IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “B” BENCH: HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER Assessment Year 2012-2013 The DCIT, M/s. Sri Chaitanya Central Circle-3(1), vs. Educational Committee, Hyderabad - 500 004. VIJAYAWADA – 521 137.

PAN AACTS2953C (Appellant) (Respondent)

For Revenue : MS. M. Narmada, CIT-DR For Assessee : Shri AV Raghuram, Advocate Date of Hearing : 24.03.2025 Date of Pronouncement : 06.05.2025 ORDER PER MANJUNATHA G. :

This appeal has been filed by the Revenue against the order dated 28.03.2023 of the learned CIT(A)-11, Hyderabad, relating to the assessment year 2012-2013.

2. The Revenue has raised the following grounds in the instant appeal :

1. “The Ld. CIT(Appeals) erred both in law and on the facts of the case in granting relief to the assessee.

2. In the facts and circumstances of the case, the Ld.

CIT(Appeals) erred in holding that there is not violation of the provisions of section 13(1)(c) r.w.s.13(2)(c), 13(2)(g)

and 13(2)(h) of the Act by the assessee society.

3. In the facts and circumstances of the case, the Ld.

CIT(Appeals) erred in not appreciating that the service agreement entered into between the assessee Society and M/s. Sri Kalyan Chakravorthy Memorial Educational Trust (SKCMET) and the companies M/s. Varsity Education Management Pvt. Ltd. And M/s. Junior Varsity Education Pvt. Ltd. are all sham transactions as M/s. SKCMET is controlled by the same group and that it was clearly a device to benefit the interested persons i.e. the daughters of the members of the assessee society.

4. In the facts and circumstances of the case, the Ld.

CIT(Appeals) erred in not appreciating the fact that the loss/profit incurred by a charitable society enjoying the benefit of Sec. 12 has no relevancy to determine whether the income of the society was used for the benefit of the specified persons u/s. 13(3) of the IT Act, in violation of the provisions of Sec. 13(1)(c), 13(2)(c) and

13(2)(g) of the IT Act.

5. In the facts and circumstances of the case, the Ld.

CIT(Appeals) erred in concluding that the assessee society has not violated the provisions of Sec. 13(1)(c), 13(2)(c) and 13(2)(g) of the IT Act in current assessment year i.e. AY 2012-13 since the said provisions were not invoked by the AO for AY 2013-14 to 2016-17 ignoring that the assessment proceedings were separate and distinct for each year.

6. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary.”

3. Brief facts of the case are that, the assessee- society viz., Sri Chaitanya Educational Committee is registered under the Societies Registration Act and registered with Register of Societies, Machilipatnam, Krishna District in the year 1987 with the predominant object of establishing, running, aiding educational institutions and hostel for them. The society is also registered under section 12A of the Income Tax Act, 1961 [in short “the Act”] vide Order of the Commissioner of Income Tax, Visakhapatnam dated 14.08.1992. The appellant-society is operating 186 colleges/ institutions for imparting education at Intermediate level. Out of the 186 colleges, 80 colleges/institutions were established by the appellant-society and the remaining 106 colleges/ institutions were established by various Societies and Trusts, but, these colleges are being run and managed by the appellant-society. During the year under consideration, there was 2,21,891 students studying in all these colleges/institutions. The appellant-society has filed it’s return of income for the assessment year 2012-13 on

03.09.2013 after claiming exemption under section 11 of the Act. The appellant-society has reported gross receipts of Rs.575,27,14,974/- and application of income for it’s objects at Rs. 575,40,66,365/-.

3.1. The case of the appellant-society was selected for scrutiny and during the course of assessment proceedings, the Assessing Officer noticed that, the appellant-society had entered in