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  • The present income tax appeal is filed under Section 260-A of Income Tax Act, 1961.
  • The appeal is preferred against the order dated 06.04.2018 passed by Income Tax Appellate Tribunal (ITAT).
  • The assesse is a charitable trust registered under Section 12A of the Income Tax Act, 1961. It has obtained approval under Sections 11 and 12 of the Act.
  • For the assessment year 2012-13, assessee filed returns of income declaring Income as nil.
  • The case was put under scrutiny and notices were issued.
  • On 30.03.2015, AO passed the order holding that income from other sources as income of the trust. The ITAT, by impugned order reversed the order and held that assessee is entitled for exemptions.


  • The learned counsel of the appellant submitted that the assessee has collected a sum of Rs.27,23,55,000/ as donation in violation of the Karnataka Educational Institutions (Prohibition of Capitation Fee) Act, 1984. Therefore assessee is not entitled for exemption as the same shall also amount to violation of section 11 and 12 of the Income Tax Act.
  • The learned counsel of the respondent placed reliance on the case of Kammavari Sangham Vs. Deputy Director of Income-tax (Exemptions), 2023 where this court has taken a view that as long as exemption certificate is in force, the Income Tax authorities are bound by the same.


  • The court dismissed the appeal.
  • Court held that the department had issued exemption certificate and the AO on an incorrect assumption has 
  • treated the money collected by the assessee as capitation fee under the KEI(Prohibition of Capitation Fee) Act.
  • The court placed reliance on the case of Kammavari Sangham AMD held that as long as exemption certificate is in force, assessee is entitled for its benefit.
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