TMI Blog2010 (10) TMI 1114X X X X Extracts X X X X X X X X Extracts X X X X ..... bjection filed by the assessee were heard together and are being disposed of by this consolidated order for the sake of convenience. 3. The brief facts of the case are that the assessee trust was running an Engineering College in the name of Ludhiana College of Engineering and Technology, Katani Kalan. The assessee Trust had claimed exemption u/s 11 of the Income Tax Act and filed the return of income showing nil income. The Assessing Officer was of the view that under the provisions of section 11 of the Act, only income of the trust of the previous year to the extent it is applied for charitable or religious purposes is not to be included in the total income. The explanation of the assessee was that it was not carrying on any other busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of building and investment in fixed assets had violated the provisions of section 11 of the Act. The profits worked out by the assessee which was claimed as exempt u/s 11 of the Act, were treated as income of the year under consideration. Before the CIT(A), the plea of the Ld. AR for the assessee was that the issue arising in the present appeal is covered by the latest judgment in the case of Pinegrove International Charitable Trust Ors Vs. Union of India and others (CWP No.6031 of 2009- date of decision 29.1.2010) and at page 50 of the judgment it was held that where the pre dominant object of the society is to carry out the charitable purposes and not to earn profit, it would not loose it character of a charitable purpose merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplying the ratio laid down by the Hon'ble Punjab Haryana High Court in the case of Pinegrove International Charitable Trust Vs. Union of India (supra) held as under:- 4. I have carefully considered the contention of the Ld. Counsel for the appellant and perused the relevant record. It is seen that in this case as the appellant had shown surplus of income over expenditure for the last few years and out of such income investments were made for building, furniture and other assets of the engineering college run by it, in view of the ratio of decision of the Hon'ble Uttrakhand High Court in the case of M/s Queens Educational Society, Civil Line, Haldwani, Distt. Nainital (supra), the A.O. was of the view that the appellant violat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue in hand would be same whether an assessee has claimed exemption u/s 10(23C)(vi) or u/s 11 of the Act. After making detailed discussions in this decision in para 8.13 of the order of the Hon'ble High Court summed up the principles of law. In this para it is held by the Hon'ble Court that merely because an institution has earned profit would not be deciding factor to conclude that the Educational Institution exists for profit . 4.2 At item No.(3) in this para it has been further held by the Hon'ble Jurisdictional High Court that the capital expenditure wholly and exclusively to the objects of the education is entitled to exemption and would not constitute part of the total income . 4.3 As per this decision if the cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the A.O. was not justified in denying exemption claimed by the appellant u/s 11 of the Act just because it had shown income in the past few years and further had invested such income in fixed assets of the Educational Institute run by it. 5. The CIT(A) in para 4.6 further held that the FDRs with PNB were made by the assessee for giving security to All India Council for Technical Education for running the B.Tech course in the Engineering College run by the assessee. The CIT(A) thus held that the FDRs will have to be considered as having been purchased for meeting the main objects of the assessee society i.e. of imparting education. Similarly, other FDRs of ₹ 20 lacs were for running MBA course in the college run by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal High Court in the case of Pine Grove International Charitable Trust Vs. Union of India. Further, in view of the application of income earned by the assessee trust during the year under consideration, to the objects of trust including investment in infrastructure, we are in conformity with the order of the CIT(A) that the assessee is entitled to the claim of exemption u/s 11 of the Act. We uphold the order of CIT(A) in allowing the claim of the assessee in respect of the interest earned on FDRs as the said FDRs were purchased to achieve the aims and objects of the assessee trust and interest income earned thereon, being part of the income earned during the year by the assessee trust was found to have been utilized and applied to the exte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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