New Horizon English School Vs CIT (ITAT Bangalore)
Summary: The Bangalore ITAT considered the assessee’s appeal against the order dated 30 September 2025 of the CIT(Exemptions), Bangalore, rejecting its Form 10AB application dated 29 March 2025 for registration under section 12AB read with section 12A(1)(ac)(vi)(B) of the Income-tax Act, 1961. The CIT(E) had required documents including approved building plans, building-safety certificates and fire-safety certificates, and had also questioned the trust’s identity based on the supplementary trust deed. Before the Tribunal, the assessee submitted that the school operated from rented premises and produced its trust deed, rental agreement, educational approvals, photographs and a fire-safety certificate issued by the Karnataka Fire and Emergency Services. The assessee also relied on its educational activities, which fall within “education” as a charitable purpose under section 2(15). The Tribunal agreed that fire-safety compliance is a material legal requirement for a school because it concerns the safety of children, teachers and staff, and observed that the post-1 April 2021 registration framework permits examination of compliance with other laws material for achieving the objects of a trust. It also noted that the trust deed and evidence of educational activity required examination. Rather than finally granting registration, the Tribunal directed fresh examination by the CIT(E), requiring the assessee to establish compliance with the Income-tax Act and other material laws, including fire-safety requirements and genuineness of activities, with adequate opportunity of hearing. The appeal was therefore allowed for statistical purposes.
Fire-Safety Compliance Is Material for Section 12AB Registration of a School: Bangalore ITAT Remands Application for Fresh Examination
The assessee, New Horizon English School, applied for registration under Section 12AB by filing Form 10AB. The CIT(Exemptions) rejected the application on the ground that the school had failed to produce the approved building plan, building-safety certificate and valid fire-safety certificate. The CIT(E) also noticed an alleged inconsistency in the trust’s identity because the supplementary trust deed referred to a different name. Consequently, the genuineness of the activities and compliance with other material laws could not be verified.
Before the Tribunal, the assessee explained that the school functioned from rented premises and therefore did not possess the ownership and building-related documents, which were under the landlord’s control. It produced the original trust deed, rental agreement, approval from the State educational authorities, photographs showing that the school was functioning, and a certificate issued by the Karnataka Fire and Emergency Services. It also contended that the supplementary deed merely recorded a change of trustees and did not alter the trust’s legal identity.
The Bangalore ITAT agreed that compliance with fire-safety requirements is a material legal condition for an institution running a school because it directly concerns the safety of children, teachers and staff. In view of the post-1 April 2021 registration framework, the CIT(E) is entitled to examine compliance with other laws that are material for achieving the trust’s objects. The Tribunal observed that serious non-compliance with fire-safety laws cannot ordinarily be viewed leniently or ignored while granting registration.
However, the Tribunal noted that the assessee had produced documents indicating that it was genuinely engaged in educational activities and had taken steps to comply with fire-safety requirements. The trust deed and other supporting evidence also required proper examination. Accordingly, the rejection was set aside and the application was restored to the CIT(E) for fresh consideration.
The assessee was directed to establish compliance with the Income-tax Act and all other material statutory requirements, including fire-safety norms and the genuineness of its activities. The CIT(E) was directed to grant adequate opportunity of hearing and, if satisfied with the compliance and documents, consider granting registration under Section 12AB.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal has been filed by New Horizon English School (the assessee/appellant/trust) against the order passed by the Commissioner of Income Tax (Exemptions), Bangalore (the learned CIT), dated 30 September 2025. By the said order, the learned CIT rejected the assessee’s application in Form No. 10AB dated 29 March 2025 seeking registration under section 12AB read with section 12A(1)(ac) (vi)(B) of the Income-tax Act, 1961 (the Act).
2. The Assessee has raised the following grounds of appeal:
1. That the Learned Commissioner of Income Tax (Exemptions), Bangalore erred in law and on facts in rejecting the appellant’s application for registration under Section 12AB, without properly appreciating the materials, documents, and explanations furnished by the appellant during the course of proceedings.
2. That the Learned Commissioner of Income Tax (Exemptions), Bangalore erred in concluding that the appellant failed to establish the genuineness of its activities, despite the fact that the appellant is engaged solely in running an educational institution and the relevant documents were provided.
3. That the Learned Commissioner of Income Tax (Exemptions) that, the appellant admitted to operate without statutory approvals is erroneous, factually incorrect and contrary to the records, and the order fails to consider the explanations furnished during hearing.
4. That the Learned Commissioner of Income Tax (Exemptions), erred in holding that the appellant did not provide mandatory fire and building safety approvals, whereas the appellant had already furnished the fire- safety compliance report and rental agreements as the school functions from a rented premises.
5. That the Learned Commissioner of Income Tax (Exemptions) failed to appreciate that the appellant had duly submitted all documents and evidences reasonably within its control, and that any documents pertaining to property ownership or structural approvals are required to be furnished by the landlord, not the tenant-institution.
6. That the Learned Commissioner of Income Tax (Exemptions) appellant’s identity based solely on the supplementary trust deed, without appreciating that the supplementary deed merely recorded a change in trustees and did not affect any change in the legal identity, name, or structure of the trust under which the school is operated.
Each of the above grounds is without prejudice to one another, the appellant craves the leave of Hon’ble Income Tax Appellate Tribunal, Bangalore to add, delete, amend or otherwise modify all or any of the grounds of appeal either before or at the time of hearing of this appeal.
3. Briefly stated, the assessee is an educational institution which applied for registration under section 12AB of the Income- tax Act by filing Form No. 10AB on 29 March 2025. During the proceedings, the assessee was granted an opportunity of hearing and submitted that its primary object is education, which is a charitable purpose under section 2(15) of the Act, and that its principal activity is running a school. The assessee was issued a show- cause notice dated 14 September 2025 requiring certain details to be furnished on 22 September 2025, on which date the assessee appeared. The learned CIT observed that running a school involves significant responsibility for the safety and security of students, teachers and staff, and that compliance with local municipal laws, building codes and safety regulations is material to carrying on educational activities in a safe environment. Such compliances, according to him, are not merely procedural but fundamental to the continuous, genuine and lawful conduct of educational activities. He further noted that non- compliance in these areas could expose the institution to closure by the competent authorities, thereby affecting the activities of the trust. The assessee was therefore asked to produce building plans, building safety certificates and fire safety certificates. Since the assessee could not furnish these documents, the learned CIT noted that, with effect from 1 April 2021, section 12AB requires the Commissioner to satisfy himself regarding compliance with requirements under other laws that are material for achieving the objects of the trust or institution. He also referred to the Finance Act, 2022, which underscores the importance of such compliance. Accordingly, he held that, apart from non-compliance with municipal and fire- safety requirements, the assessee had also failed to submit a valid trust deed, which is the foundational document evidencing the legal existence of the entity, its objects, governance structure and the manner in which its income and property are administered. On examining the documents, he found that the supplementary trust deed produced mentioned a name different from that of the entity applying for registration. He therefore held that the genuineness of the assessee’s activities and its compliance with material legal requirements could not be verified, and rejected the application.
4. Aggrieved by the order, the assessee is in appeal before us. The learned authorised representative, Ms. Shreesha N., Chartered Accountant, submitted that the assessee operates from rented premises and, therefore, the approved building plan and related ownership documents were not available with it. She produced the trust deed dated 19 June 1992, under which the assessee- trust was constituted for educational purposes. She also referred to the certificate dated 4 May 2024 issued by the District Fire Officer, Belagavi District, regarding fire – safety compliance, which was valid for one year from the date of issue and required annual renewal. The learned authorised representative further placed on record photographs showing that the school was functioning, a letter dated 30 January 1982 from the Director of Public Instructions, Karnataka, indicating that the institution had been operating for a long period, and the approval granted by the State educational authority. It was also submitted that the assessee had furnished before the learned CIT the rental agreement and the permission granted by the Government of Karnataka for running the school; however, these materials were not considered while rejecting the application.
5. The learned CIT-DR Shri N S Sashidahara vehemently supported the order of the learned CIT (Exemptions). He submitted that a school accommodates children, teachers and staff for long hours, and absence of the prescribed fire- safety compliance would expose them to serious risk. He therefore contended that rejection of the application was justified. Referring to the provisions of the Act, he further submitted that compliance with fire- safety requirements is a material condition for carrying on the activities of the assessee-trust.
6. We have carefully considered the rival submissions and perused the order of the learned CIT (Exemptions). We agree with his finding that, where a school is being run, compliance with fire- safety requirements is a material condition for carrying on its activities. Such compliance concerns the safety of children, teachers, staff, trustees and all others connected with the institution. If the assessee- trust does not comply with the fire- safety requirements prescribed by law, it cannot ordinarily be granted registration, as such non- compliance relates to a material legal requirement for conducting its activities. It was submitted before us that the assessee- trust is now in the process of obtaining the requisite registration and complying with the fire- safety norms. It has also obtained a certificate from the Karnataka Fire and Emergency Services. The certificate itself underscores the importance of compliance, as it requires at least 40% of the staff to be trained in basic firefighting skills. Non-compliance with fire- safety norms, therefore, cannot be viewed leniently. As regards the trust deed, the assessee has furnished a copy before us, which requires examination. The photographs produced before us also indicate that educational activities are being carried on.
7. In view of the above, we are of the opinion that the matter requires fresh examination to verify whether the assessee has complied with the relevant provisions of the Income- tax Act and other material laws, including requirements relating to the genuineness of its activities and fire- safety norms. We therefore direct the assessee to furnish all relevant details before the learned CIT (Exemptions), who shall reconsider the application for registration, keeping in view that the assessee is engaged in educational activities. The burden is on the assessee to demonstrate that it has complied with all material statutory requirements and has not violated any applicable law. The learned CIT (Exemptions) shall examine the application afresh and, if satisfied that it is in order, may grant registration. If any further issues arise, the assessee shall be given adequate opportunity of hearing and of producing the necessary details before the application is disposed of.
8. In the result appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 24th August, 2026.
