Yashaswi Academy for Skills Vs PCIT (ITAT Pune)
Pune ITAT Restores U/s 12AA/12AB Registration – Skill Development Institution Held to be Engaged in ‘Education’ Despite Serious Allegations
The Pune ITAT partly allowed the assessee’s appeal by setting aside the Principal CIT (Central)’s order cancelling registration under Sections 12AA and 12AB of the Income-tax Act, 1961 and directing restoration of the registrations. The Revenue had cancelled the registration following a survey alleging sham transactions, diversion of charitable funds to trustees and related parties, commercial manpower supply, hotel and restaurant operations, unreasonable salaries, loans to related concerns, and that the assessee functioned merely as a facilitator under apprenticeship schemes rather than carrying out charitable educational activities. The Tribunal first upheld the jurisdiction of the Pr. CIT (Central) to exercise cancellation powers after transfer of jurisdiction under Section 127, relying on CBDT Notification No. 70/2014 and the CBDT clarification dated 19.01.2024. However, on merits, it held that the assessee’s dominant activity was imparting education through structured skill development and apprenticeship programmes, which falls within “education” under Section 2(15). It further held that acting as a facilitator in Government-recognised skill development programmes and receiving administrative fees did not convert the institution into a commercial enterprise. Accordingly, the Tribunal held that cancellation under Sections 12AA(3), 12AA(4) and 12AB(4) was not justified and restored the registrations.
The Pune ITAT has set aside the order of the Principal CIT (Central) cancelling the registration granted to Yashaswi Academy for Skills under sections 12AA and 12AB, holding that the cancellation was not legally sustainable on the facts of the case.
The Revenue had cancelled the registration after a survey, alleging that the assessee had indulged in sham transactions, diverted charitable funds for the benefit of trustees and related parties, provided manpower on a commercial basis, operated hotels and restaurants, paid unreasonable salaries, advanced loans to related concerns, and acted merely as a facilitator under apprenticeship schemes rather than carrying out charitable educational activities.
The Tribunal first upheld the jurisdiction of the Pr. CIT (Central) to exercise powers of cancellation after transfer of jurisdiction under section 127, distinguishing earlier Tribunal decisions on the basis of CBDT Notification No. 70/2014 and the CBDT clarification dated 19.01.2024.
However, on merits, the Tribunal held that the dominant activity of the assessee was imparting education through structured skill development and apprenticeship programmes, which squarely falls within the expression “education” under section 2(15). Merely acting as a facilitator in Government-recognised skill development programmes or receiving administrative fees from industry partners did not convert the institution into a commercial enterprise. Following the principles laid down by the Supreme Court in Ahmedabad Urban Development Authority, the Tribunal held that the assessee continued to pursue charitable educational objects and was entitled to exemption under sections 11 and 12. It also distinguished the decisions of the Kerala High Court in Mahatma Gandhi Charitable Society and Annadan Trust on facts.
Accordingly, the Tribunal held that the Pr. CIT (Central) was not justified in cancelling the registrations under sections 12AA(3), 12AA(4) and 12AB(4) and directed that the registrations be restored. The assessee’s appeal was partly allowed.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the assessee is directed against the order dated 29.09.2025 passed by the Ld. Pr. CIT-(Central), Pune u/s 12AA(3) & 12AA(4) and 12AB(4) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
