SIDDARTHA EDUCATIONAL ACADEMY,KARIMNAGAR V. CIT (EXEMPTION), HYDERABAD

ITA 456/HYD/2025

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Siddartha Educational Academy, a society registered under the Andhra Pradesh (Telangana areas) Public Societies Registration Act, aimed at promoting education, filed an appeal against the order of the Commissioner of Income Tax (Exemption), Hyderabad, which rejected their application for final registration under section 12A of the Income Tax Act, 1961. The Academy argued that their activities, focused on providing education to economically lower and middle-class students, were charitable and aligned with their objectives. The Commissioner, however, found the activities not commensurate with the objectives stated in the registered deed, leading to the rejection of the application. The Tribunal, after considering the submissions and the Supreme Court's decision, directed a re-examination of the Academy's activities and granted them an opportunity for a hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 652574 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: misc
• Other Referred Cases: Noble Education Society vs., CCIT & Another 2022 SCC Online SC 1458
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B BALAKRISHNA
• Assessee Lawyers: RAMESH BABU KILARU
• Section: 12A

Judgement Text

" 1 ITA.No.456/Hyd./2025 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “A” BENCH: HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER ITA.No.456/Hyd./2025 Assessment Year 2025-2026 Siddartha Educational Academy, Karimnagar. PIN – 505001 PAN AADTS2169K [vs. The Commissioner of Income Tax (Exemption), Hyderabad. (Appellant) (Respondent) For Assessee : CA Ramesh Babu Kilaru For Revenue : Sri B Bala Krishna, CIT-DR Date of Hearing : 16.06.2025 Date of Pronouncement : 17.06.2025 ORDER PER MANJUNATHA G. : This appeal has been filed by the Assessee Company against the order dated 23.01.2025 of the learned CIT(E), Hyderabad, relating to the assessment year 2025- 2026. 2. Brief facts of the case are that, the assessee is a society registered under the Andhra Pradesh (Telangana areas) Public Societies Registration Act, on 19.02.1991 and 2 ITA.No.456/Hyd./2025 the same was formed with the main aim of promoting ‘Education’ which itself is a charitable activity. Ever since its inception, it has been pursuing the sole activity of Education i.e., by running schools for imparting primary and high school education for economically lower and middle class with the approval of the State Government. It is maintaining its regular books of accounts and the same are being regularly audited by the Chartered Accountants and also regularly filing it’s IT returns. In compliance with the amended provisions of the I.T Act, 1961, the Assessee obtained provisional registration u/sec.12A of the Income Tax Act, 1961 [in short “the Act”] on 07.02.2024 in Form- 10AC for the assessment year 2024-2025 to 2026-27. As the assessee has been carrying on its charitable/ educational activities since about 25 years, in compliance with the amended provisions of the I.T Act, 1961, the assessee has applied for final registration u/sec. 12A on 13.07.2024 in the prescribed Form-10AB. However, the learned CIT(E) rejected the application of the assessee filed in Form-10AB for registration u/sec.12A of the Act vide 3 ITA.No.456/Hyd./2025 order dated 23.01.2025 without pointing-out any specific violations and also without appreciating the submissions made by the assessee. The learned CIT(E) observed that, activities are not commensurate with the activities as per objectives of the registered deed/MOA/AOA, which is in violation of the provisions of the sec. 12A of the I.T Act, 1961 and accordingly, the present application in Form- 10AB for registration is herewith rejected. 3. CA Ramesh Babu Kilaru, Learned Counsel for the Assessee, submitted that, the learned CIT(E) had simply rejected the application of the assessee-society filed in Form-10AB for registration u/sec.12AB of the Act. In support of this contention, he drew the attention of the Bench with respect to the routine observations of the learned CIT(A) in para-3 of the order wherein the learned CIT(E) observed that, “activities are not commensurate with the activities as per objectives of the registered deed/MOA/ AOA, which is in violation of the provisions of the sec. 12A of the I.T Act, 1961 and accordingly, the present application in Form-10AB for registration is herewith rejected”. He, 4 ITA.No.456/Hyd./2025 accordingly, submitted that, the learned CIT(E) failed to appreciate that, the activity of ‘Education’ itself is a charitable activity and, therefore, he submitted that, learned CIT(E) may be directed to grant registration u/sec.12A of the Act, in the interest of poor students at large who are unable to bear the education expenses. 4. Shri B. Bala Krishna, learned CIT-DR, on the other hand, supporting the order of learned CIT(E) submitted that, the assessee-society has made the application for registration in Form-10AB for registration u/sec.12AB of the Act. He further submitted that, since the assessee-society has failed to prove it’s onus of charitable activities carried-out by it with supporting documents to the satisfaction of the learned CIT(E), he rejected the application filed by the assessee-society in Form-10AB for registration u/sec.12AB of the Act and that, the order of the learned CIT(E) is in accordance with law. He accordingly submitted that the order of the learned CIT(E) be confirmed since it is not a fit case for reconsideration by the learned CIT(E). He further submitted that, in the alternative, the matter may be 5 ITA.No.456/Hyd./2025 remitted back to the file of learned CIT(E) to verify the activities of the assessee-society in light of decision of Ho’ble Supreme Court in the case of Noble Education Society vs., CCIT & Another 2022 SCC Online SC 1458 wherein the Hon’ble Supreme Court held that, if any society or institution slowly exist for profit motive, then, such a society/institution is not eligible for exemption. In the present case, the learned CIT(E) has not verified the activities of the assessee-society in light of relevant financial statements and, therefore, the matter needs fresh examination from the learned CIT(E) to consider the case for registration u/sec.12A of the Act. Therefore, he submitted that, the mater may be remitted back to the file of learned CIT(E). 5. We have heard both the parties, perused the material on record and the orders of the authorities below. The learned CIT(E) dismissed the application filed by the assessee-society in Form-10AB seeking for registration u/sec.12AB of the Income Tax Act, 1961 on the ground that, the activities are not commensurate with as per 6 ITA.No.456/Hyd./2025 objectives of the registered deed/MOA/ AOA, which is in violation of the provisions of the sec. 12A of the I.T Act, 1961. However, the fact remains that, the learned CIT(E) has failed to appreciate that, the assessee-society is running schools from the last 25 years and imparting ‘Education’ to the economically lower and middle class students with the approval of the State Government. We further note that, imparting ‘Education’ itself is a charitable activity and the Fundamental Right of every student of this country enshrined under Article 21A of the Constitution of India. Further, the learned CIT(E) without appreciating the relevant evidences filed by the assessee, in a casual manner rejected the application filed in Form-10AB for registration of the assessee-society u/sec.12A of the Act, even though, the assessee-society’s activities are charitable in nature and further, the assessee-society is carrying-out it’s activities in accordance with it’s objectives. Therefore, we are of the considered view in principle that, the assessee is eligible for registration u/sec.12A of the Income Tax Act, 1961. Further, the learned CIT(E) has not examined the activities 7 ITA.No.456/Hyd./2025 of the assessee-society and rejected the application in a casual manner without considering relevant details. We are, therefore, of the considered view that, the matter needs to be remitted back to the learned CIT(E) to consider the application filed by the assessee society in light of our discussion hereinabove and to grant registration u/sec.12A of the Income Tax Act, 1961, after providing opportunity of hearing to the assessee within three months from the date of receipt of this order. Accordingly, the grounds of the assessee-society are allowed for statistical purposes. 6. In the result, appeal of the Assessee is allowed for statistical purposes. Order pronounced in the open Court on 17.06.2025 Sd/- Sd/- [VIJAY PAL RAO] [MANJUNATHA G] VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad, Dated 17th June, 2025 VBP 8 ITA.No.456/Hyd./2025 Copy to 1. Siddartha Educational Academy, H.No.10-1-182/1, Ramnagar, Karimnagar – 505 001. Telangana. 2. The Commissioner of Income Tax (Exemption), 2nd Floor, Aaykar Bhawan, Opp. LB Stadium, Basheerbagh, Hyderabad – 500 004. 3. The DR ITAT “A” Bench, Hyderabad. 4. Guard File. //By Order// //True Copy// "