IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER Assessment Year: 2021-22 The Asst. Commissioner of Income Tax Vs. Cosmopolis Educational Trust, (Exemptions), No.101, 2^nd Main, Circle – 1, West of Chord Road, Bengaluru. 2^nd Stage, Bengaluru – 560 086.

.PAN – AACTC 5342 H APPELLANT RESPONDENT Assessee by : Shri Madhusudhan UA, Advocate Revenue by : Shri Shivanand H Kalakeri, CIT Date of hearing : 06.10.2025 Date of Pronouncement : 18.12.2025

O R D E R

PER WASEEM AHMED, ACCOUNTANT MEMBER:

This is an appeal filed by the Revenue against the order passed by the NFAC, Delhi vide order dated 09/06/2023 in DIN No. ITBA/NFAC/

S/250/2023-24/1053627409(1) for the assessment year 2021-22.

2.. The Ground No. 1 of the revenue appeal is general and does not require any separate adjudication. Hence the same is being dismissed as infructuous.

3. The Ground No. 2 to 5 are interconnected and issue raised by the Revenue therein is that the learned CIT(A) erred in not treating the amount of Rs. 50,60,49,193/- and Rs. 20,22,96,029/- respectively as income derived from property held under trust which has not been applied toward the object.

4. The facts in brief are that the assessee (Cosmopolis Educational) is a trust came into existence as on 24^th May 2019 with the object of imparting education and started a school known as The Cambridge International School (hereafter TCIS). The year under consideration is the second year of its operation.

5. During the year under consideration, a kindred trust namely M/s Cosmopolitan Education Trust (hereafter M/s CET) which was running 2 educational institutions namely The Cambridge Public School -HSR and Embassy Public School -Magadi (hereafter- EPS) decided to help out the assessee trust. M/s CET vide transfer agreement dated 4^th February 2021 transferred its running school namely EPS- Magadi to the assessee trust w.e.f. 1^st February 2021 for a consideration of Rs. 5,32,35,693/- only. Furthermore, M/s CET transferred a sum of Rs. 47,17,52,440/- to the assessee trust on 4^th February 2021. The assessee Trust out of impugned receipt of Rs. 47,17,52,440/- repaid back an amount of Rs. 5,32,35,693/- to M/s CET against the purchase consideration of school EPS and remaining amount of Rs. 41,85,16,746/- was transferred or credited to corpus/capital found account.

6. In addition to the above, the assessee trust has received inter- trust funds of Rs. 20,22,96,029/- throughout the year from the schools run by M/s CET for construction its school building and other development works. As the assessee has no money to repay, it requested M/s CET to convert the same into donation. M/s CET agreed to the assessee request and converted the outstanding balances into donation. Accordingly, the assessee transferred the outstanding liability on account of construction of building to the corpus/capital fund account.

7. There assessee trust paid an amount of Rs. 17.1 crores from the corpus/capital fund to M/s New Cosmo Education Society as donation. The corpus/capital fund account included following amount and year end balance:

- Opening balance as on 1^st April 2020 Rs.

19,38,639/-

(6000 donation + 19,32,639 income over expenditure)

- EPS Capital balance as 1^st February 2021 Rs. 4,84,24,383/- - Income over expenses for the year Rs. 58,79,395/-

- Donation from M/s CET Rs.

41,85,16,746/-

- Inter Trust Fund converted to donation Rs.

20,22,96,029/-

Total Rs.

67,70,55,192/-

- Less: donation paid to New Cosmo Education Rs.

17,10,00,000/-

Closing balance Rs.

50,60,55,192/-

In the return filed for the year under consideration, the assessee has declared Nil income after claiming exemption under section 11 of the Act on account of following receipts:

(i) Receipt from main object Rs. 4,16,56,385/-

(ii) Interest income Rs. 2,38,786/-

(iii) Corpus Donation Rs. 50,60,49,193/-

8. The return of the assessee was selected for scrutiny under the CASS on account of large corpus donation. Durin