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Judgment
PER S. RIFAUR RAHMAN, AM :
The assessee has filed appeals against the order of the Learned Commissioner of Income-tax (Exemptions) [“Ld. CIT(E)”, for short] dated 16.03.2026 under section 12AB (1)(ac)(ii) and 80G of the Income-tax Act, 1961 (for short ‘the Act’).
Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. We take up the assessee’s appeal being ITA No.5513/Del/2026 as lead case to adjudicate the issues under consideration raising following grounds of appeal :-
“1.On the facts and circumstances of the case, the order passed by the Learned Commissioner of Income Tax (Exemptions), {"CIT(E)"} rejecting the application filed for registration under section 12A(1)(ac)(ii) of the Income Tax Act, 1961 ("Act") is bad both in the eye of law and on facts.
2.On the facts and circumstances of the case, the order passed by learned CIT(E) is invalid and illegal as the same has been passed in violation of the statutory conditions prescribed under the Income Tax Act.
3.On the facts and circumstances of the case, the learned CIT(E) has been erred both on facts and in law in rejecting the application of the assessee for approval under section 12A(1)(ac)(ii) of the Act, despite the fact assessee has fulfilled all the conditions as provided under the Act and hence, eligible for registration.
4.On the facts and in the circumstances of the case, the learned CIT(E) has erred in rejecting the application for registration under section 12A(1)(ac)(ii) of the Act, despite the fact that there is no adverse finding regarding the aims, objects and genuineness of activities of the trust and hence application for registration cannot be rejected.
5.(i) On the facts and in the circumstances of the case, the learned CIT(E) has erred in rejecting the application without bringing on record any material to show that the objects of the assessee trust are non-charitable or that the activities carried out are not genuine.
(ii)That the rejection of registration is based largely on presumptions and considerations which are beyond the scope of section 12AB of the Act.
6.On the facts and in the circumstances of the case, the learned CIT(E) has erred both on facts and in law in rejecting the application filed by the assessee by ignoring the settled judicial position that the scope of enquiry at. the stage of granting registration is confined only to examining the objects of the trust and the genuineness of its activities, and therefore the action of the learned CIT(E) is illegal, invalid, without jurisdiction and contrary to the judicial precedents in this regard.”
At the time of hearing, it is brought to our notice that assessee has filed an application dated 27.09.2025 in Form 10AB for registration under section 12A(1)(ac)(ii) of the Income-tax Act, 1961 (for short ‘the Act’). The assessee has supplied various details/documents/clarifications based on the questionnaire issued to them on 29.12.2025. After considering the same, ld. CIT (E) observed that assessee has shown income from ‘Fees from Rendering Services’. When the assessee was asked to substantiate the same, assessee vide reply dated 05.03.2026 submitted that the main objects of the society are to conduct various vocational courses like Diploma in Information Technology, Certificate in Advance Computer Software, Certificate in Advance Financial Accounts, Certificate in Advance Desktop, Publishing and English Speaking courses etc. They have provided these courses and have collected fees from students. Further, they submitted that they are only doing educational courses and not providing any commercial services. After considering the above submissions, ld. CIT (A) observed that assessee itself has accepted that it is receiving fees from the students. It failed to provide any affiliation/ reorganization certificate issued by the Education Department/CBSE/ MCD/University/any other registered education institution etc. Further by relying on the decision of Hon’ble Supreme Court in the case of Sole Trustee, Loka Shikshana Trust vs. CIT (1975) 101 ITR 234, decision of Hon’ble Patna High Court in the case of Bihar Institute of Mining & Mine Surveying vs. CIT (1994) 208 ITR 608 and decision of Hon’ble Delhi High Court in the case of Delhi Music Society, he observed that there should be a process of training and developing knowledge, skill, mind and character of the students by normal schooling. Therefore, the test for education being formal schooling was not proved by the assessee. He observed that assessee is not approved educational institution for specific educational degree as per limbs of section 2(15) of the Act wherein it is stated that educational institution is exempted from tax u/s 11 and 12 of the Act. However, it is necessary that such institution is approved by the State Government or Central Government Board. Accordingly, he came to the conclusion that assessee is carrying a commercial activity as it is charging fees from students for training. With the above observation, he rejected the application filed by the assessee.
On the similar grounds, the application filed by the assessee for registration u/s 80G(5) of the Act was also rejected.
Aggrieved with the above order, assessee is in appeal before us.
At the time of hearing, ld. AR submitted as under :-
“The present appeal has been preferred by the assessee against the order dated 16.03.2026 passed by the Learned Commissioner of Income Tax (Exemption) cancelling the registration u/s 12A(1 )(ac)(ii) of the Income Tax Act, 1961 (,the Act').
1.The assessee is a society established 'on 17.07.2008 under the Societies Registration Act, 1860, carrying the primary object of conducting vocational courses for computer education and skill development. Copy of certificate placed at PB Page 27
2.The assessee was earlier granted registration u/s 12AA (PB Pg. 81), subsequently continued under the amended provisions, valid from AY 2022-23 to AY 2026-27 (PB Pg. 76-78).
3.Thereafter, assessee filed Form 10AB seeking fresh registration u/s 12A(1)(ac)(ii) of the Act.
4.The CIT(E) issued a notice dated 29.12.2025 calling for certain details and documents.
5.In response to the same, assessee vide reply dated 14.01.2026 (PB Pg 41-42) submitted the various documents as required by the CIT(E) namely
a)Memorandum and Rules & Regulations of Society placed at PB Page 43-52
b)Certificate of Registration of Society PB Page 53
c)Audited Financial Statements for the following FYs: PB Page 54-74
I. FY 2022-23 (A Y 2023-24)
II. FY 2023-24 (A Y 2024-25)
III. FY 2024-25 (A Y 2025-26)
d)Note on Charitable Activities PB Page 75
e)12A- Registration Certificate in Form 10AC for AY 2022-23 to AY 2026-27 PB Page 76-78
f)BOG- Registration Certificate in Form 10AC for AY 2022-23 to AY 2026-27 PB Page 79-80
g)Registration u/s 12A PB Page 81
h)Registration u/s 80G PB Page 82
Memorandum, Certificate of Registration, Audited Financials, Earlier registrations etc.
6.Subsequently, assessee further filed a reply dated 05.03.2026 PB Page 85-86 explaining that its main objects are to conduct vocational courses, namely Diploma in Information Technology, Certificate in Advance Computer Software, Certificate in Advance Financial Accounts, Certificate in Advance Desktop Publishing and English speaking courses.
7.Thereafter, CIT(E) by order dated 16.03.2026 passed in Form No. 10AD rejected the application for registration, holding that the assessee is not affiliated to / recognized by the education department.
8.Aggrieved by the said rejection order, the assessee preferred the present appeal before your Honours, on the grounds, inter alia, that the said rejection is contrary to the law.
9.It is most respectfully submitted that the case of the assessee covered by the judgment of Hon'ble Delhi High Court passed in the case of - Delhi Music Society v. Director General of Income Tax, 2011 (12) TMI 124 (Delhi He). The relevant findings of the above Delhi HC judgement are as under:
"10.We may refer to the judgment of the Calcutta High Court in CIT vs. Doon Foundation (1985) 154 ITR208 (Cal). Interpreting the provisions of Section 10(22) of the Act, the High Court observed as under:- 'We are also unable to accept the contention of Mr. Maitra that an educational institution to be eligible for exemption under Section 10(22) should be affiliated to any university or any board. Section 10(22) does not impose such a condition. So long as the income is derived from an educational institution existing solely for educational purposes and not for purposes of profit. such income is entitled to exemption under Section 10(221, whether or not such educational institution is affiliated to any university or college or board. If the contention of the Revenue is accepted, then many of the societies running institutions solely for imparting education would not get the benefit of Section 10(22). Education as envisaged in Section 10(22) may be imparted in a school or college or institution which may or may not be affiliated to or recognized by a university or board."
This judgment takes care of the objection of the prescribed authority that the petitioner is not affiliated to or recognized by any university or board in India and that it merely awards certificates or grades which are issued by the Trinity College and Royal School of Music, London. Since Section 10 (23C)(vi) also uses the same language as Section 10(22), the same principle should govern the interpretation of that provision also."
10.The Hon'ble High Court specifically observed that recognition or affiliation is not a mandatory condition under the Act and that an institution may still qualify as an educational institution.
11.The facts of the present case stand on a much stronger footing. The assessee is admittedly engaged in conducting vocational and skill development courses. The details of courses conducted, fees received from students and charitable activities undertaken have been furnished before the learned CIT (E) placed at PB Page 87-130.
12.Applying this very ratio, the assessee herein runs systematic, structured vocational courses with regular classes and fee-based enrolment for skill development of students, activities that fall squarely within the meaning of "education" as judicially explained. The CIT(E), having himself cited the Delhi Music Society judgment, was bound to follow its ratio in the favour of assessee.
CIT(E)'s Objection Regarding Non-Furnishing of Affiliation Certificate is Untenable
13.The sole basis of rejection is that the assessee did not furnish any affiliation/recognition certificate. This objection cannot survive in view of the law laid down in Delhi Music Society (supra),which holds that an institution need not be affiliated to a university, board or college to qualify as an "educational institution"; so long as it exists for imparting systematic instruction, it is entitled to be so treated, whether or not affiliated.
14.The Memorandum of Association itself demonstrates that the dominant object of the society is education and skill development (PB Pg.28-19). The Note on Activities submitted before the department. Therefore, the educational character of the institution is evident not only from its objects but also from the actual activities carried on over the years.
15.In view of the above, it is most respectfully prayed that the impugned order dated 16.03.2026 passed by the CIT(E), Delhi rejecting the application for registration under section 12A(1)(ac)(ii) of the Act is liable to be quashed.”
On the other hand, ld. DR of the Revenue heavily relied on the detailed findings of the ld. CIT (E).
Considered the rival submissions and material placed on record. It is fact on record that assessee is a society established under Societies Registration Act, 1860 carrying the primary object of conducting vocational courses. The assessee was earlier granted registration u/s 12AA and subsequently continued under the amended provisions valid from AYs 2022-23 to 2026-27 by accepting the same aims and objects of the society. Now, ld. CIT (E) rejected the application filed by the assessee for the reasons that assessee was not having affiliation or recognition certificate from State Government or Central Government Board and further observed that the case of the assessee does not fall under normal schooling for imparting the education by relying on the decision of Sole Trustee, Loka Shikshana Trust (supra) and other related cases. Ld. CIT (E) came up with the observation that the imparting of education by the assessee are not fulfilled as per the definition given at section 2(15) of the Act overlooking the fact that on the similar aims and objects, the assessee was granted registration earlier. Ld. CIT (E) is relying on the decisions from (1975) 101 ITR 234 (supra) and other decisions wherein it was insisted that there should be an element of normal schooling and formal education was insisted upon. The education system has undergone substantial changes over the years, particularly after Covid pandemic. Further we observed that the basic reason for rejection of the application is that the assessee did not furnish any affiliation/recognition certificate from State or Central Board. However, we observed that Hon’ble Delhi High Court in the case of Delhi Music Society (supra) had given categorical finding that, so long as income is derived from an educational institution existing solely for educational purposes and not for profit, such income is entitled to exempt u/s 10(22) since section 10(22) is mirror of section 11 of the Act and as held in the above decision that an institution need not be affiliated to any University, Board or College to qualify as an educational institution, so long as it exists for imparting systematic instruction it is entitled to be so treated whether or not affiliated. Further we observed that ld. CIT (E) has not brought on record any reason to establish that assessee is solely exists for the purpose of making profit. Therefore, the ld. CIT (E) has rejected the application without proper application of mind. Therefore, we are inclined to remit this issue back to the file of ld. CIT (E) to appreciate the relevant facts on record and grant the registration as per law.
In the result, the appeal being ITA No.5513/Del/2026 filed by the assessee is allowed for statistical purposes.
Similarly, the registration u/s 80G was also rejected on the same ground. The assessee is in appeal before us by filing separate appeal vide ITA No.5512/Del/2026. We remit this issue also back to the file of ld. CIT (E) in the interest of justice. Both the issues under consideration may be decided as per law.
In the result, both the appeals filed by the assessee are allowed for statistical purposes.