Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (5) TMI 283 - AT - Income TaxExemption of income u/s 11 - charitable activity u/s 2(15) or not? - running of hostels and providing transportation facilities to the students - whether incidental to the education and receipt therefrom or income from independent business - AO was of opinion that for providing transportation facilities, students are charged on commercial basis - applicability of provisions of Section 11(4A) & 11(4) - HELD THAT:- In the case at hand, it is undisputed case of the assessee that hostel and transportation facilities are only being provided to the students of the Institute and as such is incidental to achieve the object of providing education in compliance to the aims and objects of the assessee trust. So, in these circumstances, provisions contained u/s 11 (4A) invoked by the AO are not applicable to the facts and circumstances of the case. We are of the considered view that activity of assessee society in providing transport and hostel facilities to the students and staff is incidental to achieve the charitable object of providing education. Addition of repair and maintenance of buses on ad -hoc basis - fuel charges for running the buses are on higher side as the assessee society is owning only two buses - HELD THAT:- Since both AO/CIT (A) have disallowed/confirmed the expenses on ad hoc basis only on the ground that the same are on higher side without disputing the incurrence of the expenses it is not permissible under law. Moreover, maintenance charges as well as fuel charges of the buses depends upon the age and condition of the vehicle which has not been examined by the AO. So, we are of the considered view that these expenses are liable to be allowed it is a matter of record that when the assessee society has been claimed exemption u/s 11, no such question has been raised by the AO regarding disallowance of exemption claimed on account of hostel and transportation facilities as is evident from assessment order for AYs 2009-10, 2012-13 and 2013-14 passed u/s 143 (3) . When there is no change in the facts and circumstances of the case, the Revenue is also bound to follow rule of consistency. Disallowance of exemption of receipt from the activities of providing hostel and transport facilities to the students of the institution is not sustainable in the eyes of law being intrinsic part of the educational activities of the assessee society - Decided in favour of assessee Disallowance of depreciation on fixed assets while computing total amount utilized and applied towards charitable purposes - HELD THAT:- Following the decisions rendered in Vishwa Jagriti Mission [2012 (4) TMI 289 - DELHI HIGH COURT] and Rajasthan and Gujarati Charitable Foundation Poona [2017 (12) TMI 1067 - SUPREME COURT] we are of the considered view that while computing income from those assets of which full expenditure has been allowed in the year of acquisition, in the subsequent years depreciation in respect of those assets has also to be taken into account. AO/CIT (A) have erred in making disallowance on account of depreciation on fixed assets claimed during the year under assessment because application of income is not computation of income and the provisions of application of income would come into play only after the income chargeable to tax is determined and the income has to be in the general sense and depreciation is one of the deductions availed under law and there is no reason for disallowing the same. - Decided in favour of the assessee.
|