IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K, JUDICIAL MEMBER Assessment Year: 2021-22 Centre for E-Governance, Vs. The Dy. Commissioner of Room No.108, 1^st Floor, 2^nd Gate, Income Tax Exemption, Multi Storeyed Building, Circle – 1, Bangalore – 560 001. Bangalore.

PAN – AAAAC 4156 C APPELLANT RESPONDENT Assessee by : Shri S Parthasarthi, Advocate Revenue by : Shri Shivanand H Kalakeri, CIT (DR)

Date of hearing : 18.12.2025 Date of Pronouncement : 31.12.2025

O R D E R

PER WASEEM AHMED, ACCOUNTANT MEMBER:

This is an appeal filed by the assessee against the order of the NFAC, Delhi vide order dated 13/02/2025 in DIN No. ITBA/NFAC/S/250/2024-

25/1073253398(1) for the assessment year 2021-22.

2. The assessee has raised as many as 17 Grounds of appeal which are interconnected to each other. Therefore, we, for the sake of brevity and convenience, are not inclined to reproduce the same here.

3. The interconnected issue raised by the assessee is that the ld. CIT-A erred in denying the exemption claimed under section 11 of the Act as well as not treating the assessee state body under article 289 of the Constitution.

4. The facts in brief are that the assessee is registered as a society which was established by the Government of Karnataka under e- governance secretariat. The assessee is also registered under section 12A of the Act as charitable organisation under the limb of advancement of any other object of general-public utility. The assessee is engaged in inviting Tenders for various Government organisations projects. The assessee is functioning as nodal agency for e-governance project. It receives tender processing fee, e-auction processing fee, supplier registration fee etc from the participant in the Tenders of Government projects. It also receives earnest money deposit (EMD) from the participants in the tender for all government projects and refund the same as and when directed by the respective government organisations. The EMD collected are deposited with the bank on which the assessee earns bank interest.

5. In the return of income filed for the year under consideration, the assessee has declared total income at NIL after claiming exemption under section 11(1)(a) and 11(2) of the Act for Rs. 20,39,64,223/- and Rs. 116,20,04,892/- respectively. The case of the assessee was selected for scrutiny assessment.

6. The assessee during the assessment proceedings submitted that the Karnataka Government had set up various government organizations and departments to handle tender-related and other IT projects. Under the Mahiti Scheme announced by the Karnataka Government around the year 2000, the State encouraged departments to call for tenders in a more transparent manner. However, several government departments were not permitted to call for tenders directly. They required a separate organization to coordinate these activities. Therefore, the society in question was formed as nothing but a government-supported body to take up these functions.

6.1 It was explained that the Government appointed the Chief Secretary as the head and Secretary of all government departments concerned. Since the Government itself cannot undertake implementation work directly, a separate organization was required. This resulted in the formation of a centre for e-Governance under the Societies Registration Act. The centre was intended to act as an implementing agency for e-Governance, knee-cap projects and other Government projects.

6.2 The assessee further submitted that the interest earned on fixed deposits was also subject to Government directions. As per the order of the Government of Karnataka, the interest portion was required to be utilized only for the purpose of the Government projects. The interest amount could not be used for any other activity, nor could it be transferred elsewhere. Since the grants allocated for the projects were reduced by the Government, the interest portion was