TMI Blog2018 (11) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon’ble Apex Court in the case of Thanthi Trust [2001 (1) TMI 80 - SUPREME COURT] had also held that the assessee is entitled to the assessment u/s 11 of the income derived from an activity incidental to the achievement of the objects of the trust. For these reasons, we hold that the assessee’s activities of running the hospital and the nursing school is intricately connected and dependent on each other and it is one inseparable activity and both are entitled to exemption u/s 11(1). Disallowance of depreciation - Held that:- We find that the recent judgment of the Hon’ble Apex Court in the case of CIT v. Rajasthan And Gujarati Charitable Foundation [2017 (12) TMI 1067 - SUPREME COURT] had held in favour of the assessee by holding that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing School as part of the Hospital, and therefore the income of the Nursing School (a division of' the Hospital) is eligible for assessment u/s 11(1) of the Act . 3 . Without prejudice to the above, even if the income of the Nursing School is assessable U/s 11(4), (4A); the provisions of section 44JB with regard to tax audit are not applicable since it is assessable U/S 11 of the Income Tax Act and is not assessable under the head Profit and Gains of Business or Profession, Further, the total Turn Over of the Nursing School is below Rs . 40 lakh and therefore the provisions of section 44AB are not attracted . 3. Brief facts of the case are as follows:- The assessee is a charitable trust registered u/s 12A of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44AB of the I. T. Act in respect of the income earned from nursing school. 5. The assessee being aggrieved by the order of the CIT(A) in denying exemption of income from nursing school, denial of depreciation and for initiation of penalty u/s 271B of the I. T. Act in respect of non-audit of books of account of nursing school, has preferred the present appeal before the Tribunal. The learned AR has filed a paper book enclosing the trust deed of the assessee, annual accounts for the year ending 31. 03. 2011 etc. The learned AR reiterated the submissions made before the Income-tax authorities. The learned Departmental Representative, on the other hand, strongly supported the assessment order and the order of the CIT(A). 6. We have heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 4(iv) of the trust deed that the carrying on the activity of nursing school is part of the objects of the assessee-trust and that both medical relief and education are charitable objects entitled for exemption u/s 11(1) of the I. T. Act. The above view was further confirmed by the Department Circular No. 11/2008 dated 19. 12. 2008, wherein it is stated that the activities with regard to education and medical relief are not hit by the restrictive provisions contained in the proviso to section 2(15) of the I. T. Act. Accordingly, the income of the school of nursing is not to be assessed as business income but as arising out of charitable activities of the trust eligible for assessment u/s 11(1) of the I. T. Act. Further, we notice tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecent judgment of the Hon ble Apex Court in the case of CIT v . Rajasthan And Gujarati Charitable Foundation [(2018) 402 ITR 441 (SC)] had held in favour of the assessee by holding that the amendment brought about to section 11(6) is not retrospective in effect and is only prospective and applicable for and from 2015- 2016 onwards. Therefore going by the dictum laid down by the Hon ble Apex Court in the case of CIT v . Rajasthan And Gujarati Charitable Foundation (supra) , we hold that the assessee is entitled to depreciation on assets though the cost of the same was allowed as application. It is ordered accordingly. 7. In the result, the appeal filed by the assessee is allowed. Order pronounced on this 12th day of November, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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