THE COMMISSIONER OF INCOME-TAX EXEMPTIONS vs. M/S ANANDA SOCIAL AND EDUCATION TRUST

PDF · subscribers
ITA/163/2022HC KarnatakaKAHC01012025202129 July 2026Bench: S.G.PANDIT,K.MANMADHA RAO6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court noted that a previous judgment dated 29.07.2026 in ITA No.112/2022 and connected matters had already answered similar substantial questions of law in favor of the assessee and against the Revenue for AY 2009-10. Applying the ratio of that judgment, the High Court answered substantial questions of law No.1 and 2 in these appeals in favor of the assessee and against the Revenue. Substantial question of law No.3 in both appeals was left undecided. Consequently, both appeals filed by the Revenue were dismissed. The operative direction was the dismissal of the appeals, upholding the Tribunal's order in part.

What were the facts?

The Revenue (Commissioner of Income-tax, Exemptions and Assistant Commissioner of Income-tax) is in appeal before the High Court of Karnataka against the common order of the Income Tax Appellate Tribunal (ITAT). The ITAT had dismissed the Revenue's appeals and allowed the assessee's appeals for Assessment Years (AY) 2008-09 to 2014-15. Specifically, these appeals concern AY 2012-13. The core dispute revolves around additions made by the assessing authority concerning unaccounted fees collected for UG and PG seats, including capitation fees, management/NRI quota seats, and fees from COEMED-K cancellations. The assessee, M/s. Ananda Social and Education Trust, is an educational institution claiming exemption under Sections 11 and 12 of the Income Tax Act, 1961.

What were the issues?

The High Court had to decide the following substantial questions of law: 1. Whether, on the facts and circumstances, the Tribunal was correct in law in deleting additions made by the assessing authority towards unaccounted fees for UG and PG seats, considering that the collection of capitation fees by the assessee could be income under Section 2(24)(iia) and Section 12(1) of the Act. 2. Whether the Tribunal's order was perverse, as it granted relief to the assessee by deleting all additions made by the assessing authority. 3. Whether, on the facts and circumstances, the Tribunal was correct in law in deleting additions made towards fees for Management/NRI quota seats for undergraduate MBBS, unaccounted fees from PG courses, unaccounted income from COEMED-K cancellation seats, and in setting aside the denial of exemption under Sections 11 and 12 of the Act, ignoring seized materials and the legislative intent for educational institutions. The Revenue contended that the Tribunal erred in deleting additions related to unaccounted fees, arguing that capitation fees constitute income under Section 2(24)(iia) and that the denial of exemption under Sections 11 and 12 was unjustified given the seized materials and legislative intent. The assessee's arguments are not explicitly detailed in the provided text, but the Tribunal's decision in favor of the assessee implies a successful defense against the Revenue's claims.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 2(24)(iia),Section 12(1),Section 11,Section 12

AI-generated summary — verify with the full judgment below

HC-KAR IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29TH 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. 163 OF 2022 C/W INCOME TAX APPEAL NO. 165 OF 2022

BETWEEN:

1.

THE COMMISSIONER OF INCOME-TAX EXEMPTIONS 6TH FLOOR, UNITY BUILDING ANNEXE MISSION ROAD BENGALURU - 560 027.

2.

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

(BY SRI. M DILIP AND SIR Y V RAVIRAJ, ADVS.)

AND:

M/S. ANANDA SOCIAL AND EDUCATION TRUST NO.24, KADUGONDANAHALLI

Digitally signed by NANJUNDACHARI Location: High Court of Karnataka HC-KAR BENGALURU - 560 045 PAN AAATA 7392M. …RESPONDENT (COMMON IN BOTH APPEALS)

(BY SRI. T SURYANARAYANA, SR. COUNSEL A/W MS. TANMAYEE RAJKUMAR, ADV.)

THESE APPEALS ARE FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 29/05/2020 PASSED IN ITA NO.2658/BANG/2017 AND ITA NO.2546/BANG/2017 RESPECTIVELY (ANNEXURE-C) FOR THE ASSESSMENT YEAR 2012- 2013, PRAYING THIS COURT TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE; ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.2658/BANG/2017 AND ITA NO.2546/BANG/2017 RESPECTIVELY DATED 29/05/2020 FOR ASSESSMENT YEAR 2012-2013 ANNEXURE-C AND 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 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)

These Income Tax Appeals under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) is filed by the Revenue, aggrieved by the common Order of the Income Tax Appellate Tribunal “C” Bench, Bangalore HC-KAR (hereinafter referred to as ‘the Tribunal’) dated 29.05.2020, by which, the Tribunal dismissed the appeals filed by the Revenue in ITA Nos.2654-2660(B)2017 for the assessment years (hereinafter referred to as ‘AY’) 2008-09 to 2014-15 and allowed the appeals filed by the assessee in ITA Nos.2542-2548(B)/2017 for the AYs 2008-09 to 2014-15. These appeals have been filed by the Revenue, aggrieved by the Order of dismissal of the appeal filed by the Revenue and aggrieved by the Order of the Tribunal allowing the appeal filed by the assessee for the AY 2012-13.

2.

ITA No.163/2022 was admitted on 02.03.2022 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 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?

HC-KAR

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. 165/2022 was admitted on 02.03.2022 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 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?

4.

Vide judgment dated 29.07.2026, this Court in ITA No.112/2022 and connected matter has answered the HC-KAR substantial questions of law raised in those appeals in favor of the assessee and against the Revenue for the AY 2009-10. The said judgment would be aptly applicable to these appeals as well.

5.

Thus, in terms of judgment dated 29.07.2026 in ITA No.112/2022 and connected matter, the substantial questions of law No.1 and 2 raised in both these appeals are answered in favor of the assessee and against the Revenue. The substantial question of law No.3 in both these appeals is left open. Both these appeals stand dismissed accordingly.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (DR.K.MANMADHA RAO) JUDGE

MPK CT:bms List No.: 1 Sl No.: 68

More judgments on Section 260-A

All 2,570 judgments and leading authorities on Section 260-A →

Recent GST High Court judgments

Search GST case law →