BLUE WING EDUCATIONAL SOCIETY,PUNJAB vs. CIT EXEMPTION-CHANDIGARH, CHANDIGARH

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ITA 609/CHANDI/2026Status: DisposedITAT Chandigarh04 May 2026AY 2027-2825 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the CIT(E)'s objections regarding the land transactions were unsubstantiated and based on mere apprehension rather than conclusive findings. The assessee had provided satisfactory explanations for these transactions.

What were the facts?

The assessee, an educational society, applied for renewal of its registration under Section 12A(1)(ac)(ii) of the Income Tax Act. The CIT(E) rejected the application, raising suspicions about certain land transactions undertaken by the assessee for acquiring school sites.

What were the issues?

Whether the CIT(E) was justified in rejecting the renewal of registration based on suspicions about land acquisition transactions without conclusive evidence of non-genuineness of activities.

Which sections of the Income-tax Act were involved?

Section 12A(1)(ac)(ii),Section 12AB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH

Before: SHRI RAJPAL YADAV & SHRI KRINWANT SAHAY

For Appellant: Shri Ajay Jain, CA
For Respondent: Shri Manav Bansal, CIT DR
Hearing: 27.04.2026Pronounced: 04.05.2026

आयकर अपील�य अ�धकरण,च�डीगढ़ �यायपीठ, च�डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘A’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 609/CHD/2026 �नधा�रण वष� / Assessment Year: 2027-28 Blue Wing Educational Society, The CIT (Exemptions), 828, Phase 3B1, Mohali. Vs Chandigarh. �थायी लेखा सं./PAN NO: AABTB0344B अपीलाथ�/Appellant ��यथ�/Respondent Assessee by : Shri Ajay Jain, CA Revenue by : Shri Manav Bansal, CIT DR Date of Hearing : 27.04.2026 Date of Pronouncement : 04.05.2026 PHYSICAL HEARING O R D E R PER RAJ PAL YADAV, VP

The assessee is in appeal against the order of ld. Commissioner of Income Tax (Exemptions) [in short ‘the CIT(E)’] dated 17.03.2026.

2.

Though the assessee has taken five grounds of appeal but its solitary grievance is that ld. CIT (E) has erred in not granting renewal u/s 12A(1)(ac)(ii) of the Income Tax Act, 1961.

ITA No.609/CHD/2026 A.Y.2027-28 2

3.

The brief facts of the case are that assessee is an old Society. It has been running a school since 2006 and enjoying registration u/s 12A of the Income Tax Act. The assessment of the assessee for assessment year 2024-25 was completed u/s 143(3) of the Act. After the change in the Scheme of registration by Finance Act, 2020 w.e.f. 01.04.2021, assessee has applied for grant of registration u/s 12A(1)(ac)(i) of the Act being an old Society which was granted to it. As contemplated in the Scheme, assessee has to get renewed this registration which will be granted as a regular registration u/s 12A(1)(ac)(ii) of the Income Tax Act. Accordingly, assessee has filed an application in Form No. 10AB. The ld. CIT (E) has rejected this application of the assessee. It is also pertinent to note that assessee Trust was granted registration u/s 12A(1)(ac)(i) of the Income Tax Act on 24.09.2021 for assessment year 2022-23 to assessment year 2026-27. When this registration was going to expire, assessee has filed a fresh application for grant of renewal u/s 12A(1)(ac)(ii). As observed earlier, assessee Society came into existence on 11.05.2005 and started running a school from 2006.

ITA No.609/CHD/2026 A.Y.2027-28 3

4.

Before we embark upon an enquiry on the facts and circumstances for denial of registration u/s 12A(1)(ac)(ii) in the case of the appellant, we deem it appropriate to take note of the relevant provisions contemplating the procedure required to be followed for grant of registration as well as cancellation of registration.

5.

We have duly considered the rival contentions and gone through the record carefully. Section 12A(1)(ac) and Section 12AB(1) have direct bearing on the controversy, therefore, we deem it appropriate to take note of these two provisions, which read as under :

12A(1) The provision of Section 11 and 12 shall not apply in relation to the income of any Trust or Institution unless the following conditions are fulfilled : a) x x x aa) x x x ab) x x x ac) notwithstanding anything contained in clauses (a) to (ab), the person in receipt of the income has made an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for registration of the trust or institution, —(i)where the trust or institution is registered under section 12A [as it stood immediately before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] or under section 12AA [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (38 of 2020)], within three months from the first day of April, 2021;

ITA No.609/CHD/2026 A.Y.2027-28 4 (ii)where the trust or institution is registered under section 12AB and the period of the said registration is due to expire, at least six months prior to expiry of the said period; (iii)where the trust or institution has been provisionally registered under section 12AB, at least six months prior to expiry of period of the provisional registration or within six months of commencement of its activities, whichever is earlier; (iv)where registration of the trust or institution has become inoperative due to the first proviso to sub-section (7) of section 11, at least six months prior to the commencement of the assessment year from which the said registration is sought to be made operative; (v)where the trust or institution has adopted or undertaken modifications of the objects which do not conform to the conditions of registration, within a period of thirty days from the date of the said adoption or modification; (vi)in any other case, where activities of the trust or institution have – (A) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said registration is sought; (B) commenced and no income or part thereof of the said trustor institution has been excluded from the total income on account of applicability of sub-clause (iv) or sub- clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of Section 10, or Section 11 or Section 12, for any previous year ending on or before the date of such application, at any time after the commencement of such activities and such trust or institution is registered under Section 12AB;] x x x 12AB. [Procedure for fresh registration.

12AB.(1)The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub- section (1) of section 12A, shall,—

ITA No.609/CHD/2026 A.Y.2027-28 5 (a)where the application is made under sub-clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of five years; (b)where the application is made under sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) or item (B) of sub-clause (vi) of the said clause,- (i)call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about— (A)the genuineness of activities of the trust or institution; and (B)the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects; (ii)after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (i),— (A)pass an order in writing registering the trust or institution for a period of five years; or (B)if he is not so satisfied, pass an order in writing- (I) in a case referred to in sub-clause (ii) or sub- clause (iii) or sub-clause (v) of clause (ac) of sub- section (1) of Section 12A rejecting such application and also cancelling its registration ; (II) in a case referred to in sub-clause (iv) or in item (B) of sub-clause (vi) of sub-section (1) of Section 12A, rejecting such application, after affording a reasonable opportunity of being heard; (c) where the application is made under item (A) of sub- clause (vi) of the said clause or the application is made under sub-clause (vi) of the said clause, as it stood immediately before its amendment vide the Finance Act, 2023, pass an order in writing provisionally registering the trust or institution for a period of three years from the assessment year from which the registration is sought,

ITA No.609/CHD/2026 A.Y.2027-28 6 and send a copy of such order to the trust or institution. x x x

6.

A perusal of the above clauses would indicate that by way of Finance Act, 2020 w.e.f. 01.04.2021, a new Scheme of Registration has been provided. It is evident from reading of Section 12A(1)(ac)(i) to (vi) of the Act that in order to claim benefit of Section 11 and 12, if any Trust or Institution is in receipt of income, it has to file an application in the prescribed form and manner to the Pr. Commissioner or Commissioner for registration of the Trust or Institution. Sub-clause (i) to (vi) of Section 12A(1)(ac) further provided different conditions on whose fulfilment, application is to be made. In the present case, application has been filed under Section 12A(1)(ac)(ii). It is pertinent to note that if a Trust was in existence prior to this new Scheme of registration, then it has to apply under sub-clause (1) within three months from the 1st day of April, 2021. If the Trust or Institution has been registered u/s 12AB, then atleast six months prior to the expiry of the said period. Registration u/s 12AB has been contemplated under the new Scheme w.e.f. 01.04.2021. Similarly, a new Trust which has come into existence after 01.04.2021 and has applied for

ITA No.609/CHD/2026 A.Y.2027-28 7 registration, which was granted provisionally registration, would require to apply for a regular registration which will be granted u/s 12A(1)(ac)(iii) for a period of five years. There is no dispute in the present case that assessees have applied for grant of regular registration u/s 12A(1)(ac)(ii) of the Act.

7.

Section 12AB of the Act further provides the procedure for grant of the fresh registration. A perusal of the above provision would indicate that if an application is being made under sub-clause (1) of Section 12A(1)(ac), then ld. Pr. Commissioner or the Commissioner would pass an order in writing registering the Trust or Institution for a period of five years but where application is being made for grant of registration u/s 12A(1)(ac) sub-clause (ii) to (vi), then ld. Commissioner would call for such documents or information from the Trust or Institution or make such enquiry as he thinks necessary in order to satisfy himself about ;

a) The genuineness of activities of the Trust or Institution,

b) The compliance of such requirements of any other law for the time being in force by the

ITA No.609/CHD/2026 A.Y.2027-28 8 Trust or Institution as are material for the purpose of achieving its objectives.

Thus, primary requirement would be to find out whether activities of the Trust are genuine and it has fulfilled the requirements of any other law for the time being in force. In other words, objectives of the assessee Trust should be genuine and that it is not engaged in any unlawful activities or failed to comply with other laws of the country.

7.1 On satisfaction of above conditions, ld. Pr. Commissioner or Commissioner would pass an order in writing registering the Trust or Institution for a period of five years and if not satisfied, then pass an order in writing rejecting such application. Before rejecting the application, a reasonable opportunity of being heard is to be provided.

7.2 At this stage, we deem it appropriate to take note of Section 12AB(4) which empowers the Pr. Commissioner or the Commissioner to cancel any provisional or regular registration. It is salutary upon us to take note of this clause, which reads as under :

ITA No.609/CHD/2026 A.Y.2027-28 9 “Procedure for fresh registration. 12 AB(1). x x x x x x x (4) Where registration or provisional registration of a trust or an institution has been granted under clause (a) or clause (b) or clause (c) of sub-section (1) or clause (b) of sub-section (1) of section 12AA, as the case may be, and subsequently,— (a)the Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year; or (b)the Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub-section (3) of section 143 for any previous year; or (c)such case has been selected in accordance with the risk management strategy, formulated by the Board from time to time, for any previous year, the Principal Commissioner or Commissioner shall— (i)call for such documents or information from the trust or institution, or make such inquiry as he thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation; (ii)pass an order in writing, cancelling the registration of such trust or institution, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violations have taken place; (iii)pass an order in writing, refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violations; (iv)forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such trust or institution. Explanation.—For the purposes of this sub-section, the following shall mean "specified violation",— (a)where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution; or

ITA No.609/CHD/2026 A.Y.2027-28 10 (b)the trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental to the attainment of its objectives; or (c)the trust or institution has applied any part of its income from the property held under a trust for private religious purposes, which does not enure for the benefit of the public; or (d)the trust or institution established for charitable purpose created or established after the commencement of this Act, has applied any part of its income for the benefit of any particular religious community or caste; or (e) any activity being carried out by the trust or institution— (i) is not genuine; or (ii) is not being carried out in accordance with all or any of the conditions subject to which it was registered; or (f) the trust or institution has not complied with the requirement of any other law, as referred to in item (B) of sub-clause (i) of clause (b) of sub-section (1), and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality; or (g) the apo referred to in clause (ac) of sub-section (1) of Section 12A is not complete or it contains false or incorrect information. (5)The order under clause (ii) or clause (iii) of sub-section (4), as the case may be, shall be passed before the expiry of a period of six months, calculated from the end of the quarter in which the first notice is issued by the Principal Commissioner or Commissioner, on or after the 1st day of April, 2022, calling for any document or information, or for making any inquiry, under clause (i) of sub-section (4).]]

8.

A perusal of above provision would indicate that it empowers the Pr. Commissioner or Commissioner to call for such document or information from the Trust or Institution or

ITA No.609/CHD/2026 A.Y.2027-28 11

make such enquiry as he thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation. If there is any specified violation, then he would pass an order in writing, cancelling the registration of such Trust, granted under sub-clause (a) clause (b) or clause (c) of sub-section (1) or clause (b) of sub-section (1) of Section 12AA. The Explanation appended to this Section further provides the meaning of expression ‘specified violations’. These violations are contemplated in clause (a) to (g) of the Explanation extracted supra.

8.1 ‘Specified violation’ is that if a Trust has been drawing income from the property held under a Trust, wholly or partly, which is charitable or religious in nature and such income has been applied other than for the objects of the Trust, meaning thereby, if income is not being applied for the objects of the Trust, then it would be construed a ‘specified violation’ on whose fulfilment, registration can be cancelled. The second condition is, the Trust or Institution has income from profits and gains of a business which is not incidental to attainment of its objects but separate books are not being maintained.

ITA No.609/CHD/2026 A.Y.2027-28 12

For example, Hon'ble Gujrat High Court in the case of Sabarmati Gaushala has held that object of the Society was to develop the breed but any income earned by the Society from sale of semen was only incidental qua the main object of developing the breeds of the milking cows. If there is no incidental income, then assessee is required to maintain separate books of account and if assessee failed in maintaining such books then this would be a ‘specified violation’.

8.2 The next ‘specified violation’ under clause (c) is that if any part of income is applied from the property, held under a Trust for profit on religious purpose which does not exist for the benefit of public at large, then such a situation would be a ‘specified violation’ for cancelling the registration. Similarly, if any other income is applied for particular religious entity or cause, then it would fall within the ambit of a specified violation contemplated in clause (d). Under (e), it has been provided that any activity carried out by the institution or the Trust is not genuine or is not being carried out in accordance with all or any of the conditions subject to which it was

ITA No.609/CHD/2026 A.Y.2027-28 13

registered. Meaning thereby, assessee has to fulfil the conditions of registration as well as its activities should be genuine in accordance with objects. If there is any shortcoming in this area, then it would be considered as ‘specified violation’. The Trust has failed to comply with requirement of any other allied law as contemplated in sub- clause (i) or clause (b) of sub-section (1) of Section 12AB. In other words, if any specified law being violated, then it would fall within specified violation for cancellation of registration. The last violation provided in this Explanation is that if Registration Certificate is being obtained by submitting false or incorrect information, then registration could be cancelled.

9.

In the light of above, let us examine the facts of the present case. The ld. CIT(E) has issued a Show Cause Notice confronting the assessee that it has been engaged in purchase and sale of land from assessment year 2023-24, why it should not be treated as a Trader in the Real Estate. Copy of the Show Cause Notice is available on page No. 100 of the Paper Book. We deem it appropriate to take note of this Show Cause Notice which reads as under :

ITA No.609/CHD/2026 A.Y.2027-28 14

ITA No.609/CHD/2026 A.Y.2027-28 15

ITA No.609/CHD/2026 A.Y.2027-28 16

9.

The assessee has filed detailed reply to this Show Cause Notice which is available on page No. 103 to 115. Apart from this reply, assessee has filed further explanation justifying its stand and since the next reply is very brief, we deem it appropriate to take note of this reply, which reads as under:

To 01.03.2026 The Hon'ble CIT (EXEMPTION) Chandigarh Subject: Reply to Notice u/s 12A (1) (ac) (ii) in connection with application filed in Form 10AB in the case of Blue Wing Educational Society, 828, Phase 3B-1, Mohali, 160059, Punjab having PAN: AABTB0344B.

ITA No.609/CHD/2026 A.Y.2027-28 17 Sir/Madam It is in response to the notice issued u/s 12A (1) (ac) (ii) of the Income-tax Act, 1961 dated 29.01.2026 vide DIN ITBA / EXM / F / EXM43 / 2025-26 / 1085316967 (1), we respectfully submit that a detailed reply along with the requisite documents was already filed on 16.02.2026. However, in continuation of the said submission, the assessee hereby wishes to further clarify and elaborate upon the information sought in the notice to ensure complete and proper compliance.

Site (Sector 66 beta Block) Mohali - 6,57,73,894 The site was allotted through auction process by the Estate Officer, GMADA Mohali. Further to the earlier submission in respect of Site, the assessee respectfully submits an additional factual clarification for your kind consideration. Subsequent to the acquisition of the said site, a liquor shop was opened in the immediate vicinity of the property. The Society, being an educational institution committed to maintaining a safe, disciplined and morally appropriate environment for students, made sincere and bona fide efforts to have the said liquor shop relocated/closed by approaching the concerned authorities. However, despite best efforts, the same could not be achieved. The photograph of liquor shop is attached alongwith this reply. Considering that the existence of a liquor shop adjacent to a proposed educational institution would not be conducive to the academic atmosphere and welfare objectives of the Society, the management, after due deliberation, resolved not to proceed with construction of a Educational Institution at the said location. This factor, coupled with the earlier stated issue of inadequate site size, led to the decision to dispose of the property and acquire a more suitable site where the educational objectives of the Society could be properly fulfilled.

Site Aerocity - 10,61,65,313

The site was acquired for expansion of the Society's educational infrastructure. However, due to litigation before the Hon'ble Punjab & Haryana High Court in CWP No. 9180-2021, wherein status quo was ordered vide order dated 06.12.2021 and continues till date possession and development of the site remained uncertain. Accordingly, the Society opted for cancellation of the agreement to safeguard its educational funds. Educational Site 2 Event 3282- 33,85,00,000 The said educational site was purchased from M/s Human Enterprises. The purchase was made at the reserve price fixed by GMADA of similar educational sites and the consideration paid by the society was in accordance with the price determined by the authority of similar educational sites. The transaction was carried out in a transparent manner and no undue benefit of any nature accrued to the seller, M/s Human Enterprise.

ITA No.609/CHD/2026 A.Y.2027-28 18

Educational Site 3 Event-9,72,20,813 For the educational site in question the agreement to sell was cancelled on 26- 09-2023. The amount paid was duly credited back to the society's Kotak Bank Account No. 4045838208 by M/s Human Enterprise. These funds were subsequently utilized for acquisition of educational Site 2, 3282. The society has recovered compensation damages of Rs. 1,00,00,000 from the firm, which was duly shown as interest income in the said financial year. It is further clarified that the interest of Rs. 1,00,00,000/-recovered by the Society was agreed at the rate of interest was higher than the prevailing bank interest rates, thereby adequately safeguarding the financial interest of the Society. Moreover, the cancellation of agreement has happened within 1 year from the date of agreement. The funds utilized for the aforesaid transactions were sourced entirely from the society's own funds, including accumulation from prior years. No loans or borrowings were availed for these transactions. The educational site was acquired with the primary objective of expanding the Society's educational infrastructure, in furtherance of its main educational objects. However, due to insufficiency of funds at the relevant time, the Society requested M/s Human Enterprise to cancel the said agreement to sell, and the funds received from this cancellation were subsequently utilized for the acquisition of educational Site 2, 3282. This step was undertaken to ensure that the Society could at least acquire one piece of site to commence the construction of educational site at the earliest.

Eco-City school site measuring 4.02 acre. The Society participated in the auction conducted by GMADA for the said school site at Mullanpur, Eco-city, New Chandigarh. The Society participated with the objective of acquiring school site for running senior secondary school. As per the latest GMADA guidelines, the schools can only operate through the designated sites allotted/auctioned by GMADA. Therefore, the society does not have had any option except to purchase the designated school site auctioned by GMADA. As informed by GMADA, the allotment letter has not yet been issued to the Society. It has been communicated that the allotment letter shall be issued once the site is made feasible for use and all requisite formalities at their end are completed. The Indian Overseas Bank has sanctioned loan of Rs. 43.65 Crores on 12.02.2026 (copy of sanction letter attached) for purchase of land and construction of school building. Accordingly, the allotment letter is presently awaited. As and when the allotment letter will be issued, the society has plans to open senior secondary school at the designated site. In view of the above submissions, it is respectfully submitted that all transactions relating to the aforesaid lands were undertaken bona fide, in furtherance of the

ITA No.609/CHD/2026 A.Y.2027-28 19 Society's educational objects. It is therefore requested that the above clarifications may kindly be taken on record. Further we would like to bring to your kind notice that apart from the above no property transaction took place in the last five years and our Scrutiny assessment was completed upto AY 2024-25. We request for personal hearing of 5-10 minutes to explain in person of any point you may require more information or if any adverse view is contemplated in the matter. I trust the above submissions and enclosures meet the requirements of your notice. The assessee is duty bound to furnish any other information or documents as and when the same is required by your goodself. Thanking You, Yours Faithfully, Sd/- (CA TEJINDER GARG)

10.

With the assistance of ld. Representative, we have gone through the complete details including all the replies submitted by the assessee. At the cost of repetition, we would like to observe that a conjoint reading of Section 12A(ac)(ii) in the light of Section 12AB of the Act would indicate that ld. CIT (E) is required to pass an order in writing registering the Trust or Institution for a period of five years on conducting enquiry, as she thinks necessary in order to satisfy herself about ; a) The genuineness of activities of the Trust or Institution;

b) The compliances of such requirements of any other law for the time being in force by the Trust

ITA No.609/CHD/2026 A.Y.2027-28 20 or Institution, as are material for the purpose of achieving its objectives.

10.1 We have been apprised about Rule 17A sub-rule (e) which contemplates as under :

“Where the Trust or Institution has been in existence during any year or years prior to the financial year in which the application for registration is made, self-certified copies of the Annual Accounts of the Trust or Institution relating to such prior year or years (not being more than three years immediately preceding in the year in which the said application is made for which such accounts have been made up.” 10.2 A perusal of this Rule would indicate that ld. CIT (E) would look into accounts of three years immediately preceding to the filing of the application. The ld. counsel for the assessee submitted that a scrutiny assessment has undergone for assessment year 2023-24 and all these aspects have been examined by the AO. In other words, the AO has duly confronted the assessee to explain its stand for the investment made in various lands. Copy of this order dated 05.12.2025 is available on page No. 88 to 99 of the Paper Book. The ld. counsel for the assessee specifically took us through paragraph 9, internal page 3 of the assessment order till page 8 of the assessment order. A perusal of all these details would indicate that assessee has basically purchased three sites. The first sight purchased

ITA No.609/CHD/2026 A.Y.2027-28 21 by it in Sector 66, Beta Block, Mohali. It was not purchased from any individual or any associated person contemplated in Section 13(3) of the Income Tax Act. It was purchased through auction from the GAMADA, Mohali. It is pertinent to note that various development authorities of Urban Estate do reserve educational sites which are to be auctioned on competitive bids to the educational institutions only. An Allotment Letter was issued to the assessee by the GMADA. It has made all payments through Account Payee Cheques and details of such payments have been given by the assessee in its reply to the ld. CIT(E). A copy of such reply is available on page No. 103. The assessee did not construct the school on this site for two reasons ;

a) A liquor shop was opened adjacent to the site.

b) Over a period of time and after looking in the growth of school children, it was felt that this site is not sufficient for establishing an educational institution.

10.3 We do not find any reason as to why ld. CIT (E) has raised suspicions in the transaction of the assessee when it has been demonstrated that from last 20 years, it has been

ITA No.609/CHD/2026 A.Y.2027-28 22 enjoying status of a ‘Charitable Institution’ and duly recognized by the Department. It is running a school, thus, even if the assessee has sold this site and acquired a fresh site which is bigger in size, then nothing to be imputed qua genuineness of the activities of the assessee.

11.

The second circumstance highlighted by the ld. CIT (E) is with regard to purchase of a site at Aero City. Qua this site, it was submitted by the assessee that at the time of purchase of this site, the Floor Index Ratio for development was 3:1, however, it was reduced to 2:1. This site was acquired from Chahat Enterprises and when litigation started amongst the parties, it travelled to the Hon'ble High Court and the Hon'ble High Court has granted the status- quo. Instead of carrying on the litigation, assessee persuaded the vendor to cancel the transaction and repayment of the advances given by it. The vendor has given the money back to the assessee alongwith compensatory interest. We fail to understand what is wrong with this decision of the assessee where some suspicion can be imputed. The ld. CIT (E) has unreasonably raised doubts about the decision of the assessee which was conducive in achievement of its objectives.

ITA No.609/CHD/2026 A.Y.2027-28 23 12. The next reason assigned by the ld. CIT(E) is regarding educational site No. 2 and educational site No. 3. The assessee first thought of purchasing both but later on cancelled one and purchased site No.2. But ld. CIT (E) has unnecessarily made reference to it on which site No. 3 was agreed to be purchased and cancelled without construing these transactions in right perspective. The ld. CIT (E) has just raised suspicion and left those suspicions without conclusion, rather drew adverse inference without any basis. The assessee has duly explained all these five transactions that under what circumstances, it has to change decision for acquiring a fresh site. Money received has duly been invested in the fresh site. In the scrutiny assessment for assessment year 2023-24, the AO has duly considered these transactions and did not find any irregularity in it. He accepted them. How the ld. CIT (E) could reappreciate those transactions in a summary manner and raise suspicions about the activities of the assessee which is not discernable.

12.1 It is observed that Section 2(15) of the Income Tax Act provides definition of expression ‘Charitable Purpose’. This Section contemplates that ‘Charitable Purpose’ will include relief to the poor, education, yoga, medical relief,

ITA No.609/CHD/2026 A.Y.2027-28 24 preservation of environment including water sheds, forests, wild life and preservation of monuments or place or objects of artistic or holistic interest and the advancement of any other object of general public utility. Thus, the definition contemplates two fold of activities :

a) Activities which are per-se charitable

b) The advancement of any other object of general public utility.

12.2 Since the assessee is imparting education through its schools, thus its activities fall within the first fold of definition which is ‘per-se charitable’. The ld. CIT (E) has not made any comment about the activities of the assessee, whether it is engaged in providing education or not. The other requirement for renewal of the licence is whether assessee has violated any allied laws. The ld. CIT(E) has not commented on that also. Her objection was since the assessee has undertaken few transactions for purchase of land for school sites, but ultimately did not develop them actually, rather gone for alternative would suggest that its activities are not genuine.

ITA No.609/CHD/2026 A.Y.2027-28 25

12.3 To our mind, the finding of the ld. CIT (E) is not in consonance with the circumstances and facts produced by the assessee. The ld. CIT (E) has only expressed her apprehension about these transactions without conclusively holding that such a stand was factually incorrect at the end of the assessee. Therefore, we are of the view that order of ld. CIT (E) is not sustainable. We set aside this order and allow this appeal. The ld. CIT (E) is directed to issue renewal certificate to the assessee u/s 12A(1)(ac)(ii) of the Income Tax Act as per the procedure. 13. In the result, appeal is allowed.

Order pronounced on 04.05.2026.

Sd/- Sd/- (KRINWANT SAHAY) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE PRESIDENT “Poonam” आदेश क� �ितिलिप अ�ेिषत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�/ CIT 4. िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File

सहायक पंजीकार/ Assistant Registrar

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