Case Law Details

Case Name : Society for Educational Excellence Vs. DCIT (ITAT Delhi)
Appeal Number : ITA No. 6957, 6960 and 3606/Del/2017
Date of Judgement/Order : 19/03/2018
Related Assessment Year : 2008-09, 2009-10 and 2010-11

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.

2. The assessee has raised the following grounds of appeal for Assessment Year 2008-09:-

1. That on facts and circumstances of the case, the order passed by the Ld. CIT (Appeal) is bad both in the eyes of law and on facts.

2. The Ld. CIT(A) has erred in law and on facts by upholding the decision of Assessing Officer in framing the assessment u/s. 153A when no proceedings for the relevant assessment year were pending on the date of search and no incriminating material was found during the course of search.

3. The Ld. CIT(A) has erred in law and on facts by ignoring the fact that hostel is an integral part of the business and the income generated from hostel is exempted u/s. 11 of the income Tax Act, 1961.

4. The Ld. CIT(A) has erred in law and on facts by not appreciating that the addition of Rs. 2,38,60,740/- made by the Assessing Officer without any cogent reasons and facts.

5. That the impugned appellate order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence.”

3. Ground No. 1 of the appeal is general in nature and therefore, same is

4. Adverting to ground No. 2 about absence of incriminating material during the course of search, brief facts of the case is that the assessee is a registered trust running an educational institutions in the name of Academy of Business and Engineering Science (ABES). It is also registered u/s 12A of the Income Tax Act, 1961 and eligible for exemption u/s 11 of the Act. The ld AO held that the assessee trust is carrying on certain activities such as hostel activities wherein total revenue of Rs. 3.12 crores was earned and certain expenses were also According to the ld AO the assessee is carrying on the business and also the hostel activities are falls under the object of general public utility and therefore, the assessee should have maintained separate books of account of hostel activities. The ld AO therefore consequently disallowed various expenses incurred by the assessee holding that only certain percentage of the expenses are allowable. Further, he also disallowed depreciation of Rs. 10866975/- being 50% of the total amount of deprecation relying on the decision of Hon’ble Supreme Court in case of Escorts Ltd and Honble Kerala High Court in case of Lilssie Medical Institution. Consequently the total income of the assessee was assessed at Rs. 23860740/- against the returned income of the assessee of Nil filed on 30.04.2015 u/s 153A of the Act pursuant to search undertaken u/s 132 of the Act on 31.07.2013. Assessee preferred appeal before the ld CIT(A), who dismissed the appeal of the assessee, therefore, the assessee is in appeal before us.

5. The ld AR submitted that the ld AO has framed assessment order u/s 143(3) read with section 153A of the Act on 31.03.2016 pursuant to search u/s 132 of the Act on 31.07.2013. He submitted that on the date of impugned assessment order i.e. Assessment Year 2008-09 was not pending and therefore the addition or any adjustment to the income of the assessee can be made only on the basis of incriminating material. He therefore, submitted that no such incriminating material were found during the course of search based on which the adjustment of the total income was made. He relied on the decision of the Hon’ble Delhi High Court in case of CIT Vs. Kabul Chawla 380 ITR 573 and CIT Kurele Paper Mills Ltd 380 ITR 571. He submitted that the whole addition is not accordance with the provision of section 153A of the Act. On the merits of the case he submitted that the issue is squarely covered in favour of the assessee by the decision of the coordinate bench in case of Krishna Charitable Society Vs. ACIT in ITA No. 4639/Del/2015 and submitted that the hostel facilities are provided to the students of the society and not to the outsider. He submitted that the hostel activities are part of the educational activities of the trust. With respect to the allow ability of the depreciation he referred to the decision of the Hon’ble Supreme Court in case of CIT Vs. Rajasthan and Gujarat Charitable Foundation in Civil Appeal No. 7186/2014.

6. The ld DR relied on the orders of the lower authorities and further submitted a written submission wherein, he relied on the following decisions:-

a. E.N. Gopakumar Vs CIT R2016) 75 taxmann.com 215 (Kerala))] (Copy Enclosed)

b. CIT V. Kabul Chawla [20161 380 ITR 573/f20151 234 Taxman 300/61 taxmann.com 412 (Delhi) (para 4),

c. CIT v. Continental Warehousing Corpn. (Nhava Sheva) Ltd. [2015] 374 itr 645/232 Taxman 270/58 taxmann.com 78 (Bom.) (para 4),

d. Principal CIT v. Kurele Paper Mills (P.) Ltd. [2016] 380 itr 571 (Delhi) (para 4),

e. CIT V. Lancy Constructions [2016] 383 ITR 168/237 Taxman 728/66 taxmann.com 264 (Kar.) (para 4),

f. CIT v. ST. Francies Clay Decor Tiles [2016] 240 Taxman 168/70 taxmann.com 234 (Ker.) (para 5) and

g. CIT v. Promy Kuriakose J2016] 386 itr 597 (Ker.) (para 5).

h. CIT Vs Rai Kumar Arora T20141 52 taxmann.com 172 (Allahabad)/r2014l 367 ITR 517 (Allahabad)

i. CIT Vs Kesarwani Zarda Bhandar Sahson Alld. NTA No. 270 of 20141 (Allahabad)

j. Smt Davawanti Vs CIT T20161 75 taxmann.com 308 (Delhi)/(2017) 245 Taxman 293 (Delhi)/(2017) 390 ITR 496 (Delhi)/(2016) 290 CTR 361 (Delhi) (Copy Enclosed)

7. On the issue of hotel activities he submitted the following decisions:-

a. Dava Nand Pushpa Devi Charitable Trust Vs Addl. CIT (2016- TIQL-1810- ITAT-DEL (Copy Enclosed)

b. Young Women’s Christian Association of Madras Vs. JDIT (2014) 41 taxmann.com 142 (Chennai – Trib.)/(2014) 62 SOT 65 (Chennai – Trib.HURO.) (Copy Enclosed)

c. CIT Vs. Mehta Charitable Prajnalav Trust T20121 28 taxmann.com 73 (Delhn/ (2013) 214 Taxman 88 (Delhi)/ 2013) 357ITR560(Delhi)/ (2013) 255 CTR 232 (Delhi) (Copy Enclosed)

8. We have carefully considered the rival contentions and also perused the orders of the lower authorities. Apparently in this case the search took place at the premises of the assessee society on 31.07.2013. As on that dated for impugned assessment year 2008-09 the return of income was filed by the assessee on 12.03.2009 and time limit for issue of notice u/s 143(2) of the Act was expired on 30.09.2009. In view of this the assessment year 2008-09 was not pending on the date of search. Further notice u/s 153A was issued on 26.03.2015 in response to which the return of income was filed on 30.04.2015. Hon’ble Delhi High Court in case of CIT Vs. Kabul Chawla (supra) has held that in case of completed assessment the addition can be made only on the basis of incriminating material found during the course of search. In the present case while looking at the order passed by the ld AO we do not find that addition is based on any incriminating material found during the course of search. No such reference is also made of such documents. The ld DR also could not produce any material to show that these additions are based on incriminating material. In view of this respectfully following the decisions of the Hon’ble Delhi High Court in case of Kabul Chawla (supra) we are of the opinion that adjustment or addition made by the ld AO and confirmed by the ld CIT(A) deserves to be deleted as these are not based on any incriminating material found during the course of search. In view of this ground No. 2 of the appeal of the assessee is allowed.

9. s the appeal of the assessee succeeds on ground No. 2 of the appeal ground No. 3 to 5 of the appeal are academic in nature and therefore they are not adjudicated.

10. In the result appeal No. 6957/Del/2017 for the AY 2008-09 is allowed

11. Now we come to the appeal of the assessee for AY 2009-10 in ITA No. 6960/Del/2017.

12. This appeal is filed by the assessee against the order of the ld CIT(A)- IV, Kanpur dated 21.09.2017 wherein, the assessee has raised the following grounds of appeal for Assessment Year 2009-10:-

1. That on facts and circumstances of the case, the order passed by the Ld. CIT (Appeal) is bad both in the eyes of law and on facts.

2. The Ld. CIT(A) has erred in law and on facts by upholding the decision of Assessing Officer in framing the assessment u/s. 153A when no proceedings for the relevant assessment year were pending on the date of search and no incriminating material was found during the course of search.

3. The Ld. CIT(A) has erred in law and on facts by ignoring the fact that hostel is an integral part of the business and the income generated from hostel is exempted u/s. 11 of the income Tax Act, 1961.

4. The Ld. CIT(A) has erred in law and on facts by not appreciating that the addition of Rs. 2,90,25,290/- made by the Assessing Officer without any cogent reasons and facts.

5. That the impugned appellate order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence.”

13. For the year the assessee filed its return of income on 30.04.2015 declaring Nil income in pursuance of notice u/s 153A of the Income Tax Act pursuant to search u/s 132 of the Act on 31.07.2013. The claim of the assessee vide ground No. 2 of the appeal was that the additions have been made by the ld AO in the completed assessment without having any incriminating material unearth during the course of The brief facts shows that the similar addition to Assessment Year 2008-09 were made to the total income of the assessee holding that the hostel activities of the assessee is not educational activities.

14. The ld Authorized Representative submitted the similar arguments as were made in appeal of the assessee for AY 2008-09.

15. The ld DR also submitted the same arguments.

16. We have carefully considered the rival contentions and also perused the orders of the lower authorities. For the impugned assessment year the due date of filing of the return was 30.09.2009 and the time limit for issue of notice u/s 143(2) of the Act was up to 30.09.2010. The search took place on 31.07.2013 therefore, apparently assessment for Assessment Year 2009-10 was a completed assessment year. Therefore, if any addition is required to be made then it has to be strictly based on the incriminating evidence unearthed during the course of search. As found in Assessment Year 2008-09, the impugned addition for Assessment Year 2009-10 were also made without any reference to incriminating material. Further, no incriminating evidences were also produced before us at the time of hearing. Therefore, respectfully following the decision of the Hon’ble Delhi High Court in case of CIT Vs. Kabul Chawla (supra) we hold that additions made by the ld AO of Rs. 29025290/- does not deserve to be upheld. In the result we reverse the decision of the lower authorities in making and confirming the addition in the completed assessment without any incriminating evidences unearthed during the course of search. In the result Ground No 2 of the appeal of the assessee is allowed.

17. In view of our above decision in ground No. 2 allowing the appeal of the assessee all other grounds of the appeal becomes academic in nature and therefore, they are not adjudicated.

18. In the result ITA No. 6960/Del/2017 for Assessment Year 2009-10 is

19. Now we come to ITA No. 3706/Del/2017 for Assessment Year 2010-11 which is filed by the assessee against the order of the ld CIT(A)- Muzaffarnagar dated 02.03.2015 raising following grounds of appeal:-

1. That on the facts and circumstances of the case and in the law the learned commissioner of income-tax (Appeals) has grossly erred in confirming the additions made by Assessing Officer treating Hostel facility provided to college students as business of the appellant society considering the alleged surplus of Rs. 2,72,79,769/- as business income in the hand of appellant society. The observation made and basis adopted are erroneous, unjustified, unwarranted, bad in law and are without sufficient material on records.

2. That the Learned Commissioner of Income-tax ( Appeals) has grossly erred in confirming the additions made by A.O. holding that hostel/ mess facility for students is separate business activity in terms of section 11 (4A) merely on irrelevant consideration like surplus should have been reimbursed to students or used to reduce fee or giving contents of some website about fall in demand for rooms at Meerut etc, even after accepting that maintenance of such hostel is mandatory as per the concerned controlling Authority and it was an integral and inalienable part of educational activity. Thus finding is perverse.

3. That the learned assessing officer has failed to appreciate the fact that maintaining hostel/mess facility to students is an essential & integral part of “education” u/s 2(15) of the Act and not a separate business activity covered under section 11 (4A) as also accepted in the past assessments and there is no change in law about the first three limbs of section 2(15) even after 01.04.2009, , hence overall surplus of the society as worked out in Income & Expenditure account of the society and consequently used and invested in the fulfillment of the main objectives of the society resulting into application of income and as such exempt under the provisions of section 11 to 13 of the Act and learned Commissioner of Income-tax (Appeals) has also confirmed the view taken by Assessing officer.

4. That the Learned Commissioner of Income-tax ( Appeals) has erred on facts and in law to confirm the dis allowance made by Assessing officer Rs. 2,95,02,605/- being the depreciation as claimed by debiting the same to the Income & Expenditure Account of the Society for the purposes of working out the surplus in the hands of the society. The assessing officer has failed to bring any material on records to establish that the appellant has availed hundred percent application of the value of capital expenditure in the year of investment thereby inviting dis allowance of the depreciation on such capital expenditure quoting double deduction. During the course of assessment proceedings, the Society’s council has submitted details of Gross Income and its Application of income of relevant year and preceding five years to justify that addition in Fixed Assets could not be utilized as application of income in past years due to excess utilization in past years, hence the same could not be termed as double claim of depreciation. Hence the dis allowance of the depreciation is not only unjustified but it is illegal and bad in the eyes of law.”

20. Brief facts of the case is that the assessee filed its return of income on 04.08.2010 declaring Nil income. The assessment u/s 143(3) was passed on 28.03.2013 at total income of Rs. 27279769/-. The main issue in dispute in the present appeal is that assessee is running certain educational institution in the field of engineering, management and computer sciences. During the course of assessment proceeding the assessee filed note on hostel and transport facilities vis a vis income generated therefrom and applicability of provisions of section 2(15) and 11(4A) of the Act. Assessee submitted that providing hostel, mess and transport facilities to the students which are studying in the colleges of the assessee is as per AICTE guidelines. It was further stated that the NBA Accreditation also requires these facilities. It was further stated that these facilities are not separate but part of the educational activities of the assessee. It was therefore, stated that assessee is not carrying on any business activity in the form of hostel and transport facilities provided to the students of the society.

21. The ld Assessing Officer did not accept the explanation of the assessee and held that running hostel, mess and transport activities is in the form of business and therefore the assessee should have maintained separate books of accounts u/s 11(4A) of the Act. He held that running a hostel may be requirement of ACITE norms but it nowhere describes generation of surplus. He further held that assessee is charging fees per student at the market rate. He further referred to the website of the assessee trust and held that educational activity and hostel and transport activity of the assessee are separable and the activities of the hostel and transportation are business activities which requires maintenance of separate books of account u/s 11(4A) of the Act. Based on the above findings, out of the total hostel expenses of Rs. 44835456/- he disallowed Rs. 27703575/- and allowed Rs. 17131881/-. Consequently, out of the gross receipt of the hostel activity of Rs. 44411650/- he deducted allowable expenditure of Rs. 1713 1881/- and balance sum of Rs. 27279769/- was charged to tax as business income of the assessee.

22. The ld AO further disallowed the deprecation of Rs. 29502605/- holding that it amounts to double deduction as assessee has already claimed the cost of purchase of the asset as application of funds. Consequently, the total taxable income of the assessee was determined at Rs. 27279769/-.

23. Assessee preferred an appeal before the ld CIT(A) who dismissed the appeal of the assessee with respect to the profit determined of Rs. 27279769/- as profit from hostel activities and upheld the order of the ld Assessing Officer. With respect to the claim of the deprecation of Rs. 29502605/- same was also upheld relying on the decision of the Honble Kerala High Court in case of Leissee Medical Institute Vs. CIT (supra). In the result appeal of the assessee was dismissed and therefore, assessee preferred appeal before us.

24. The ground No. 1 to 3 of the appeal of the assessee pertaining to determination of alleged surplus of Rs. 27279769/- on account of hostel and mess facilities treated as business income of the assessee. The ld Authorized Representative firstly submitted that the hostel facilities are as per the mandate of AICTE and only provided to the students who are exclusively undergoing education at the institute. He further submitted that these are the activities subservient to the main object of the education carried on by the assessee. It was further stated that issue is squarely covered in favour of the assessee by the decision of Krishna Charitable Society Vs. ACIT in ITA No. 4639/Del/2015 dated 15.09.2017. He therefore, submitted that orders of the lower authorities are not sustainable.

25. The ld CIT Departmental Representative relied on the decision of Dayanand Puspadevi Charitable Trust Vs. Addl CIT (2016-TIOL-1810- ITAT- Del and Yong Women‟s Christian Association of Madras Vs. JDIT 41 Taxmann.com 142 (Chennai ) and CIT Vs. Mehta Charitable Prajnalaya Trust 28 Taxmann.com 73 (Delhi). It was therefore, stated that hostel activities are the business activities of the assessee. He vehemently supported the orders of the lower authorities.

26. We have carefully considered the rival contentions and also perused the orders of the lower authorities. 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 as under:-

“11. We have carefully considered the rival contentions and perused the orders of the lower authorities and other judicial pronouncement placed before us. In the grounds No. 1 – 3 assessee is contesting that addition made by the Ld. assessing officer treating hostel places provided to college student as business of the society and text the alleged surplus of Rs. 9887873/– as business income of the appellant. It was not the case of the revenue that assessee has rented out these hostels to the students who are not parted education in the above institutes. It was also not the case of revenue that assessee is primarily engaged in the business of providing hostel facilities to the students. The above issue is no more res Integra in view of the decision of the Hon’ble Karnataka High Court in CIT versus Karnataka lingayat education society in ITA No. 5004/2012 dated 15/10/2014 wherein it has been held that providing hostel to the students/staff working for the society’s incidental to achieve the object of providing education, namely the object of the society. In view of this we are of the opinion that providing of hostel facilities and transport facilities to the student and staff member of the educational Institute cannot be considered as business activity but is subservient to the object of educational activities performed by the society. We are also supported by our view by the decision of the Hon’ble Allahabad High Court in IIT versus state of UP, (1976) 38 STC 428 (All) wherein question arose in Indian Institute of Technology v. State of U. P. (1976) 38 STC 428 (All) with respect to the visitors’ hostel maintained by the Indian Institute of Technology where lodging and boarding facilities were provided to persons who would come to the Institute in connection with education and the academic activities of the Institute. It was observed that the statutory obligation of maintenance of the hostel, which involved supply, and sale of food was an integral part of the objects of the Institute nor could the running of the hostel be treated as the principal activity of the Institute. The Institute could not be held to be doing business. Further meals being supplied in a hostel to the scholars, visitors, guest faculty etc. can not be exigible to sales tax where main activity is academics as held in Scholars home Senior Secondary School 42 VST 530. Further, the reliance placed by the lower authorities on the decision of the Hon ’ble Madras High Court in case of DCIT versus Wellington charitable trust is also misplaced because in that case, the only activity of that particular trust was renting out of the property and not education. We are also not averse to considering the latest legal developments too where in the recently introduced new legislation of Goods and service tax it is provided that no GST would be chargeable on the hostel fees etc recovered from the Students , faculties and other staff for lodging and boarding as they are engaged in education activities . Therefore we reverse the finding of the lower authorities and held that transport and hostel facilities surplus cannot be considered as business income of the assessee society which is mainly engaged in business activities and these activities are subservient to the main object of education of the trust. In the result 1 – 3 of the appeal of the assessee are allowed.”

27. In the present case also, it is not the case of the revenue that hostel is rented out to outsider or the transport facility is also provided to the outsider. Furthermore, the Hon’ble Karnataka High Court in Karnataka Lingayat Education Society in ITA No. 5004/2012 dated 15.10.2014 has held that providing the hostel to the students and the staff working for the society is incidental to achieve the object of providing education and i.e. the object of the society. Therefore, in view of the above decision of the Hon’ble Karnataka High Court as well as the decision of coordinate bench in ITA No. 4639/Del/2015 we are of the view that hostel and transport activities of the assessee trust are not in the nature of business. Further, the activity of the hostel and transport is also incidental to the attainment of the main object of the trust of the education. Therefore, the provisions of section 11(4A) of the Act does not apply to the assessee.

28. Now coming to the various decisions relied upon by the revenue, the first decision was with respect to the Dayananda Puspadevi Charitable Trust Vs. Addl CIT dated 21.09.2016. In that particular case the assessee trust was running a dental college and also provided hostel facilities on fee basis. The ld Assessing Officer treated the hostel fees at higher side in comparing the market price and therefore, applying the provisions of section 11(4A), as he did not maintain separate books of accounts, the exemption was denied. The above decision is rendered by the strength of single member whereas the decision relied upon by the ld AR is of division bench and therefore, has more binding Furthermore, in para NO. 8 of that it is accepted that hostel activity is incidental to the attainment of the object of the trust. Therefore, the decision even after referring the decision of the Hon’ble Karnataka High Court it was so held. As decision of division bench, held otherwise, this decision cannot be relied upon.

29. The next decision relied upon in case of Young Womens Christian Association of Madras Vs. JDIT 41 Taxmann.com 142 the assessee was carrying on advancement any other object of general utility running orphanage, old age homes etc . The dominant part of the income was from running a working women hostel. Such hostel activities were not found to be incidental to the main object of the trust. Therefore, the facts of the case are distinguishable.

30. The third decision relied upon was with respect to CIT Vs. Mehta Charitable Prajnalaya Trust 357 ITR 560 where the trust was created for the object for education and where the separate business activity was carried out which was not incidental to the main object of the

31. In view of this the decisions relied upon by the revenue are distinguishable on the facts.

32. In view of this 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.

33. Ground No. 2 of the appeal is with respect to the claim of the deprecation disallowed by the ld AO of Rs. 29502605/- as assessee has already claimed the whole cost of the assets as application of Therefore, according to the ld Assessing Officer it amounts to double deduction. The above issue has already been decided by Hon’ble Supreme Court in case of CIT Vs. Rajasthan and Gujarati Charitable Foundation in Civil Appeal NO. 7186/2014 dated 13.12.2017 wherein it has been held that up to the assessment year 2015-16 the assessee is entitled to claim the cost of acquisition of fixed assets as application of income and further deprecation thereon in subsequent years. In view of this we direct the ld Assessing Officer to delete the dis allowance of Rs. 29502605/- on account of depreciation. Consequently, we reverse the finding of the ld CIT(A) and allow ground No. 4 of the appeal.

34. In the result appeal of the assessee for Assessment Year 2010-11 in ITA NO. 3706/Del/2015 is allowed.

35. In the result all the above three appeals of the assessee are allowed.

Order pronounced in the open court on 19/03/20 18.

Download Judgment/Order

More Under Income Tax

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

June 2021
M T W T F S S
 123456
78910111213
14151617181920
21222324252627
282930