SHRI. MAHAVEER JAIN EDUCATION SOCIETY ENGLISH MEDIUM SCHOOL,GADAG V. CIT, EXEMPTIONS, BANGALORE

ITA 54/BANG/2025

AI Insights

The case involves Shri Mahaveer Jain Education Society English Medium School, which appealed against the decision of the Commissioner of Income Tax Exemptions, Bangalore, denying their application for registration under section 80G of the Income Tax Act. The primary contention was whether the collection of fees for educational services disqualifies the institution from receiving donations under section 80G, which is intended for charitable purposes. The Tribunal found that the CIT(E)'s interpretation was flawed, as running a school and charging fees does not inherently negate the institution's charitable status, especially when it aligns with the objectives of promoting education without a profit motive.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126694 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M HARISCHANDRA NAIK
• Assessee Lawyers: THARUN KOTHARI
• Keywords: Set aside; Opportunity of being heard; Charitable institution; Fee receipt; Commissioner; Statutory conditions; Commissioner of Income Tax; Statistical purposes; Restored; Exempt; Services
• Section: 12AA; 80G

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K, JUDICIAL MEMBER ITA No. 54/Bang/2025 Assessment Year: 2024-25 Shri Mahaveer Jain Education Society English Medium School, Mulgund Road, Behind Kanak Bhavan, Gadag – 582 101. PAN – AAFTS 3301 K Vs. The Commissioner of Income Tax Exemptions, Bangalore. APPELLANT RESPONDENT Assessee by : Shri Tharun Kothari, Advocate Revenue by : Shri M Harischandra Naik, CIT (DR) Date of hearing : 27.02.2025 Date of Pronouncement : 24.04.2025 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: This is an appeal filed by the assessee against the order passed by the ld. CIT(E), Bangalore dated 03/12/2024 in DIN No. ITBA/EXM/F/ EXM45/2024-25/1070853492(1) for the assessment year 2024-25. 2. 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. 3. The relevant facts are that the assessee is a society and running a School. The assessee filed application for registration under section 80G of the Act in Form 10AB as on 29th June 2024. However, the application ITA No.54/Bang/2025 Page 2 of 4 . 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”, “School Bus Fee” and “Books and Uniform Fee” whereas section 80G of the Act applies on the donation. 4. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 5. The learned AR before us submitted that the learned CIT (E) has not pointed out any infirmity in the objects and bylaws of the institution. As such, the objects and the bylaws of the institutions have been accepted while granting the registration under section 12AA of the Act. Thus, the learned AR contended that the registration under section 80 G of the Act cannot be denied in the given facts and circumstances. 6. On the other hand, the learned DR before us vehemently supported the order of the authority below. 7. 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. From the preceding discussion, we note that the assessee, is engaged in running a School, with the stated objective of promoting education. The assessee made an application in Form 10AB seeking registration under section 12AB and section 80G of the Act which was denied by the learned CIT(E). In the rejection order, the learned CIT(E) observed that the assessee collects fees from students and concluded ITA No.54/Bang/2025 Page 3 of 4 . 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. 7.1 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 fall within the purview of charitable purposes as defined under section 2(15) of the Act. Running a school for the advancement of 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. 7.2 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 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 of appeal raised by the assessee is allowed for statistical purposes. ITA No.54/Bang/2025 Page 4 of 4 . 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in court on 24th day of April, 2025 Sd/- Sd/- (SOUNDARARAJAN K) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 24th April, 2025 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore "