M/S. SARAKKI EDUCATIONAL SOCIETY ,BANGALORE vs. INCOME TAX OFFICER, WARD -3 (EXEMPTIONS), BANGALORE

ITA 1973/BANG/2024Status: DisposedITAT Bangalore19 December 2025AY 2017-18Bench: SHRI LAXMI PRASAD SAHU (Accountant Member), SHRI KESHAV DUBEY (Judicial Member)12 pages
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What did the Tribunal hold?

The Tribunal held that the disallowance of professional charges paid to a related entity was partly confirmed, but the exemption under Section 11 should be allowed to the extent admissible. The disallowed amount not falling under application of income was to be taxed at the maximum marginal rate.

What were the facts?

The assessee, a charitable educational society, paid professional charges to a company where its managing trustee and secretary were directors and family members held a significant stake. The Assessing Officer (AO) disallowed a portion of these payments, deeming them excessive and not at arm's length, leading to a partial denial of exemption under Section 11.

What were the issues?

Whether payments made to a specified person were excessive and not at arm's length, and the consequential impact on the charitable trust's exemption under Section 11.

Which sections of the Income-tax Act were involved?

Section 11,Section 13(1)(c),Section 13(2)(c),Section 13(2)(g),Section 13(3)

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Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE

Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY

Hearing: 13.11.2025Pronounced: 19.12.2025

PER KESHAV DUBEY, JUDICIAL MEMBER:

These cross appeals are filed against the order of ld. CIT(A)/NFAC both dated 23/08/2024 vide DIN and order No: ITBA/NFAC/S/250/2024-25/1067908538(1) for the AY 2017-18 & vide DIN and order No: ITBA/NFAC/S/250/2024-25/1067909213(1) for the AY 2018-19 passed u/s. 250 of the Income Tax Act (in short “

The order continues below.

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