TMI Blog2019 (1) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... es and transportation facilities from the students of the educational Inst, therefore, we reverse the order of the learned commissioner of income tax appeals. Further it is not required to adjudicate on the enhancement made by the learned commissioner of income tax appeals as the basis of the enhancement itself has been negated by us. - Decided in favour of assessee - ITA No. 6391 & 6392/Del/2017 - - - Dated:- 15-11-2018 - Shri Amit Shukla, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri H. Hasnain, AR For the Revenue : Shri NK Bansal, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. These are the appeals filed by the assessee against the order of the ld CIT (A)-I, Noida dated 30.03.2017 for the Assessment Year 2006-07 and 2007-08. 2. The assessee has raised the following grounds of appeal for Assessment Year 2006-07:- 1. Because the Hon ble CIT(Appeals) has erred in law and on facts in issuing the Notice u/s 251(2) of I.T. Act in the guise of Notice u/s 251(1) conferring the powers of enhancement of income without taking into consideration the Explanation. In disposing of an appeal, the Commissioner(Appeals) m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he genuineness of the purpose tested by the obligation created to spend the money exclusively or essentially on charity . This view is supported by Sole Trustee, Lok Shikshana Trust v. Cit, Mysore, 1976 1 SCC 254 that: ( SCC pp. 274-75, para 41) 6. Because the Hon ble CIT(A) has erred in law and on fact ignoring the ITAT decision that Transport 8 Hostel Facilities surplus cannot be considered as Business Income of the Society if the same was an integral part of its objects.(ITANO.4639/Del/2015 Addl.CIT, Range- 1, Ghaziabad Vs. Krishna Charitable Trust, Ghaziabad. 7. Because the Hon ble CIT(A) has erred in law and on facts in not allowing the exemption u/s 11 of I.T. Act, 1961 to the Appellant when all the terms and conditions were fulfilled by the Appellant. 8. Because the Hon ble CIT(A) has erred in law and on facts in not appreciating the facts that the Appellant is a charitable (Society) Trust within the meaning of section 2(15) of I.T. Act which is imparting education through its school and providing the students transport and Hostel facility, which is integral part of education because the whole function is run by the trust itself. 9. Because the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) while filing the Appeal, it may be considered and decided by the CIT (Appeals) even if, it was not put up at the assessment stage. The powers conferred in the Section 251 allows the CIT(A) to play around the issues taken up in the Assessment Order and not to move outside the Assessment Order, i.e, not to raise the fresh issues but he can decide any issue, if raised by the Appellant at the Appeal stage afresh. In this case the Hon ble CIT(A) embedded the soul of above explanation under the powers conferred to him in section 251(1) of I.T. Act, 1961. 2. Because the Hon ble CIT(Appeals) has failed in raising any specific query to justify his finding that there was violation of provisions of sections 11,12 and 13 of I.T. Act, 1961 without appreciating the fact that the Appellant is a charitable (Society) Trust within the meaning of section 2(15) of I.T. Act and which has already been granted exemption under section 12A of I.T. Act by the Hon ble Commissioner of Income tax. 3. Because the Hon ble CIT(Appeals) has erred in law and on facts in treating the Hostel Transport facility to the students as purely commercial activity though it was the integral pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e attainment of the objectives of the (Society) trust but in the case of the Appellant the facility of Transport and Hostel is not incidental, but a regular facility being integral part of the trust which cannot be taxed. 10. Because the Hon ble CIT(A) has erred in law and on facts in separating the educational institution and the Trust while both are part and parcel of each other, the (Society) Trust runs the school and provide the transport Hostel Facility to the students. Therefore, the provision of Transport and Hostel facility to the students are the integral part of the (Society) Trust and not the incidental business. 11. Because the Hon ble CIT(A) has erred in law and on facts who opined that the income of Universities or the other educational institutions is to be dealt with for exemption from the incidence of tax u/s 10(23C)(iv) 10(23C)(vi) of I.T. Act, 1961 and cannot be claimed under the provisions of sections 11 12 of I.T. Act, 1961, but the Appellant is not an University or Other Educational Institution, but is a (Society) Trust within the meaning of Section 2(15) of I.T. Act which run an Educational Institution to which Exemption under section 12A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities have resulted into the surplus to the assessee. On enquiry, the assessee submitted that the transport facility and hostel facilities are part of the charitable activities connected with the education and not as business. The learned assessing officer rejected the explanation of the assessee and consequently held that it is a business activity and the assessee should have maintained separate books of account and should have offered this sum as income of the assessee. According to him, in short, these activities are not eligible for exemption under section 11 and 12 of the income tax act. Accordingly assessment under section 143 (3) read with section 147 of the income tax act 1961 was passed on 10/2/2014 wherein the net taxable income of the assessee was determined at ₹ 75200 as net profit from transportation activities and net profit from hostel activities were determined at ₹ 74342/ totaling to ₹ 1 49542/ . Similarly for Ay 2007-08, assessment under section 143 (3) rws 147 of the income tax act was also passed on 23/3/2015 determining the total income of the assessee at ₹ 3 52842/ where the need returned income was rupees nil. The adjustment to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere not there before the learned assessing officer. Even otherwise the stated that the requirement of maintenance of the separate books of accounts is with respect to the separate business activities carried on by the trust which is not in the case of the assessee. It was further stated that the issue is squarely covered in favour of the assessee by the decision of the coordinate bench in ITA number 4739/del/2015 in additional CIT, range 1 Ghaziabad vs. Krishna charitable trust, Ghaziabad where at the identical issue has been decided by the coordinate bench holding that the educational and transfer facilities if provided to the students of the educational Inst then these activities are not in the nature of the business but are subservient to the main object of the education. In view of this, it was stated that the issue is solely covered in favour of the assessee. 9. The learned departmental representative vehemently supported the order of the learned assessing officer as well as the learned commissioner of income tax appeal stating that the hostel facilities and the transport facilities offered by the assessee are business activities and therefore the separate books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot the case of revenue that assessee is primarily engaged in the business of providing hostel facilities to the students. The above issue is no more res Integra in view of the decision of the Hon ble Karnataka High Court in CIT versus Karnataka lingayat Page 5 of 20 education society in ITA No. 5004/2012 dated 15/10/2014 wherein it has been held that providing hostel to the students/staff working for the society s incidental to achieve the object of providing education, namely the object of the society. In view of this, we are of the opinion that providing of hostel facilities and transport facilities to the student and staff member of the educational Institute cannot be considered as business activity but is subservient to the object of educational activities performed by the society. We are also supported by our view by the decision of the Hon ble Allahabad High Court in IIT versus state of UP, (1976) 38 STC 428 (All) wherein question arose in Indian Institute of Technology v. State of U.P. (1976) 38 STC 428 (All) with respect to the visitors' hostel maintained by the Indian Institute of Technology where lodging and boarding facilities were provided to persons who would come ..... X X X X Extracts X X X X X X X X Extracts X X X X
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