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2018 (7) TMI 1084 - AT - Income TaxEligibility to section 11 - Registration under section 12AA - Held that:- If the main activity of the assessee i.e. providing hostel facilities to the students fall within the ambit of expression “education” employed in the main provision of section 2(15) then generation of surplus would be immaterial because ultimately is to be ascertained whether surplus is being used for the purpose of fulfilling all the objects of the trust or not. If the surplus is being applied on the objects of the trust or being accumulated as provided in the scheme, then nothing is to be taxable. AO has unnecessarily created an artificial distinction. The assessee is not admitting other persons in the building. It is providing facility only to the students, and there are lots of rules and regulations, bye-laws for admitting students, according to their merits in education. Thus, taking into account overall facts and circumstances, we are of the view that the assessee is entitled for benefit of sections 11 and 12. If the assessee is entitled for benefit of sections 11 and 12, then the amount spent from the corpus fund for construction of building is also to be looked into with that angle. We set aside both the orders of the Revenue authorities and restore this issue to the file of the AO. AO shall re-determine taxable income of the assessee and after providing benefit under sections 11 and 12. Appeal of the assessee is allowed for statistical purpose.
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