Pre-School and Kindergarten Activities Constitute ‘Education’; Registration under Section 12AB Cannot Be Denied on Alleged Section 13 Violations: ITAT

Case: Indian Institute of Model Education Society v. CIT (Exemptions)

ITA Nos.: 1855 & 1856 (Chd.) of 2025

ITAT: Chandigarh

Assessment Year: 2025-26

Date of Order: 15 April 2026

Brief Facts:

• The assessee operated a pre-school/play school under the name Sunshine Meadows catering to young children. The society applied for registration under section 12A read with section 12AB of the Income-tax Act.

• The Commissioner (Exemptions) rejected the application on the ground that the activities of running a play school and kindergarten did not constitute “education” within the meaning of section 2(15). 

• According to the Commissioner, the institution lacked a prescribed syllabus, examination system, formal affiliation and structured curriculum and therefore merely carried on informal childcare and play-based activities.

• The Commissioner also observed that substantial amounts had been transferred to certain members of the society who belonged to the same family and alleged that the funds of the society were being used for personal benefit, resulting in a violation of section 13. 

• On these grounds, registration under section 12AB was denied.

• Aggrieved by the rejection, the assessee preferred an appeal before the ITAT.

Observations:

The Tribunal held that:

• The approach adopted by the Commissioner was unduly narrow and inconsistent with the modern understanding of education. 

• It noted that the assessee was engaged in imparting pre-primary education through a structured play school and kindergarten system, and that the teachers employed possessed recognised Nursery Teacher Training (NTT) qualifications. 

• This itself demonstrated that the activities were organised and systematic rather than informal in nature. 

• The Tribunal further observed that the National Education Policy, 2020 recognises Early Childhood Care and Education (ECCE) as a foundational component of the formal education system. 

• Accordingly, pre-primary education could no longer be viewed as falling outside the scope of “education” under section 2(15). 

• The Tribunal also relied upon judicial precedents which had recognised kindergarten and pre-primary education as qualifying educational activities for charitable purposes. 

• With regard to the alleged violation of section 13, the Tribunal reiterated the settled legal position that at the stage of granting registration under section 12A/12AB, the authority is required only to examine the objects of the institution and the genuineness of its activities. 

• Questions relating to violation of section 13 and denial of exemption are matters to be examined by the Assessing Officer during assessment proceedings and cannot constitute a valid basis for refusing registration. 

• The Tribunal also noted that the assessee had contended that the payments made to related parties represented repayment of advances received earlier, and this aspect had not been properly examined by the Commissioner. 
  

Accordingly, the ITAT held that running a play school and kindergarten is an educational activity and therefore qualifies as a charitable purpose. The Tribunal further clarified that issues relating to the application or misuse of funds cannot be examined while deciding an application for charitable registration and, if relevant, must be considered during the assessment process. Accordingly, it directed the tax authority to grant charitable registration to the assessee and allowed both appeals.