THE COMMISSIONER vs. M/S ANANDA SOCIAL AND EDUCATION TRUST

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ITA/107/2022HC KarnatakaKAHC01012014202130 July 2026Bench: S.G.PANDIT,K.MANMADHA RAO5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that substantial question of law Nos. 1 and 2 in both appeals were answered in favour of the assessee and against the Revenue, in terms of a previous judgment in similar appeals between the same parties (ITA.No.112/2022 and ITA.No.168/2022). Consequently, these questions were answered against the Revenue. Substantial question of law No.3 was left open. Based on the previous judgment, both appeals were dismissed. The reasoning for answering questions 1 and 2 in favour of the assessee would have been detailed in the prior judgment, likely concerning the interpretation of 'income' for educational trusts and the perversity of the Tribunal's order. The ratio would be that if a prior judgment between the same parties on identical issues exists, it binds subsequent appeals. The operative direction was the dismissal of both appeals.

What were the facts?

The appeals were filed by the Commissioner of Income Tax and the Assistant Commissioner of Income Tax against M/s. Ananda Social and Education Trust for the assessment year 2014-2015. The appeals challenged orders passed by the Income Tax Appellate Tribunal (ITAT) which had deleted additions made by the assessing authority and allowed exemptions under Sections 11 and 12 of the Income Tax Act. The assessing authority had made additions towards unaccounted fees charged for UG and PG seats, including those under Management/NRI Quota and for seats filled against cancellation as per management quota fees. The ITAT's order was challenged as perverse and ignoring seized materials. This court had previously considered identical substantial questions of law in other appeals between the same parties and ruled in favour of the assessee.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal was right in law in deleting additions made by the assessing authority towards unaccounted fees charged for UG and PG seats, ignoring evidence and considering the collection of capitation fee as income under Section 2(24)(iia) and Section 12(1) of the Act? 2. Whether the Tribunal's order was perverse in granting relief to the assessee by deleting all additions made by the assessing authority? 3. Whether the Tribunal was right in law in deleting additions made towards fees charged for seats under Management/NRI Quota for undergraduate MBBS Programme, unaccounted fees from PG Courses, and unaccounted income from seats filled against COEMED-K cancellation, and in setting aside the denial of exemption under Sections 11 and 12 of the Act, ignoring seized materials and the legislative intent for granting exemptions to educational institutions? Assessee's Contentions: The judgment does not record specific contentions from the assessee. The Tribunal's order, which was in favour of the assessee, is implicitly supported. Revenue's Contentions: The Revenue argued that the Tribunal was wrong in deleting additions made towards unaccounted fees for UG and PG seats, Management/NRI quota seats, and other unaccounted income. They contended that the Tribunal's order was perverse, ignored seized materials and the findings of the assessing authority, and disregarded the legislative intent behind Sections 11 and 12 of the Act. They relied on evidence brought on record by the assessing authority and argued that the collection of capitation fees should be treated as income.

Which sections of the Income-tax Act were involved?

Section 2(24)(iia),Section 11,Section 12,Section 260-A

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

ITA NO.2660/BANG/2017
ITA NO.2548/BANG/2017

Read from the judgment's own cause title. This page is filed under one of them.

HC-KAR IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30TH DAY OF JULY, 2026 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE DR. JUSTICE K.MANMADHA RAO INCOME TAX APPEAL NO. 167 OF 2022 C/W INCOME TAX APPEAL NO. 107 OF 2022

BETWEEN: 1. THE COMMISSIONER OF INCOME TAX, CIT(A) EXEMPTION 6TH FLOOR, UNITY BUILDING ANNEXE MISSION ROAD, BENGALURU - 560 027.

2.

THE ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE (3), PRESENT ADDRESS DCIT, CIRCLE-1 EXEMPTION 6TH FLOOR, UNITY BUILDING ANNEXE MISSION ROAD, BENGALURU - 560 027. …APPELLANTS (COMMON IN BOTH APPEALS)

(BY SRI. RAVI RAJ Y.V., AND SRI M DILIP, ADVS.)

AND: M/S. ANANDA SOCIAL AND EDUCATION TRUST NO.24, KADUGONDANAHALLI BENGALURU - 560 045 PAN AAATA 7392M …RESPONDENT (COMMON IN BOTH APPEALS)

(BY SRI. T SURYANARAYANA, SR. ADV. FOR SMT. TANMAYEE RAJKUMAR, ADV.)

THESES APPEALS ARE FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 29/05/2020 PASSED

Digitally signed by NANJUNDACHARI Location: High Court of Karnataka HC-KAR IN ITA NO.2660/BANG/2017 AND ITA NO.2548/BANG/2017 (ANNEX- C), FOR THE ASSESSMENT YEAR 2014-2015, PRAYING THIS COURT TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN; ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.2660/BANG/2017 AND ITA NO.2548/BANG/2017

DATED 29/05/2020 FOR ASSESSMENT YEAR 2014-2015 ANNEXURE-C CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER INCOME TAX, CIRCLE-1 EXEMPTIONS BENGALURU AND ETC.

THESE APPEALS ARE COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE S.G.PANDIT AND HON'BLE DR. JUSTICE K.MANMADHA RAO

ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE S.G.PANDIT)

Both the above appeals are taken up for hearing together since both the appeals arise between the same parties and both the appeals relate to assessment year 2014-15.

2.

ITA.No.167/2022 was admitted on 03.03.2022 to examine the following substantial questions of law: “1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in deleting the addition’s made by the assessing authority towards unaccounted fees charged for UG HC-KAR and PG seats ignoring evidence brought on record by assessing authority and when collection of capitation fee by assessee is not voluntary which can partake character of income for purpose of section 2(24)(iia) of the Act and section 12(1) as well?

2.

Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse in nature as relief to assessee is granted by deleting all additions made by assessing authority?

3.

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in deleting additions made towards fee charged for seats under Management/NRI Quota for undergraduate MBBs Programme, unaccounted fees received from PG Courses, Unaccounted income on account of fee charged for seats filled up against COEMED-K cancellation as per management quota fees and setting aside denial of exemption under section 11 and 12 of the Act ignoring seized materials and intention of legislature in granting exemption under Section 11 and 12 of the Act to educational institutions?”

3.

ITA.No.107/2022 was admitted on 21.02.2022 to examine the following substantial questions of law:

HC-KAR "1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in deleting the addition's made by assessing authority towards unaccounted fees charged for UG and PG seats ignoring evidence brought on record by assessing authority and when collection of capitation fee by assessee is not voluntary which can partake character of income for purpose of section 2(24)(iia) of the Act and section 12(1) as well?

2.

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in allowing appeals preferred by assessee and in dismissing Revenue's appeal by completely ignoring seized materials and findings given by assessing authority for making additions which were based on seized materials?

3.

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in deleting additions made towards fee charged for seats under Management/NRI Quota for undergraduate MBBS Programme, unaccounted fees received from PG Courses, Unaccounted income on account of fee charged for seats filled up against COEMED-K cancellation as per management quota fees and setting aside denial of exemption under section 11 and 12 of the Act ignoring seized HC-KAR materials and intention of legislature in granting exemption under section 11 and 12 of the Act to educational institutions?"

4.

This Court in ITA.No.112/2022 and ITA.No.168/2022, between the same parties considered identical substantial questions of law and answered against the Revenue and in favour of the assessee.

5.

In terms of the said judgment, substantial question of law Nos. 1 and 2 in both the appeals are answered in favour of the assessee and against the Revenue. The substantial question of law No.3 is left open. In terms of the said judgment, both the above appeals also stand dismissed.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (DR.K.MANMADHA RAO) JUDGE NC CT:bms: List No.: 1 Sl No.: 33

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