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

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ITA/97/2021HC KarnatakaKAHC01012015202129 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, referred to its prior decision in ITA No.112/2022 and connected matters for AY 2009-10, which was decided in favor of the assessee. Applying that precedent, the Court answered substantial questions of law No.1 and 2 in favor of the assessee and against the Revenue. Substantial question of law No.3 was left undecided. Consequently, both appeals filed by the Revenue were dismissed. The operative direction was the dismissal of the appeals, upholding the ITAT's order in favor of the assessee on the first two questions, with the third question left open.

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 grant exemption under Sections 11 and 12 of the Act. The appeals before the High Court pertain to AY 2013-2014, arising from ITAT's orders in ITA Nos. 2547/BANG/2017 and 2659/BANG/2017.

What were the issues?

The High Court had to decide the following substantial questions of law for AY 2013-2014: 1. Whether the Tribunal was legally correct in deleting additions made by the assessing authority concerning unaccounted fees charged for UG and PG seats, considering the evidence presented and whether such collection of capitation fees constitutes 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 legally correct in deleting additions made towards fees for seats under Management/NRI Quota for undergraduate MBBS, 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, disregarding seized materials and the legislative intent for educational institutions. The Revenue contended that the Tribunal erred in deleting the additions related to unaccounted fees and in granting exemption, arguing that capitation fees are income and that the seized materials and legislative intent were ignored. The assessee's contentions are not explicitly recorded in the provided text, but the Tribunal's decision in favor of the assessee implies their arguments prevailed before the ITAT.

Which sections of the Income-tax Act were involved?

Section 260A,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. 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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