MOUNT LITERA EDUCATION FOUNDATION,MUMBAI vs. COMMISSIONER OF INCOME-TAX (EXEMPTIONS), MUMBAI

ITA 5020/MUM/2026Status: DisposedITAT Mumbai09 October 20265 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that for renewal under section 12AB, the Ld. CIT(E) must examine the objects, genuineness of activities, and compliance with other laws. An alleged violation of section 13(1)(c) is primarily an assessment matter and does not, by itself, prove non-charitable objects or non-genuine activities. The Tribunal found that DVPL was not identified as a specified person under section 13(3) in the impugned order, and a common address or operational nexus does not automatically establish such a relationship. The observation that section 13(1)(c) applies without identifying a specified beneficiary was not sustainable. The explanation of the amount as a refundable deposit required examination of agreements and educational activities. Finance costs exceeding receipts do not inherently prove non-genuine activities. These matters were not adequately examined. Therefore, the order rejecting the section 12AB renewal was set aside and restored for fresh consideration. Consequently, the order rejecting the section 80G renewal was also set aside and restored for fresh decision in light of the section 12AB decision. The assessee was directed to furnish documents and cooperate.

What were the facts?

The assessee, Mount Litera Education Foundation, filed appeals against orders dated 30.03.2026 passed by the Learned Commissioner of Income-tax (Exemptions), Mumbai. These orders rejected the renewal of registration under section 12AB and renewal of approval under section 80G of the Income-tax Act, 1961. The rejection for section 12AB was based on the Ld. CIT(E)'s finding that an amount of Rs. 57.86 crore placed with Digital Ventures Pvt. Ltd. (DVPL) as an interest-free security deposit constituted financial accommodation, violating sections 13(1)(c) and 11(5). The Ld. CIT(E) also noted that the assessee's income was less than its finance costs, suggesting non-genuine activities. The rejection for section 80G was consequential to the section 12AB rejection.

What were the issues?

1. Whether the Ld. CIT(E) erred in rejecting the application for renewal of registration under section 12AB of the Income-tax Act, 1961, based on alleged violations of sections 13(1)(c) and 11(5)? Assessee's contentions: The amount given to DVPL was a contractual, refundable security deposit for leased school premises and infrastructure, not a violation of section 13(1)(c) as DVPL is not a specified person under section 13(3). The finance costs arose from borrowings for educational infrastructure. An alleged violation of section 13(1)(c) should be dealt with during assessment, not as a reason to refuse registration. Revenue's contentions: The Ld. DR relied on the Ld. CIT(E)'s order and supported the rejection. 2. Whether the Ld. CIT(E) erred in rejecting the application for renewal of approval under section 80G of the Income-tax Act, 1961, as a consequence of the rejection under section 12AB? Assessee's contentions: This issue is consequential to the registration appeal. Revenue's contentions: The Ld. DR relied on the impugned order.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 80G,Section 13(1)(c),Section 11(5),Section 13(3),Section 80G(5)(i)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

Before: SMT BEENA PILLAI & SHRI JAGADISH

For Appellant: Shri Nishit Gandhi a/w Ms. Angel More
For Respondent: Shri Srinivasa Rao Vona, CIT-DR
Hearing: 24.09.2026Pronounced: 09.10.2026

Per: SHRI JAGADISH, A.M.:

1.

These two appeals filed by the assessee arise out of separate orders dated 30.03.2026 passed by the Learned Commissioner of Income-tax (Exemptions), Mumbai [“Ld. CIT(E)”], rejecting renewal of registration under section 12AB and renewal of approval under section 80G of the Income-tax Act,

ITA Nos.5039 & 5020/M/2026 Mount Litera Education Foundation

1961 [“the Act”]. Since the issues are connected, the appeals are disposed of by this common order.

2.

We first take up ITA No. 5039/Mum/2026 relating to registration under section 12A

The order continues below.

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