Income Tax Appellate Tribunal - Chandigarh
Blue Wing Educational Society,Punjab vs Cit Exemption-Chandigarh, Chandigarh on 4 May, 2026
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, 'A' CHANDIGARH
BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND
SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No. 609/CHD/2026
नधारण वष / Assessment Year: 2027-28
Blue Wing Educational Society, The CIT (Exemptions),
828, Phase 3B1, Mohali. Vs Chandigarh.
थायी लेखा सं./PAN NO: AABTB0344B
अपीलाथ /Appellant यथ /Respondent
Assessee by : Shri Ajay Jain, CA
Revenue by : Shri Manav Bansal, CIT DR
Date of Hearing : 27.04.2026
Date of Pronouncement : 04.05.2026
PHYSICAL HEARING
ORDER
PER RAJ PAL YADAV, VP T h e a ssessee is in app eal agai nst the or de r of ld. C o mm issi o ner of Incom e Tax ( Ex emptio ns ) [i n shor t 'th e C IT (E ) '] d a t ed 17 . 03.202 6.
2. Tho ugh th e assesse e has taken f ive gr ound s of ap peal b ut i t s soli tar y gr ieva nce is tha t ld . CI T (E ) has e rr ed in not gr an ti ng ren e w al u/s 12 A(1 ) (a c)( ii ) o f th e I nc om e T ax Act, 1 96 1.
ITA No.609/CHD/2026
A.Y.2027-28 2
3. The b ri ef fact s of the case ar e that ass es s ee is an old So cie t y. It ha s b een ru nnin g a s cho ol s inc e 20 06 and enjo yi n g reg istr at ion u/ s 12 A of the I ncom e Tax Act. The a sses sm ent of t h e assesse e fo r assessm ent year 2 02 4-2 5 was co m pl eted u/s 14 3(3 ) o f t he Act. Af te r t he c hange i n the Sch eme of r egi str at io n by F ina nc e Act , 2 02 0 w .e. f. 0 1.0 4. 20 21 , a ssessee h as app li ed f or grant of r egis t rat ion u/ s 12 A (1 ) (a c)( i) of t he Act b ei ng an o ld Soci e ty whi c h was gr an ted to i t. As co ntem plate d i n the Sc he m e, ass es see has to get ren ew ed t hi s r egi strat io n wh ich w il l be gr anted as a r egu la r r egi stra t io n u/s 12 A(1 )( ac)( ii ) o f the I ncom e T ax Act. Acco r di ng l y, a ssessee has f i led an applicat ion in For m N o. 1 0AB. The ld . CI T (E) has r ej ect ed t his app li cation of the a sses se e. It is al so p ert inen t to no t e that as sess ee T rus t w as gra n te d r eg i strati o n u/ s 1 2 A(1 ) (ac)( i) of the I ncome T ax Act on 2 4. 09. 202 1 for as se ssm en t ye ar 2 02 2-2 3 to a sses sm ent year 20 26 -27 . W he n this r egis t rati on w as going to exp ir e, assessee has fi led a fr e sh app lic at ion f or gr ant of r enew a l u/ s 12 A(1 )(a c)( ii) . As o bs erve d ear l ier , assesse e So cie t y ca me in to ex i ste nc e on 11 .05. 20 05 and st ar ted r unn in g a scho o l fr om 2 00 6.
ITA No.609/CHD/2026
A.Y.2027-28 3
4. Bef o re w e em bar k upo n an enquir y on th e fact s and cir cu msta n ces f or d enial o f r eg ist r ation u/ s 12 A(1 )( a c)( ii ) i n the c ase o f t he app ell ant, we dee m it appr o pr iate to t ake note of th e r elevant pr ovisions co ntem p lati ng t he pr oced ure r eq uir ed to b e f o ll owed fo r gr ant of r egistr ation as wel l as cance ll at i o n o f regist r ation.
5. We ha ve dul y con sid er ed the r ival co nte nt ions and gone thr o ug h t h e r ecor d caref ully. S ecti o n 1 2A (1 )( ac ) and S ect i on 1 2AB (1 ) ha ve di rect bear in g o n the c ont rover s y, ther ef or e, w e d eem it a p pr o pr iate t o ta ke no t e of these tw o pr ovisions, w hich r ea d as under :
12 A (1) T h e p r o v i s i o n o f Se cti o n 1 1 a n d 12 s h al l n ot ap p ly i n r el a ti o n to th e i n c ome of a ny T r us t o r I ns t it ut io n un l es s t h e f o llo w i n g co nd i t i o ns a r e f u l f ill e d :
a) x x x
aa ) x x x
a b) x x x
a c) n ot w i t hs ta nd i n g a n yth i n g con tai ne d i n cl au s es (a ) to (a b ) , t h e p er s on i n r ecei pt o f t h e i n com e h as ma d e an a p p l i ca ti o n i n t h e p r es cr i bed f or m an d ma nn er t o t he Pr i n ci pa l C o mm is s i o ner o r C omm is s i o n er , f or r eg i s t r ati o n o f t h e t ru s t or i n s t i t ut i o n,
-- (i )w h er e th e t r u s t or in s t i t u t i on i s r eg is ter e d u n d er s e ct i o n 1 2 A [ as i t s t oo d i mm edi at el y bef o r e i t s a men d men t b y t h e Fi na nce (N o . 2) A c t, 199 6 (3 3 o f 1 996 )] o r u n d e r s e cti o n 1 2A A [a s i t s t o o d imm edi at el y b efo r e i t s ame n d men t b y t h e T axat i o n a nd O t her L aw s (R el a xat i on a nd A men dmen t of C er t a i n P r o vi s i o n s ) Ac t , 2020 (3 8 of 20 20 )] , w i th i n t hr ee m o nth s f r om th e f i r s t d ay of A p r i l, 2 0 21;ITA No.609/CHD/2026
A.Y.2027-28 4 ( i i) wh er e t h e t r us t or i ns t i t ut i on i s r egi s t er ed u n d er s ect i o n 1 2A B a n d t h e per i o d o f t he s a i d r egi s t r ati o n i s d u e t o ex p ir e , a t le as t s i x m on t hs p r io r t o expi r y of t he s ai d p er i od ; ( i ii ) w he r e t h e t r ust or i n s ti t u ti on h as b ee n pr o vis io n a l ly r eg i s t er ed u nd er s e ct i o n 12A B, at l ea s t s ix mo n t h s p r i o r t o ex pir y of per i o d of t he pr ovi s i on al r egi s t r a t io n o r w i th i n s i x m o nth s o f c om me nce ment o f i t s act i v it i es , w h i ch ever i s ea r l ie r ;
( iv) wh er e r eg i s t r at i o n of t he t r us t o r i n s t i t ut i o n ha s be co me i n op er a t i ve d u e t o t h e fi r s t pr ov i s o t o s u b- s ect i o n (7 ) o f s ect i o n 1 1, a t le as t s i x mont hs pr i o r t o t h e co mme n c em en t of t h e as s es s ment yea r f r o m w h i ch t he s ai d r eg i s t r a ti o n i s s o ug ht t o be ma de o p er at i ve ;
( v)w h er e t h e t r u s t or i ns ti t ut i o n ha s a dop t ed o r u n d er t a ken m o dif i ca t i on s of t he o bj ect s w hi c h do n ot co n f o r m t o t he co nd i t i o ns of r eg i s tr a t io n, w i t h in a per i o d o f t h i rt y d a ys f r o m t h e d at e o f t h e s a id ad opt io n o r mod i f i ca t i o n ; ( vi) i n a ny o th er ca s e, w her e act i vit i es o f t h e t ru s t o r i n s t it u t i o n h ave -
(A) no t c omme n ce d , at l eas t o ne mo n t h pr i o r t o t h e co mm en cem ent o f t h e pr ev i ou s ye ar r el eva n t t o t h e as s es s ment yea r f r om w hi c h t he s a i d r e gi s t r at i on i s s o ug h t ;
( B) co mmen ced a nd no i nc ome or pa r t t h er e o f o f t h e s ai d t r u s t o r i ns ti t u ti o n h as be en ex cl u d ed f r o m t h e t ot a l in co me on a cco un t of ap p l i ca bi l i t y o f s ub -c l a u s e (i v ) or s u b - cl au s e ( v) or s u b-cl au s e (vi ) or s ub -c la us e (vi a ) o f cl a u s e (23 C ) o f Sec t i on 10, or Sec t io n 1 1 or S ect i o n 12 , f or a n y pr evi ou s yea r end i n g o n or bef o r e t h e d at e o f s u ch ap pl i c at i on , a t a ny ti me af t er t h e co mm en cem e nt o f s u ch act i v it i es a nd s uc h t r u s t or in s t i tu t io n i s r eg i s t er e d u nd er S e ct i o n 1 2A B;] x x x 12AB. [Proced u re f or fresh re gistrati o n.
1 2A B.(1 )T h e P r i nci pal Co mmi s s i on e r or C o mmi s s i o n er , o n r ece i p t of an a pp li cat i o n m a de un der cl a u s e ( ac) o f s u b - s ect io n ( 1) of s ec t io n 1 2A , s h al l , --
ITA No.609/CHD/2026
A.Y.2027-28 5 ( a) wh er e t h e a p p li c at i on i s m ad e un de r s u b -c l au s e (i ) o f t h e s a i d c l a us e, p as s an or der i n wr i t in g r eg i s t e r i n g t h e t r us t o r i ns t it ut i on for a pe ri od of f i ve y ea rs ; ( b) wh er e t h e ap pl i c a t i on i s ma de un d er s u b -cl au s e ( i i ) or s u b- cla use (i i i) o r s ub - cla us e (i v) or s u b- cl a u s e (v ) o r it em ( B) of s ub -c la us e ( v i ) o f t he s ai d cl au s e, -
( i )c al l f o r s u ch doc u ment s o r i n f o r ma t i o n f r o m t h e t r us t o r i ns t i tu tio n or ma ke s u ch i n qu i r ies as h e th i nk s n eces s a r y i n o r der t o s at i s f y hi ms e l f a b ou t-- ( A)t he g e nu i n enes s of act i vi ti e s of t he t r us t or i n s ti t ut i o n; an d ( B)t he c omp l ia nc e of s u ch r eq u i r emen t s o f a n y o th er l a w f o r th e t im e b ein g i n fo r ce b y t he t r us t o r i ns t i t u t i o n as a r e mat er i a l f or t he pu r po s e of a ch i evi n g i t s ob j ect s ; ( ii ) af t er s at i s f y i n g hi ms el f ab out t he o b j ect s of t he t r u s t or i n s t i t ut i on a nd t h e genu in ene s s o f it s a ct i vi t ies u n d er it em ( A) an d com pl i an c e of t h e r eq u i r em en t s u n d er i tem (B), o f s u b- cla use (i ),--
( A)p a s s an or d er i n w r i t in g r eg ist er i n g t he tr u s t or i n s ti t ut i o n f or a pe r i o d o f f i ve y ea r s ; o r ( B)i f h e i s n o t s o s at i s f i e d, pas s an o r d er i n wr i t i n g -
( I) i n a ca se r ef er r ed t o i n s ub -c l a u s e (i i ) o r s u b - cl au s e (i i i ) or s ub- cl a us e (v ) of cl a u s e ( a c) of s u b - s ect i on (1 ) o f Se ct i o n 1 2A r ej ect in g s u ch a p p l ica t i o n a nd al s o can ce l l i n g it s r e gis t r at i on ;
( II ) i n a ca s e r ef er r ed t o i n s ub - cl a u se (i v ) o r i n i t em ( B ) of s u b- cl au s e (v i ) of s ub -s e c t i on (1 ) o f S ecti on 1 2A , r ej ec t i ng s uc h ap pl i ca t i o n , af t er a ff o r di n g a reas o nab l e o pp or t u n i t y o f b ei n g hear d ;
( c) w h er e th e ap p l i cat i on i s ma de u n d er i t e m ( A) o f s u b - cl au s e (v i ) o f t h e s ai d cla us e or th e ap p l i c at i on i s ma d e u nd er s u b-c la us e (vi ) of t he s a i d cl a u se , a s i t s t oo d i mmed ia t e ly b ef o r e i t s a me nd ment v i de t h e F i na n ce A ct, 2 02 3, pa s s a n o r der i n wri t i ng pr o vis io n a l ly r eg i s t er i n g t h e t r u s t or i n s ti t uti on f o r a per i od o f t hr ee ye ar s fr o m t h e a s s es s men t yea r fr o m w hi ch t he r eg i s tr a t i o n is s o u g h t , ITA No.609/CHD/2026 A.Y.2027-28 6 a nd s en d a cop y of s uch or d er t o t h e t r u s t o r i ns t i t ut i o n .
x x x
6. A p erusal o f th e a b ove clau ses wo uld i nd icate that b y w ay of Fi nanc e Act, 202 0 w. e.f . 01 .04. 2021 , a new Sc heme o f R egist ra tio n has been p r o vided. I t is evi d e nt f r om read ing o f Sectio n 1 2A(1 )(ac)( i) to (vi) of t he Act that i n ord er t o cl aim b enef i t of S ect io n 11 an d 12, if any Tr ust or Inst itut ion is i n r ecei p t of inco m e, it has to f ile an a pp li c ation i n the p rescr ib ed f orm and m anner to the Pr . Com mi ssioner or C o mm issi o ner fo r r egistr atio n of the Tr ust or I nstit ut ion. Sub -cla use ( i) t o ( vi) o f Se ct io n 12 A(1 ) (ac) f ur t her pr ovid e d d if f er ent co ndit ion s o n w ho se fu lf ilm e nt, a pp li ca tion i s to be mad e. I n th e present cas e, appl icat io n has b e e n f il ed und er Sec t io n 1 2 A (1 )( ac)( ii) . It is pe r tinent to not e t hat if a T rus t w as in exi stence pr ior to this new Sc heme of registr at ion, then it ha s to app ly u nd er sub -cla us e ( 1) wit hin thre e mo n t hs fr om the 1 s t day o f A pr i l, 2 02 1. I f the Tr ust or In st it ut i o n ha s b een regi ster ed u/ s 12 AB, t he n atleas t s ix mo n t hs p r ior to t he exp ir y o f t he said p e r iod . R egis t rati on u/ s 12 AB h as been co n tem pla ted under t he new Sc heme w .e. f . 01 . 0 4. 20 21 . Sim il arl y , a ne w Tr u st wh ich has come int o ex ist en ce af t er 0 1. 04 . 2021 and has ap plied fo r ITA No.609/CHD/2026 A.Y.2027-28 7 r egis tra t ion , wh ich was gr ante d pr ov isio na ll y reg istr at ion, w ou ld r eq ui re t o apply f o r a re gular re gistr at i on which w i ll b e gra nte d u/ s 12 A(1 )( ac)(i ii ) fo r a p er io d of fi ve year s . There is no d isput e i n the prese nt case t hat asse s see s have app li ed fo r gr a nt of r egular reg ist r a tio n u/s 1 2 A (1) (ac) (ii ) of the Act.
7. Sect i on 1 2AB of t he A ct f u rthe r pr ov id es the pr oced ure fo r g ra nt o f the f r esh r egis tr at io n. A per usal of the above p ro vi sio n w o uld ind icat e t hat if an appli ca t ion i s bei ng made und er sub -cla use (1 ) of Secti o n 12A(1) (ac), the n ld . P r. C o mm issi o ner or t he Co m m issi o ner w o uld pas s an or der in w rit in g reg ister i n g the Tr u st or Instit u tion for a per iod o f fi ve yea r s but w h er e appli cati on is b eing m ade for gr ant of r egis tra t ion u/s 12 A(1 )( ac ) s ub -cl au se (i i) t o (vi), the n ld. C o mm issi o ner would call fo r such d ocuments or infor m ation fr o m the T r ust o r I nst it ut io n o r m ake su c h e n qu ir y as he thi nk s n ecessar y in order to satisf y him se l f ab out ;
a) T he ge nuin enes s o f activiti e s o f the Tr ust or In st it ut i o n,
b) T he co m pl ia nce o f such requir em ent s of any o ther law f or the tim e be ing i n for ce by the ITA No.609/CHD/2026 A.Y.2027-28 8 T rust o r I nstit utio n as ar e mater ial f or the p urpo se o f achi e ving i t s o bje cti ves.
T hu s, p ri ma r y requi rem e nt wou ld b e t o f ind out whe t her a ctiv it i es of the Tr ust ar e gen uine and it has f ulf il led t he r eq uir eme nts o f any oth er law f or t he tim e be ing in f or ce. I n o ther w o rd s, ob jec tives o f the assess ee Tr us t s hould be gen u ine a nd tha t it is no t en gag ed in any unl awf ul ac t ivi t ies o r fa iled to com pl y w ith o ther l aws of the countr y. 7 .1 On sa tisf acti on of abo ve co nd it ions, ld . P r. C o mm issi o ner or Co m m is sio ner wo ul d pas s an or der in w rit in g reg ister i n g the Tr u st or Instit u tion for a per iod o f fi ve y ear s an d i f no t satis fi ed, t hen pa ss an ord er in wri ting r ejec t ing suc h app li catio n. B ef o re r eje cti ng t he app licat ion, a r easo na bl e o p po r t uni ty o f bei ng h eard i s to b e p r ov id ed. 7 .2 At this sta ge, we d eem it app r o pr iate to take not e of Section 12AB(4) which empowers the Pr. Commissioner or the Comm issioner to cancel any provisional or regular registration. It is salutar y upon us to take note of this clause, which reads as under :
ITA No.609/CHD/2026
A.Y.2027-28 9 " Procedure for fresh registration.
12 AB (1). x x x x x x x
(4) Where registration or provisional registration of a trust or an institution has been granted under clause (a) or clause (b) or clause (c) of sub-section (1) or clause (b) of sub-section (1) of section 12AA, as the case may be, and subsequently,--
(a)the Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year; or
(b)the Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub-section (3) of section 143 for any previous year; or
(c)such case has been selected in accordance with the risk management strategy, formulated by the Board from time to time, for any previous year, the Principal Commissioner or Commissioner shall--
(i)call for such documents or information from the trust or institution, or make such inquiry as he thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation;
(ii)pass an order in writing, cancelling the registration of such trust or institution, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violations have taken place;
(iii)pass an order in writing, refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violations;
(iv)forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such trust or institution.
Explanation.--For the purposes of this sub-section, the following shall mean "specified violation",--
(a)where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution; or ITA No.609/CHD/2026 A.Y.2027-28 10
(b)the trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental to the attainment of its objectives; or
(c)the trust or institution has applied any part of its income from the property held under a trust for private religious purposes, which does not enure for the benefit of the public; or
(d)the trust or institution established for charitable purpose created or established after the commencement of this Act, has applied any part of its income for the benefit of any particular religious community or caste; or
(e) any activity being carried out by the trust or institution--
(i) is not genuine; or
(ii) is not being carried out in accordance with all or any
of the conditions subject to which it was registered; or
(f) the trust or institution has not complied with the requirement of any other law, as referred to in item (B) of sub-clause (i) of clause (b) of sub-section (1), and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality; or
(g) the apo referred to in clause (ac) of sub-section (1) of Section 12A is not complete or it contains false or incorrect information.
(5)The order under clause (ii) or clause (iii) of sub-section (4), as the case may be, shall be passed before the expiry of a period of six months, calculated from the end of the quarter in which the first notice is issued by the Principal Commissioner or Commissioner, on or after the 1st day of April, 2022, calling for any document or information, or for making any inquiry, under clause (i) of sub-section (4).]]
8. A per usal of above provision wo uld indicate that it empower s the Pr. Comm issioner or Comm issioner to call for such document or information from the Trust or Institution or ITA No.609/CHD/2026 A.Y.2027-28 11 make such enquir y as he thinks necessary in order to satisfy him self about the occurrence or otherwise of any specified violation. If there is any specified violation, then he would pass an order in writing, cancelling the registration of such Trust, granted under sub-clause (a) clause (b) or clause (c) of sub-section (1) or clause (b) of sub-section (1) of Section 12AA. The Explanation appended to this Section further provides the meaning of expr ession 'specified violations'. These violations are contemplated in claus e (a) to (g) of the Explanation extracted supra.
8.1 'Specified violation' is that if a Trust has been drawing income from the property held under a Trust, wholly or partly, which is charitable or religious in nature and such income has been applied other than for the objects of the Tr ust, meaning thereby, if income is not being applied for the objects of the Trust, then it would be construed a 'specif ied violation' on whose fulfilment, registration can be cancelled. The second condition is, the Trust or Institution has income from prof its and gains of a business which is not incidental to attainment of its objects but separate books are not being maintained. ITA No.609/CHD/2026
A.Y.2027-28 12 For example, Hon'ble Gujrat High Court in the case of Sabarmati Gaushala has held that object of the Society was to develop the breed but any income earned by the Society from sale of sem en was only incidental qua the main object of developing the breeds of the milking cows. If there is no incidental income, then assessee is required to maintain separate books of account and if assessee failed in maintaining such books then this would be a 'specified violation'.
8.2 The next 'specified violat ion' under clause (c) is that if any part of income is applied from the property, held under a Trust for profit on religious pur pose which does not exist for the benefit of public at large, then such a situation would be a 'specified violation' for cancelling the registration. Similarly, if any other income is applied for particular religious entity or cause, then it would fall within the ambit of a specified violation contem plated in clause (d). Under (e), it has been provided that any activity carried out by the institution or the Trust is not genuine or is not being carried out in accordance with all or any of the conditions subject to which it was ITA No.609/CHD/2026 A.Y.2027-28 13 register ed. Meaning thereby, assessee has to fulfil the conditions of registration as well as its activities should be genuine in accordance with objects. If there is any shortcoming in this ar ea, then it would be considered as 'specified violation'. The Trust has failed to comply with requirement of any other allied law as contemplated in sub- clause (i) or clause (b) of sub-section (1) of Section 12AB. In other words, if any specified law being violated, then it would fall within specified violation for cancellation of registration. The last violation provided in this Explanation is that if Registration Certificate is being obtained by submitting false or incorrect information, then registration could be cancelled.
9. In t he light of abo ve, let us e x am i ne the fact s of t he p resen t ca se. Th e ld . CI T(E) ha s is s ued a Show Cause N otice co nf r ont in g th e assess ee t hat it has b ee n engaged in p urch as e a nd sale o f l and fr o m as sessm e nt ye ar 2 02 3-2 4, w h y it shou ld n ot be t r eated as a Tr ader in t he R eal Est ate. C o py of the Sho w C ause N o tice is av ailab le on p age N o. 1 00 o f the P aper Boo k. We d eem i t appr opr iate to take not e of thi s S ho w Ca use N otice w hi ch re ad s as unde r : ITA No.609/CHD/2026
A.Y.2027-28 14 ITA No.609/CHD/2026 A.Y.2027-28 15 ITA No.609/CHD/2026 A.Y.2027-28 16
9. The asses see has filed det ai led re pl y to this Show Cause N o tice w h ich is availabl e o n pa g e N o. 103 to 115 . Apar t f rom thi s reply , assessee has fi le d fur ther ex planat i on j ust if ying it s sta nd a nd si nce th e ne x t r epl y is v er y br i ef, w e de em it a pp ro p ri a te t o take note of thi s r eply, w hi ch r ea ds as unde r:
To 01.03.2026
The Hon'ble CIT (EXEMPTION)
Chandigarh
Subject: Reply to Notice u/s 12A (1) (ac) (ii) in connection with application filed in Form 10AB in the case of Blue Wing Educational Society, 828, Phase 3B-1, Mohali, 160059, Punjab having PAN: AABTB0344B.ITA No.609/CHD/2026
A.Y.2027-28 17 Sir/Madam It is in response to the notice issued u/s 12A (1) (ac) (ii) of the Income-tax Act, 1961 dated 29.01.2026 vide DIN ITBA / EXM / F / EXM43 / 2025-26 / 1085316967 (1), we respectfully submit that a detailed reply along with the requisite documents was already filed on 16.02.2026. However, in continuation of the said submission, the assessee hereby wishes to further clarify and elaborate upon the information sought in the notice to ensure complete and proper compliance. Site (Sector 66 beta Block) Mohali - 6,57,73,894 The site was allotted through auction process by the Estate Officer, GMADA Mohali. Further to the earlier submission in respect of Site, the assessee respectfully submits an additional factual clarification for your kind consideration. Subsequent to the acquisition of the said site, a liquor shop was opened in the immediate vicinity of the property. The Society, being an educational institution committed to maintaining a safe, disciplined and morally appropriate environment for students, made sincere and bona fide efforts to have the said liquor shop relocated/closed by approaching the concerned authorities. However, despite best efforts, the same could not be achieved. The photograph of liquor shop is attached alongwith this reply.
Considering that the existence of a liquor shop adjacent to a proposed educational institution would not be conducive to the academic atmosphere and welfare objectives of the Society, the management, after due deliberation, resolved not to proceed with construction of a Educational Institution at the said location. This factor, coupled with the earlier stated issue of inadequate site size, led to the decision to dispose of the property and acquire a more suitable site where the educational objectives of the Society could be properly fulfilled. Site Aerocity - 10,61,65,313 The site was acquired for expansion of the Society's educational infrastructure. However, due to litigation before the Hon'ble Punjab & Haryana High Court in CWP No. 9180-2021, wherein status quo was ordered vide order dated 06.12.2021 and continues till date possession and development of the site remained uncertain. Accordingly, the Society opted for cancellation of the agreement to safeguard its educational funds.
Educational Site 2 Event 3282- 33,85,00,000 The said educational site was purchased from M/s Human Enterprises. The purchase was made at the reserve price fixed by GMADA of similar educational sites and the consideration paid by the society was in accordance with the price determined by the authority of similar educational sites. The transaction was carried out in a transparent manner and no undue benefit of any nature accrued to the seller, M/s Human Enterprise.
ITA No.609/CHD/2026
A.Y.2027-28 18 Educational Site 3 Event-9,72,20,813 For the educational site in question the agreement to sell was cancelled on 26- 09-2023. The amount paid was duly credited back to the society's Kotak Bank Account No. 4045838208 by M/s Human Enterprise. These funds were subsequently utilized for acquisition of educational Site 2, 3282. The society has recovered compensation damages of Rs. 1,00,00,000 from the firm, which was duly shown as interest income in the said financial year. It is further clarified that the interest of Rs. 1,00,00,000/-recovered by the Society was agreed at the rate of interest was higher than the prevailing bank interest rates, thereby adequately safeguarding the financial interest of the Society. Moreover, the cancellation of agreement has happened within 1 year from the date of agreement. The funds utilized for the aforesaid transactions were sourced entirely from the society's own funds, including accumulation from prior years. No loans or borrowings were availed for these transactions. The educational site was acquired with the primary objective of expanding the Society's educational infrastructure, in furtherance of its main educational objects. However, due to insufficiency of funds at the relevant time, the Society requested M/s Human Enterprise to cancel the said agreement to sell, and the funds received from this cancellation were subsequently utilized for the acquisition of educational Site 2, 3282. This step was undertaken to ensure that the Society could at least acquire one piece of site to commence the construction of educational site at the earliest.
Eco-City school site measuring 4.02 acre.
The Society participated in the auction conducted by GMADA for the said school site at Mullanpur, Eco-city, New Chandigarh. The Society participated with the objective of acquiring school site for running senior secondary school. As per the latest GMADA guidelines, the schools can only operate through the designated sites allotted/auctioned by GMADA. Therefore, the society does not have had any option except to purchase the designated school site auctioned by GMADA. As informed by GMADA, the allotment letter has not yet been issued to the Society. It has been communicated that the allotment letter shall be issued once the site is made feasible for use and all requisite formalities at their end are completed. The Indian Overseas Bank has sanctioned loan of Rs. 43.65 Crores on 12.02.2026 (copy of sanction letter attached) for purchase of land and construction of school building. Accordingly, the allotment letter is presently awaited. As and when the allotment letter will be issued, the society has plans to open senior secondary school at the designated site. In view of the above submissions, it is respectfully submitted that all transactions relating to the aforesaid lands were undertaken bona fide, in furtherance of the ITA No.609/CHD/2026 A.Y.2027-28 19 Society's educational objects. It is therefore requested that the above clarifications may kindly be taken on record.
Further we would like to bring to your kind notice that apart from the above no property transaction took place in the last five years and our Scrutiny assessment was completed upto AY 2024-25.
We request for personal hearing of 5-10 minutes to explain in person of any point you may require more information or if any adverse view is contemplated in the matter.
I trust the above submissions and enclosures meet the requirements of your notice. The assessee is duty bound to furnish any other information or documents as and when the same is required by your goodself. Thanking You, Yours Faithfully, Sd/-
(CA TEJINDER GARG) 1 0. W it h t h e assistanc e of ld. R epr ese nt ative, we have go ne t hr o ug h t he com pl ete det ail s in cl udi ng a ll t he r e pl ies sub m i tted b y t he asses s ee. At the cost of r epeti t ion, we w ou ld l ik e to o bser ve that a c onjo i nt r ead i ng of Sect i on 1 2A (ac) (ii ) in t he li ght of Sec ti on 1 2A B of the Act would ind i ca te t ha t l d. C IT (E) is requi re d to p ass an or der in w rit in g reg ister i n g the Tr u st or Instit u tion for a per iod o f fi ve yea r s on conduct i ng e nq uir y, as she t hinks nece ssar y i n o r der to s at isf y her sel f ab o ut ;
a) Th e ge n ui ne ness of activi tie s o f t he Tr ust or Inst it ut i on;
b) T he co m pl iances o f suc h re qui r eme nts of any other law f o r the tim e bei ng i n f o rce by the Tr ust ITA No.609/CHD/2026 A.Y.2027-28 20 or I n stit ut io n, a s are m ateri al f or t he p urp ose of a chie vi n g its ob j ect iv es.
1 0.1 W e h ave been appr i s ed abo ut Ru l e 1 7 A sub -r ul e (e ) w hich co ntem p l at es as unde r :
" W her e the T ru s t o r In s t it ut i on h as b een in e xi s t en c e du r i n g a n y ye ar or ye ar s p ri or t o th e f i n anci al ye ar i n wh ich t h e ap p l i ca t i on f o r r eg is tr a t i o n i s ma de , s el f - cer t i f i ed c op i es o f t h e A n n u a l Ac cou nt s o f t he T r us t or Ins t it ut i on r el at in g t o s u ch p r i or yea r o r y ear s ( no t bei n g mo r e t han thr e e yea r s i mmed i a t el y p r e ce d i ng i n th e yea r i n w hi ch th e s ai d ap pl i cat i on i s mad e f or w hi ch su ch a cco un t s ha ve b een ma de up ."
1 0.2 A pe r usal of thi s R ule w oul d i ndi cate that l d. CI T (E ) w ou ld lo ok int o acco unts of t hr ee year s i mm edi at el y p reced i n g to t he fil in g o f the appl ic ati on. T he l d. counse l fo r the a sse ssee subm it te d t hat a sc ruti ny ass essm e nt has und er go ne for assessm ent ye ar 2 02 3-24 a nd all t hes e a spe ct s h ave b e en exam ine d by the AO . I n othe r wor ds , t he AO ha s duly confr o nt ed the asse ss ee t o ex pl ain i ts s tand f or the in v estm e nt made i n va r io u s land s. C op y o f t his or d er d ated 05 . 12. 20 2 5 is avai labl e o n page N o. 8 8 t o 9 9 of t he P ap er B ook . The l d. co unse l f or t h e asses se e sp ec if ic al ly to o k us t hr o ugh par agrap h 9, inter na l p a ge 3 of t he a sses sm ent ord er t ill page 8 of the asse ssm e nt or de r. A p erus al o f a ll th ese detail s wo u l d ind icate t hat asses see has b asica ll y pur chased thre e sit es . T he f ir st s ight p ur c hase d ITA No.609/CHD/2026 A.Y.2027-28 21 b y i t in S ect or 66 , Beta B lo ck, M ohali . It w as not p ur c has ed fr o m any ind ivi dual o r any ass o ciat ed p er so n conte m p lat ed in S e ct ion 1 3(3) of t he Inco m e Tax A ct. I t was p ur c has ed thr o ug h a uct io n fr o m t he GAM ADA , Mohal i. It is pe rt ine nt to note tha t var ious deve lop me nt au thori tie s of Ur ban E stat e d o reser ve ed ucational s it es wh ich are t o b e auct i oned on co m petit ive b id s t o the edu catio nal i nst i t utio ns onl y. An Al lo tm ent Let t er was iss ue d to the assesse e by the G M AD A. It ha s m a de a ll pay m ents t hr o ug h Acc o unt Payee C heq ue s a nd d et ai l s o f such p aym ent s have be en give n by t he a sses se e in it s r eply t o the l d . C IT( E). A cop y of such rep ly is ava ila b le on page No . 10 3. The assess e e di d not constr uct the scho ol o n this sit e fo r tw o reaso ns ;
a) A l iq uor shop w as o pe ned adjac ent to the s i te.
b) Over a perio d o f tim e and af ter l ook ing in t he grow th of schoo l chi ldr en, i t w as f elt that t his s it e is not suf fi cien t fo r est ablis hi ng an ed uc at ional in s t it uti o n.
1 0.3 We d o n ot f ind a ny r eason as to why ld. CI T (E) has r ai sed sus picio ns i n the t r a nsact io n of the ass esse e w he n it has b ee n dem o n str at ed that fro m last 20 year s , i t has b ee n ITA No.609/CHD/2026 A.Y.2027-28 22 enjo yi n g st at us of a 'Char it able I ns tit u tio n' and d ul y r eco gn i zed b y t he D epa r tm ent . I t is ru n nin g a school, th us, eve n if t he a ssessee has s ol d th is site and acqu ir ed a fr esh sit e w hich i s b i gger i n s iz e, t h en not hing to b e imp ut ed qu a gen u ine n ess o f t he acti vit i e s o f the as s ess ee. 1 1. The seco nd ci rc umst an ce highl i ght ed b y the ld . CI T (E ) is wi t h r e ga rd to pur chase o f a sit e at Aer o C ity. Q ua thi s sit e, it wa s s ub m itted b y the asses se e t hat at t he ti me of p urch as e of this si te, th e Flo o r Index Rat io f or dev e lopm ent w as 3 :1 , ho wever, it was reduced t o 2: 1. This s ite was a cq uir e d f r om Chah at E nt e r p rises an d w hen l it i gation star ted am ong st t he p arti es, it t r avelle d t o the Hon'bl e Hi gh C o urt a nd t he Hon'bl e Hig h C o ur t h as gr anted t he status - q uo . I nstead of carryi ng on the l iti gati on, ass ess e e p ersu ad ed t he vendor to cance l the t r a nsact i on and r epa ym ent of the advance s gi ven by it. T he ven dor has gi ve n the m o ney ba ck t o the assesse e al ong wi t h comp ensator y int er est. We f ai l t o under s ta nd w hat is w rong w it h th is d ecisio n of the assessee wher e so m e su s pi cion can be im p ut ed. The ld . CI T (E ) has unr easo nabl y r aised doubt s a bo ut t he d ecision o f t he as s es see w hi c h was cond uc iv e i n a chi eve m ent of i ts o bj ect i ve s.
ITA No.609/CHD/2026
A.Y.2027-28 23 1 2. The next reason as sig ne d by t he ld. C IT(E) is re gar d ing ed u ca tio na l sit e N o. 2 and e ducat ion al sit e No. 3 . T he a sses se e f ir st t ho ught o f p ur chas in g b ot h but lat er on cance ll ed on e a nd p ur chas ed s i t e N o .2 . B ut ld . C IT (E) has un n ec essar i ly m ade ref er ence to it on w hic h s ite N o. 3 wa s a gre ed t o b e purch as ed and c anc elle d wi thout c onstru ing thes e tra nsact i o ns i n rig ht p er s pect i ve. The ld. C I T (E) has ju st r a ised sus picio n and lef t those s us p ic i ons wi t ho ut co ncl us i o n, r a ther dr ew ad ver se infe r e nce w it hout any bas i s. T he as ses se e ha s duly explaine d all t hes e f iv e t rans act io ns that u nd er w hat circum stan ces, it has t o c hange d eci sion f or a cq uir i n g a f r esh site. Mon ey r ece ived has d ul y b ee n inv est ed i n t he fr esh site . In t he sc r uti ny as s essm e nt f or a sses sm ent year 20 23 -24 , the A O has du l y co ns id ere d thes e tr an sa ct io ns a nd di d n ot find any ir r egular i ty in it . He a ccep t ed th em . Ho w th e l d. CI T (E ) cou ld r eapp r e ciat e t hos e tr an sa ct io ns in a sum m ary m anner and r aise susp ic ions a bo ut the a ct ivit ies o f the asse ss ee wh ich i s not di sc er nabl e. 1 2.1 It is obser ved that Sect ion 2 (1 5) of t he I nco m e T ax Act pr ov id es d efi nit ion o f ex pr ess io n 'Chari tab le P ur po se'. T his Secti o n cont em pl at es t hat 'Char ita bl e P urp ose' w il l inc l u de rel ief t o th e p o or , edu catio n, yo ga, m edica l reli e f, ITA No.609/CHD/2026 A.Y.2027-28 24 p reser vation of envi ronm ent in clud i ng wat er shed s, for e sts, w il d lif e a nd pr eser vat ion o f monume nts or pl ace or object s o f artis tic o r holi st ic in tere st and the ad vance m e nt of any o ther o bject o f gen eral pub l ic uti lit y. Th us, the d efi nit ion co ntem p la tes t w o f o ld of acti vit ies :
a) Act i viti es w h ich ar e per -s e char it ab le
b) Th e a dvancem e nt o f any o the r ob ject of ge ner a l pub li c util it y.
1 2.2 Sin ce t he asse ssee i s im part ing ed ucatio n thr o ugh it s sch oo ls , th us i ts acti vit i es fa ll w i thin t he f ir st f old of d efi n iti o n w hi ch is 'per -se c har itable '. T he ld . CI T (E ) ha s no t m ade any c omm ent abo u t t he acti vit i e s of the ass ess ee, w hether it is engag ed i n pr o vi ding ed u cat ion or not. The o ther r equir em e nt f or r enew al o f the lic enc e is whe t her a sses se e h as vi olated an y all ied law s. The ld . C IT(E) ha s not co m mente d on that also. Her ob je ctio n w as since the a sses se e ha s under taken fe w tr ansact ion s f or p ur chase of lan d f o r scho ol sites, but ult i m ately d id not deve l op them a ctual ly, r ath er gone f or alter nativ e wo u ld suggest that it s a ctiv it i es a r e no t gen ui ne.
ITA No.609/CHD/2026
A.Y.2027-28 25 1 2.3 To our m ind , the f i ndin g of t h e ld. CI T (E) is not i n co nso n an ce w it h t he cir cum sta nce s and f acts p rod uced b y the a ssessee. Th e ld. CI T (E ) has o nl y ex pr ess ed her a pp re hensio n abo ut th ese tr ansact io ns w it hout conc l us i ve l y ho ldi ng t h at such a st and was f act ual ly incorr e ct at the end o f the a ssesse e. T her ef o r e, we are o f the vie w that or de r of ld. C IT (E) is no t sust ai nab le. We s et asi d e this or de r and a ll o w th i s ap peal. Th e ld . CI T (E) is dir ect ed t o is sue re newa l cer t ificat e t o the assess e e u/ s 12A( 1) (ac) (i i) of t he I ncome T ax Act a s p er the pr oced ur e .
1 3. In t h e r esul t, appe al i s allo we d.
Or der p r onoun ced o n 04. 05 .202 6.
Sd/- Sd/-
(KRINWANT SAHAY) (RAJPAL YADAV)
ACCOUNTANT MEMBER VICE PRESIDENT
"Poonam"
आदेश क ितिलिप अ ेिषत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु / CIT
4. िवभागीय ितिनिध, आयकर अपीलीय आिधकरण, च डीगढ़/ DR, ITAT, CHANDIGARH
5. गाड फाईल/ Guard File सहायक पंजीकार/ Assistant Registrar