Case Law Details
Society for Educational Excellence Vs. DCIT (ITAT Delhi)
The assessee is a society running an engineering college in the name and style of M/s. Academy of Business and Engineering Sciences, assessee is affiliated with all India Council for Technical Education (AICTE). It is also undisputed that assessee is carrying on the educational activities and running certain colleges etc. During the year it is also undisputed that assessee has earned gross receipt of Rs. 16.71 crores on account of educational activities whereas assessee is also running a hostel for the students who are studying in the educational institutes of the assessee. The assessee has also earned hostel receipts of Rs. 3.02 crores. The issue involved here is that whether the hostel activities carried on by the assessee are business activities and therefore, the provisions of section 11(4A) of the Act are applicable so, assessee should maintain separate books of accounts. Otherwise, it loses exemption to that extent u/s 11 and 12 of the Act. section 11(4A) of the Act provides that provision of section 11() to (3A) shall not apply in relation to any income of the trust being profits and gains of the business, unless the business is incidental to the attainment of the objectives of the trust and separate books of accounts are maintained in respect of such business. Therefore, if the assessee trust is carrying on any business and if such business is not incidental to the attainment of the objective of the trust then, separate books of account with respect to such business is required to be maintained. The identical issue arose in case of Krishna Charitable Society Vs. Addl CIT in ITA No. 4639/Del/2015 for AY 2011-12 wherein, in para No. 11 wherein, it is held that transport and hostel facility surplus cannot be considered as business income of the society as these activities are incidental to the main object of the assessee society of education.
We are of the view that the hostel, mess facility and transport facility etc carried out by the society are incidental to the main object of the assessee trust of education and therefore, provisions of section 11(4A) of the Act do not apply to the assessee as it cannot be said that by running the hostels or transport facility for student its educational activities is a separate business altogether. In view of this ground No. 1 to 3 of the appeal of the assessee are allowed and consequently, the ld AO is directed to grant the assessee benefit of section 11 and 12 of the Income Tax Act with respect to the all income of the trust including hostel and transportation receipts.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
1. These are the appeals filed by the assessee against the order of the ld CIT(A)-IV, Kanpur dated 21.09.2017 for the Assessment Year 2008-09 to 2010-11.
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