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

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ITA/167/2022HC KarnatakaKAHC01012022202130 July 2026Bench: S.G.PANDIT,K.MANMADHA RAO5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court, in its judgment, referred to its prior decision in ITA No. 112/2022 and ITA No. 168/2022, which involved the same parties and identical substantial questions of law. Following that precedent, the Court held that substantial question of law Nos. 1 and 2 in both the present appeals (ITA No. 167 of 2022 and ITA No. 107 of 2022) are answered in favour of the assessee and against the Revenue. Substantial question of law No. 3 was left open. Consequently, both appeals filed by the Revenue were dismissed in terms of the aforementioned judgment.

What were the facts?

The appeals were filed by the Commissioner of Income Tax and the Assistant Commissioner of Income Tax against an order of the Income Tax Appellate Tribunal (ITAT) for the assessment year 2014-2015. The ITAT had deleted additions made by the assessing authority concerning unaccounted fees charged for undergraduate and postgraduate seats, including fees from Management/NRI Quota, PG Courses, and seats filled against COEMED-K cancellation. The ITAT also set aside the denial of exemption under Sections 11 and 12 of the Income Tax Act. The Revenue challenged these deletions, arguing that the ITAT ignored evidence and seized materials. The High Court noted that similar substantial questions of law in related appeals between the same parties were previously decided against the Revenue and in favour of the assessee.

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 for UG and PG seats, considering the collection of capitation fee as income under Section 2(24)(iia) and Section 12(1) of the Income Tax 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 for Management/NRI Quota seats for undergraduate MBBS, unaccounted fees from PG Courses, and 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 legislative intent. The Revenue contended that the Tribunal erred by deleting additions despite evidence and seized materials, and that the collection of capitation fees should be treated as income. The Revenue also argued that the Tribunal's order was perverse. The Assessee's contentions are not explicitly recorded in the judgment, but the Tribunal's decision was in their favour.

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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