NEHRU SMARAKA VIDYA KENDRA TRUST,BANGALORE vs. COMMISSIONER OF INCOME TAX, EXEMPTIONS, BANGALORE

6. The learned Commissioner of Income Tax (Exemptions) has wrongly assumed the chair of Appellant Trust by creating her own opinion at 6.4 of the order dated 17.1.2025 i.e., answer to (i) is "No" whereas answer to (ii) is Yes, by doing so, learned CIT(E) overlooked the fact that, the answer to (i) and (ii) may be vis a vis.

9. The learned Commissioner of Income Tax (Exemptions) has failed to understand the method of computation of total income ie., application income in Trust cases.

10. The learned Commissioner of Income Tax (Exemptions) has grossly ignored the fact that, the appellant had granted registration under section 80G from the date of appellant's inception.

5. The Ld.DR relied on the order of the Ld.CIT(E) and prayed to dismiss the appeal.

7. We have perused the rejection order passed by the Ld.CIT(E). In the said order, the Ld.CIT(E) had observed that it is seen from the financial statements, the assessee had collected fees and therefore concluded that the provision of 80G would be applicable to the receipts in the form of donations only and therefore rejected the application filed for approval u/s. 80G(5) of the Act. We have also perused the financial statements furnished by the assessee and in schedule 12, the assessee had shown the donations received under the other income heads whereas the fees received was shown separately under schedule 10 to the consolidated income and expenditure account filed for the period ending 31/03/2024. From the said details, the assessee had not added the fees receipts for the purpose of claiming deduction u/s. 80G of the Act. In fact, the financials shows the separate details of the fees collection as well as the donations received from the donors. No doubt, the assessee is not entitled to utilise the 80G for the fees received from the students but it will apply only to the donations received from the donors. The assessee had also shown separately the fees collections as well as the donations received from the donors and therefore to the extent of the donations received by the assessee, they can utilise the approval granted u/s. 80G of the Act. If the authorities are able to establish that the assessee had also utilised the approval granted u/s. 80G of the Act in respect of the fees collected by them, then the Ld.CIT(E) may be correct in rejecting the said application. In the present facts and circumstances of the case, we do not find any such claim made for the fees receipt and in fact both the fees receipts as well as the donations were shown separately. We have also considered the orders of the Coordinate Bench of this Tribunal cited by the Ld.AR in the case of Aanika Educational Trust vs. CIT(E) in vide order dated 25/04/2025 and in the case of Academy of General Education vs. CIT(E) in vide order dated 17/06/2025. The Coordinate Bench in its order dated 25/04/2025 had considered a similar issue and gave the following finding: “8. In our considered opinion, the receipt of fees for educational services by a charitable institution registered under section 12AB of the Act does not disqualify it from seeking approval under section 80G of the Act, provided the institution's activities are genuine and falls within the purview of charitable purposes as defined under section 2(15) of the Act. Imparting education is recognized as a charitable purpose, and merely charging fees from students to sustain the functioning of the institution does not vitiate its charitable character, especially where no profit motive is evident, and the institution operates in accordance with its stated charitable objectives. 8.1 We also note the learned AR before us claimed the that the assessee has already been granted registration under section 12AB of the Act, thereby confirming the genuineness of its charitable activities. In such a situation, unless there is a specific adverse finding as to misuse of funds or deviation from the stated charitable purpose, denial of approval under section 80G of the Act solely on the ground of receiving fees from student is not legally sustainable. 8.2 Accordingly, we hold that the rejection of the application under section 80G of the Act by the learned CIT(E) is not justified and is liable to be set aside. The matter is restored to the file of the learned CIT(E) to examine the application afresh in accordance with law, after affording the assessee a reasonable opportunity of being heard and without being influenced solely by the ground of fee receipts. The ld. CIT(E) shall evaluate whether the donations, if any, are applied towards charitable purposes and whether all statutory conditions for approval under section 80G of the Act are met. Hence the ground appeal raised by the assessee is allowed for statistical purposes.”

8. In another order dated 17/06/2025, the Coordinate Bench had considered the similar issue and held as follows: “7.5 In view of the above, we are of the opinion that at the time of granting of approval u/s 80G of the Act, the authority has to satisfy herself that the chartable institution is established in India for charitable purposes and the activities of the assessee trust are genuine and the assessee trust also fulfilled all the conditions as mentioned above. The ld. CIT(Exemptions) in our view has also not brought any material on record to show that the activities of the assessee trust are not genuine or the conditions as specified above are not fulfilled by the assessee trust. 7.6 In view of the above discussion, we allow the appeal of the assessee trust and direct the ld. CIT(Exemptions) to grant approval u/s 80G of the Act to the assessee trust as applied in form 10AB on 10.08.2024. It is ordered accordingly.”