AANIKA EDUCATIONAL TRUST ,BANGALORE vs. CIT(EXEMPTIONS), BENGALURU

This is an appeal filed by the assessee against the order passed by the CIT(E), Bangalore dated 23/12/2024 vide DIN No. ITBA/EXM/F/ EXM45/2024-25/1071488064(1).

The only issue raised by the assessee is that the learned CIT(E) erred in not granting the registration under section 80G of the Act.

The relevant facts are the assessee is a trust imparting education. The appellant assessee filed Form 10AB as on 28th June 2024 for registration under section 80G of the Act. However, the application for registration under section 80G of the Act was rejected by the learned CIT(E). While dismissing the application of the assessee learned CIT(E) found that the assessee is receiving fee from the student in the form of “School Fee” whereas section 80G of the Act applies on the donation. Being aggrieved by the order of the learned CIT(E), the assessee is in appeal before us.

The learned AR before us submitted that there was no violation of the provisions of section 80G of the Act and therefore, the registration under section 80G of the Act cannot be denied merely on the reasoning that the assessee is in receipt of school fees. According to the ld. AR, once the activities of the assessee have been accepted as genuine then the assessee should be grated the registration under section 80G of the Act.

Per Contra, the learned DR before us prayed to set aside the issue to the file of the AO for fresh adjudication as per the provisions of law. We have heard the rival contentions of both the parties and perused the materials available on record. The only issue involved in the present appeal pertains to the denial of registration under section 80G of the Act. We note that the assessee, is a trust with the stated objective of promoting education.

The assessee had initially filed Form 10A seeking registration under section 80G of the Act, pursuant to which it was granted provisional registration. Subsequently, for final registration, the assessee .

In the rejection order, the learned CIT(E) observed that the assessee collects fees from students and concluded that since section 80G of the Act pertains to donations made to charitable institutions, and not fee-based receipts, the assessee does not qualify for such registration. This interpretation, however, is found to be flawed and inconsistent with the established legal principles governing eligibility under section 80G of the Act.

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.

In the result, the appeal of the assessee allowed for statistical purposes.