CAREER POINT UNIVERSITY HAMIRPUR,JAIPUR vs. CIT EXEMPTIONS CHANDIGARH, CHANDIGARH

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ITA 1246/CHANDI/2026Status: DisposedITAT Chandigarh05 August 20264 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the unsecured loan discrepancy was factual and required re-appreciation by the CIT(E). The Tribunal also noted that the allegation of a high interest rate needed to be factually ascertained against prevailing market practices.

What were the facts?

The assessee's application for registration under Section 12A(1)(ac)(ii) was rejected by the CIT(E) due to discrepancies in unsecured loans and a high interest rate paid to a related entity. The assessee contended that the unsecured loan balance was a change in current liabilities and the interest rate was reasonable.

What were the issues?

Whether the rejection of registration was justified based on discrepancies in unsecured loans and interest paid to a related party.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, CHANDIGARH

Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI RAJESH DAMODARLAL SHARMA, JM

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, CHANDIGARH VIRTUAL HEARING BEFORE HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM AND HON’BLE SHRI RAJESH DAMODARLAL SHARMA, JM आयकरअपीलसं./ ITA No.1246/CHANDI/2026 Career Point University Hamirpur CIT (Exemptions) C/o Kalani & Co. LLP (CA) Room No.1, 5th Floor, CR Building बनाम/ Vs. 5th Floor, Milestone Building Himalaya Marg, Sector – 17E Gandhinagar Turn, Tonk Road Chandigarh – 160017 Jaipur (Rajasthan) – 302015 �ायीलेखासं./जीआइआरसं./PAN/GIR No. AAAJC-0903-G (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Sh. Yogesh Parwal (CA) – Ld. AR ��थ�कीओरसे/Respondent by : Smt. Jaishree Sharma (CIT) - Ld. DR सुनवाईकीतारीख/Date of Hearing : 03-08-2026 घोषणाकीतारीख /Date of Pronouncement 05-08-2026 : आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aggrieved by rejection of an application as filed by the assessee seeking registration u/s 12A(1)(ac)(ii) vide impugned order dated 17.03.2026 of Ld. Commissioner of Income Tax (Exemption), Chandigarh, [CIT(E)], the assessee is in further appeal before us. 2. Upon perusal of para 4.2 of impugned order, it could be seen that Ld. CIT(E) has worked out balance of unsecured loans as on 31.03.2025 at Rs.29.68 Lacs whereas the same has been shown to be

Nil in assessee’s financial statements. The Ld. AR has contended that the same represent change in current liabilities which has been omitted to be considered by Ld. CIT(E) in the computations. The Ld. AR stated that the same could be reconciled by the assessee. 3. The second issue as raised by Ld. CIT(E) is that the assessee has paid interest of 10.5% to Srajan Capital Limited which was a related entity. It has been observed that the pattern of transaction indicate that funds were utilized on a need-based basis rather than as structured borrowing arrangement thereby raising concerns regarding the genuineness of such financial arrangement. The Ld. CIT(E) also alleged that such rate of interest was higher than rate of interest normally charged on unsecured loans. The assessee institution claimed it to be a public charitable institution engaged in educational activities. In such institutions, financial transactions with related parties require strict scrutiny to ensure that the funds of the institution are utilized solely for charitable purposes. In the present case, the borrowing of funds from related concerns at comparatively higher rates of interest coupled with frequent financial transactions raises the possibility of diversion of funds for the benefit of related parties, which is not consistent with the principles governing charitable institutions. Finally, the registration was denied against which the assessee is in further appeal before us.

4.

So far as the issue of discrepancy in unsecured balance is concerned, we find that the same is factual in nature. Apparently, the difference as computed by Ld. CIT(E) represent change in current liabilities. The same would require re-appreciation by Ld. CIT(E). 5. So far as allegation of higher rate of interest is concerned, it is the argument of Ld. AR that it has to pay separate processing fees on secured loans and the secured loans are backed up by security which justify lower rate of interest in comparison to unsecured loans. The rate of 10.5% as paid by the assessee is, accordingly, contended to be fair and reasonable. We are of the opinion that the allegation has to be fact based. It is to be ascertained how the rate of interest as paid by the assessee is on the higher side having regard to the prevailing market practices. This exercise is to be undertaken before reaching a conclusion that the assessee has paid higher rate of interest to related parties. 6. Considering the facts and circumstances of the case, we set aside the impugned order and restore the impugned application for de novo adjudication on above lines by Ld. CIT(E) with a direction to the assessee to plead and prove its case forthwith. 7. The appeal stand allowed for statistical purposes. Order pronounced on 5th August, 2026

-Sd- -Sd- (RAJESH DAMODARLAL SHARMA) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER

AS Dated: 05-08-2026 आदेश की �ितिलिप अ�ेिषत /Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

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ITAT CHANDIGARH

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