ITAT Chandigarh on Ashoka University: Section 12AB Registration Rejection Set Aside and Matter Remanded

1. Background and Case Overview

Ashoka University Vs CIT came up before the ITAT Chandigarh in two connected appeals arising from separate orders dated 24.03.2026 passed by the Commissioner of Income Tax (Exemptions), Chandigarh (CIT(E)). Both orders dealt with:

  • Rejection of the assessee’s application for renewal/continuation of registration under Section 12AB, and
  • Rejection of its application for approval under Section 80G(5) of the Income Tax Act 1961.

The Tribunal passed a consolidated order disposing of both appeals.

The assessee is a university constituted under the Haryana Private Universities Act, 2006 (HPU Act) and is engaged in imparting higher education. It already held a valid registration under Section 12AB for Assessment Years 2022-23 to 2026-27 and had filed Form No. 10AB seeking renewal/continuation.

During the registration proceedings, the CIT(E) called for extensive material relating to:

  • Activities of the University
  • Audited financials
  • Donations and receipts routed through its sponsoring body, International Foundation for Research and Education (IFRE)
  • Foreign contributions and related compliances
  • Compliance position under the Haryana Private Universities Act, 2006 and the Foreign Contribution (Regulation) Act, 2010 (FCRA)

Based on the material and his interpretation of law, the CIT(E) rejected the Section 12AB and Section 80G(5) applications. The assessee carried both matters in appeal before ITAT Chandigarh.

2. Key Grounds on Which CIT(E) Rejected the Application

The order of the CIT(E) rested broadly on the following pillars:

  1. Alleged breaches of the HPU Act

    • The sponsoring body, IFRE, was collecting and retaining donations that, according to CIT(E), ought to have been channelled directly through the University.
    • This was treated as violative of the scheme of the HPU Act.

  2. Alleged loss of independent character of the University

    • CIT(E) inferred that IFRE exercised pervasive financial and operational control over the University.
    • On that basis, he concluded the University had lost its independent institutional character.

  3. Alleged FCRA violations

    • Foreign contributions were received by IFRE in relation to the “Ashoka University Project” while the University itself did not possess an FCRA registration.
    • CIT(E) treated this as indicative of contravention of the FCRA framework.

  4. Perceived discrepancies in financial statements and fund flows

    • Mismatches and non-reconciled figures between the books of the University and IFRE.
    • Alleged non-recognition of income at the stage of receipt either by IFRE or the University.

  5. Observations amounting to cancellation of existing registration

    • While dealing with renewal, CIT(E) recorded that the earlier Section 12AB registration effectively stood cancelled/superseded on account of the present rejection.

These findings led to the denial of renewal under Section 12AB and consequent refusal of approval under Section 80G(5).

3. Assessee’s Submissions Before the Tribunal

3.1 Scope of Enquiry Under Section 12AB

The assessee argued that the enquiry under Section 12AB(1)(b) is confined to:

  • Whether the objects are charitable, and
  • Whether the activities are genuine, and
  • Whether there is compliance with laws that are material to achieving those objects.

On facts, it was emphasised that:

  • The assessee exists solely for education, a recognised charitable purpose.
  • There was no allegation that its teaching, research, campus operations or academic activities were sham, bogus, or non-genuine.

3.2 Role of Sponsoring Body Under the HPU Act

The assessee placed the Haryana Private Universities Act, 2006 on record and took the Tribunal through several key provisions, including section 2(v), sections 3, 4, 5, 6, 7, 8, 11, 12, 13, 16, 17, 22, 23 etc., to demonstrate that:

  • The University is a statutory entity created under the HPU Act.
  • The sponsoring body’s role is expressly built into the statutory framework:
    • The Chancellor is appointed by the sponsoring body with the Visitor’s approval.
    • The Chancellor appoints the Vice-Chancellor and wields substantial administrative powers.
  • The Governing Body under section 22 includes:
    • Chancellor
    • Vice-Chancellor
    • Five nominees of the sponsoring body
    • Subject experts
    • A representative of the State Government

This Governing Body is statutorily declared to be the supreme authority of the University.