TMI Blog2018 (5) TMI 1482X X X X Extracts X X X X X X X X Extracts X X X X ..... sident And Shri K. Narasimha Chary, Judicial Member Appellant by : Shri S. Krishnan, Advocate Respondent by : Shri Ravikant Gupta, Sr. DR ORDER Per K. Narasimha Chary, JM Challenging the order dated 02.03.2015 in Appeal No 98/13-14/GZN/63 for the assessment year 2010-11 passed by the learned Commissioner of Income-tax (Appeals), Muzaffarnagar (for short hereinafter called as the learned CIT(A) ), the assessee preferred this appeal. 2. Assessee is running a school and providing transport facility for its student for which separate fees charged. During the scrutiny of the return of income of the assessee for the assessment year 2010-11, Ld. AO disallowed a sum of rupees 1,73,20,960/-in relation to the activity of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... datory as provided in section 11(4A) of the IT Act. 4. On these questions CIT(A) found that the fee charged from the students is on commercial basis and not on charitable basis, as such the assessee is engaged in commercial activity and cannot be termed as education as covered under section 2 (15) of the Act; transport running for the children of school is not advancement of general public utility; the assessee is not charging as per market rate but has charged more from the students which shows the commercial motive of the assessee and not a charitable one as claimed by them; and that the assessee is not entitled for exemption under section 11(4A) of the act. 5. Aggrieved by the impugned order, assessee preferred this appeal before u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... education. He vehemently relied upon the orders of the authorities below. 8. We have gone through the record in the light of the submissions on either side. At page No.4 of the assessment order, Ld. AO recorded that the assessee society has charged ₹ 3,00,42,296/- towards transport fee which is included in the income and expenditure account and corresponding expenses was debited to ₹ 3,09,33,029/-for providing transport facility to students. There is no dispute that the assessee has been running 37 school buses. Ld. AO allowed the salary of 7 drivers. The contention of the assessee that 37 buses cannot be run by 7 drivers goes uncontradicted. Further AO did not bring on record as to the use of the vehicles for any other purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... society of education. Relevant observations on this aspect are 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 ₹ 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther 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 , facul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter the object is to make profit and one should bear in mind the distinction between the corpus, the objects and the powers of the concerned entity. 13. In the present case also, it is not the case of the revenue that the transport facility is also provided to the outsider. Hon'ble Karnataka High Court in the case of 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 a coordinate bench of this Tribunal in ITA No. 4639/D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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