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

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ITA/166/2022HC KarnatakaKAHC01012026202129 July 2026Bench: S.G.PANDIT,K.MANMADHA RAO6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court, in its judgment dated 29.07.2026 in ITA No.112/2022 and connected matters, had already answered substantial questions of law in favor of the assessee and against the Revenue for AY 2009-10. The Court found this judgment to be applicable to the present appeals. Consequently, substantial questions of law No.1 and 2 in both appeals were answered in favor of the assessee and against the Revenue. Substantial question of law No.3 in both appeals was left undecided. Both appeals were dismissed in terms of the aforementioned judgment.

What were the facts?

The Revenue (Commissioner of Income-Tax, CIT(A) Exemptions and Assistant Commissioner of Income-Tax) filed these appeals under Section 260A of the Income Tax Act, 1961, against a common order dated 29.05.2020 passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru. The ITAT had dismissed the Revenue's appeals and allowed the assessee's (M/s. Ananda Social and Education Trust) appeals for Assessment Year (AY) 2013-2014. The Revenue is aggrieved by the ITAT's decision to delete additions made by the assessing authority and to set aside the denial of exemption under Sections 11 and 12 of the Act. The appeals concern alleged unaccounted fees collected for UG and PG seats, including capitation fees, management/NRI quota seats, and fees from COEMED-K cancellations.

What were the issues?

The High Court had to decide the following substantial questions of law: 1. Whether the Tribunal was correct in deleting additions made by the assessing authority towards unaccounted fees charged for UG and PG seats, considering that the collection of capitation fees by the assessee is not voluntary and can be considered 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 correct in deleting additions made towards fees charged for seats under Management/NRI Quota for undergraduate MBBS Programme, unaccounted fees received from PG Courses, unaccounted income on account of fees charged for seats filled up 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: Not recorded in the judgment. Revenue's Contentions: The Revenue argued that the Tribunal erred in deleting additions related to unaccounted fees, including capitation fees, and in setting aside the denial of exemption under Sections 11 and 12. They contended that the collection of capitation fees constitutes income and that the Tribunal ignored evidence and the legislative intent behind exemptions.

Which sections of the Income-tax Act were involved?

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

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. 97 OF 2021 C/W INCOME TAX APPEAL NO. 166 OF 2022

BETWEEN: 1. THE COMMISSIONER OF INCOME-TAX CIT(A) 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 BENGALURU - 560 045 PAN AAATA 7392M. …RESPONDENT (COMMON IN BOTH APPEALS)

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

Digitally signed by NANJUNDACHARI Location: High Court of Karnataka HC-KAR 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.2547/BANG/2017 AND ITA NO.2659/BANG/2017 RESPECTIVELY (ANNEXURE-C) FOR THE ASSESSMENT YEAR 2013- 2014, 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.2547/BANG/2017 AND ITA NO.2659/BANG/2017 RESPECTIVELY DATED 29/05/2020 FOR ASSESSMENT YEAR 2013-2014 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 (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 HC-KAR 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 2013-14.

2.

ITA No.97/2021 was admitted on 14.02.2022 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?

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 HC-KAR 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. 166/2022 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 HC-KAR 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 substantial questions of law raised in those appeals in favor of the assessee and against the Revenue for the AY HC-KAR 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.: 62

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