TMI Blog2018 (7) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income of ₹ 17,556/-. The assessee has filed audited reports under section 12A(b) of the Act in form No.10B. The assessee is having a Bhavan of the Lohana Community in which it is running a hostel and is providing lodging facility to the students. It is charging fees from the students. The AO harboured a belief that running a hostel does not fall within the ambit of charitable purpose as contemplated in section 2(15) of the Act. According to the AO the case of the assessee is hit by proviso appended to section 2(15) and its activities would fall within the concept of advancement of any other object of general public utility . Since threshold limit of gross receipt from an activity of advancement of any other object of general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e capital expenditure of ₹ 19,71,648/- is disallowed and is added back to the total income of the assessee trust. Penalty proceedings u/s.271(1)(c) are separately initiated for furnishing inaccurate particulars of income. 10. Subject to the above remark, the total income of the assessee trust is computed as under: Net profit (as discussed above) Rs.13,82,059/- Add: Exemption claimed u/s.11 and 12, capital expenditure (as discussed above) Rs.19,71,648/- Total Income Rs.33,53,707/- Assessed Income Rs.33,53,710/- 4. Appeal to the CIT(A) did not br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be adjudicated by the Tribunal is, whether providing hostel facility to the students by appellant-trust is to be considered as imparting education within the meaning of section 2(15) of the Act or it would fall within the clause advancement of any other object of general public utility provided in the proviso appended to section 2(15) of the Act. The AO was of the opinion that providing hostel facility is not an activity akin to education. Hence, the activity performed by the assessee would not fall within the meaning of clause 2(15) giving meaning of expression charitable purpose . He construed advancement of any other object of general public utility falling within the ambit of proviso appended to section 2(15). For harbouring this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to character building as well. Students in hostel not only learn the theoretical material, they also learn how to enhance their personal abilities and learn to live independently. Hostel life has an impact upon the behavioral as well as personality development of students. It is one of the essential components of an educational institution. Some of the institutions like IITs, Medical Colleges provide compulsory stay in the hostel. Thus, how the AO can segregate this component from the concept of education provided in the main provision of section 2(15) ? If it is accepted that hostel is just an essential part of educational institution, then all that discussions made by the AO would be irrelevant. The simple reason is that assessee-trust ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has to maintain building. It has to incur expenditure in capital field. If a small percentage of surplus is being generated then how all of a sudden the charitable activity would become trade, commerce or business ? 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. On due analys ..... X X X X Extracts X X X X X X X X Extracts X X X X
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