessee will be free to bring on record the evidences before the AO which should be considered in the light of revised status of the assessee.

8.

In the result, the appeal of the assessee is allowed for statistical purpose.

Order pronounced in the Court on 29/07/2026 at Ahmedabad.

Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 29th July, 2026 Neelesh, Sr. PS (True Copy) आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file. आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर अपीलीय आयकर अपीलीय अिधकरण अिधकरण, अहमदाबाद अहमदाबाद / ITAT, Ahmedabad आयकर आयकर अपीलीय अपीलीय अिधकरण अिधकरण अहमदाबाद अहमदाबाद

More judgments on Section 12AB

All 5,972 judgments and leading authorities on Section 12AB →

Recent GST High Court judgments

Search GST case law →