Jamna Devi Shikshan Sansthan Vs CIT (Exemption) (ITAT Jaipur)
Enhanced Rent to Specified Persons Cannot, on Mere Assumption, Justify Denial of Section 12AB Registration: Jaipur ITAT
Jamna Devi Shikshan Sansthan, which runs an English-medium senior secondary school, was denied registration by the CIT(E) on the ground that the monthly rent paid to specified persons had increased from ₹70,000 to ₹1,00,000, allegedly attracting Sections 13(1)(c) and 13(3).
The Jaipur ITAT observed that the rent was enhanced after the construction and inclusion of the first and second floors, for which an amended lease deed had been executed. The society had furnished the lease documents, resolutions, area particulars, rent accounts and evidence of TDS deduction. The CIT(E), however, rejected the application without properly examining these materials or the additional area made available to the society.
Since the charitable objects and educational activities of the society were never disputed, the Tribunal held that benefit to specified persons could not be presumed merely from the increase in rent. Section 13(1)(c) could not be invoked on assumptions, without examining the complete facts and evidence. The CIT(E)’s order was set aside and registration sought through Form 10AB was directed to be granted.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
Appellant- Jamna Devi Shikshan Sansthan by moving an appeal sought to set aside the impugned order passed by Commissioner of Income Tax (Exemption), Jaipur (hereinafter referred to as the ‘CIT(E)’] on the grounds inter-alia that:-
“1. That order of Learned Assessing Authority is bad in law, illegal and against facts and circumstances of the case.
2. That the object & Funds received and utilized are not in dispute but the Application rejected on Sole ground that the Benefit to specified ITA No: 1384/JPR/2025 persons u/s 13(3) ie Rent paid to Shri Meer Singh & Smt Kamlesh Choudhary inspite of the Humble Appellant have submitted the Copy of Lease Deed, Copy of Amended Lease Deed, Resolutions passed by Society for increase of Rent, Ledger Accounts and the Payment is made after deduction of TDS.
3. That the provision of section 13 quoting which the application is rejected. It is humbly submitted that the said section can be pressed into play at the time of assessment of the income for any year and not during the processing or application under section 12A.
4. That the facts were similar while provisional approval of the Application but the Learned CIT (Exemption) rejected the Provisional Registration and Permanent Registration on Dt 29-09-2025 ie while Deciding the Permanent Registration.
5. That order of learned Assessing Authority is based on assumptions and presumptions and against real facts of the case.
6. That the Learned Commissioner of Income Tax Exemption bas grossly eared in Comparing the Rental Value in nearby Location.
7. That further submissions in support of appeal shall be made at the time of hearing.
8. That appellant craves leave to add, amend or alter all or any grounds of appeal before or at the time of hearing.”
2. Briefly stated, facts necessary for adjudication of the issues at hand are: Appellant trust being registered under society Act to promote education and school namely “Jamna Vidyapeeth” and running a co-education English Medium Senior Secondary School. Appellant’s income is from fee chargeable from the students, interest of IT refund, interest on funds available in bank, RTE fees received and sponsorship as such engaged in only education activities. Ld. CIT(E) rejected the exemption by invoking provisions contained under section 13(3) of the Act.
3. We have heard Ld. ARs for the appellant and Ld. DR for the Revenue and perused the record available on file.
4. Undisputedly appellant society is running a Co-educational English Medium Senior Secondary School in a rented premises. Ld. CIT(E) after noticing from the documents relied upon by the appellant that the appellant has paid a rent @ Rs. 70,000/- per month during financial year 2022-23 which was enhanced to Rs. 1,00,000/- per month during financial year 2023-24 has not accepted the reasons given by the appellant society for enhancement of the rent and proceeded to deny the registration by invoking provisions contained under section 13(3) of the Act.
5. Bare perusal of the reply filed by appellant society, before Ld. CIT(E) categorically goes to show that earlier society was paying rent for basement and ground floor, thereafter first floor and second floor building was constructed on the existing structure and amended lease deed was executed between the parties.
6. Merely because of the fact that rent has been enhanced from Rs. 70,000/- per month to Rs. 1,00,000/- per month does not disentitle the appellant society for registration without examining the amended lease deed and without examining additional construction of first floor and second floor by the society. Ld. CIT(E) has not questioned the aims and object of the trust. The appellant trust has brought on record the complete details of area in square meter and rent thereof. So there is no reason on record assume that benefit was passed under section 13(1)(c) of the Act under the garb of enhanced rent.
7. Keeping in view what has been discussed above and the fact that aims and object of the appellant trust has never been disputed by the AO, merely on the basis of assumption, that too without examining the record and complete facts available on record, provisions contained under section 13(1)(c) of the Act cannot be invoked to deny the registration. So we hereby set aside the impugned order passed by Ld. CIT(E) and accordingly registration applied for by the appellant trust by virtue of his application in Form 10AB is order to be granted.
8. In the result, the appeal filed by the appellant trust is accordingly allowed.
Order pronounced in the open court on 10-08-2026
