TaxTMI 
TaxTMI 
2018 (3) TMI 1079
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.... CIT(A) has erred in law and on facts by ignoring the fact that hostel is an integral part of the business and the income generated from hostel is exempted u/s. 11 of the income Tax Act, 1961. 4. The Ld. CIT(A) has erred in law and on facts by not appreciating that the addition of Rs.2,38,60,740/- made by the Assessing Officer witho ut any cogent reasons and facts. 5. That the impugned appellate order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence." 3. Ground No. 1 of the appeal is general in nature and therefore, same is dismissed. 4. Adverting to ground No. 2 about absence of incriminating material during the course of search, brief facts of the case is that the assessee is a registered trust running an educational institutions in the name of Academy of Business and Engineering Science (ABES). It is also registered u/s 12A of the Income Tax Act, 1961 and eligible for exemption u/s 11 of the Act. The ld AO held that the assessee trust is carrying on certain activities such as hostel activities wherein total revenue of Rs. 3.12 crores was earned and certain expenses were also incurred. According to ....
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....CIT Vs. Rajasthan and Gujarat Charitable Foundation in Civil Appeal No. 7186/2014. 6. The ld DR relied on the orders of the lower authorities and further submitted a written submission wherein, he relied on the following decisions:- a. E.N. Gopakumar Vs CIT R2016) 75 taxmann.com 215 (Kerala))] (Copy Enclosed) b. CIT V. Kabul Chawla [20161 380 ITR 573/f20151 234 Taxman 300/61 taxmann.com 412 (Delhi) (para 4), c. CIT v. Continental Warehousing Corpn. (Nhava Sheva) Ltd. [2015] 374 itr 645/232 Taxman 270/58 taxmann.com 78 (Bom.) (para 4), d. Principal CIT v. Kurele Paper Mills (P.) Ltd. [2016] 380 itr 571 (Delhi) (para 4), e. CIT V. Lancy Constructions [2016] 383 ITR 168/237 Taxman 728/66 taxmann.com 264 (Kar.) (para 4), f. CIT v. ST. Francies Clay Decor Tiles [2016] 240 Taxman 168/70 taxmann.com 234 (Ker.) (para 5) and g. CIT v. Promy Kuriakose J2016] 386 itr 597 (Ker.) (para 5). h. CIT Vs Rai Kumar Arora T20141 52 taxmann.com 172 (Allahabad)/r2014l 367 ITR 517 (Allahabad) i. CIT Vs Kesarwani Zarda Bhandar Sahson Alld. NTA No. 270 of 20141 (Allahabad) j. Smt Davawanti Vs CIT T20161 75 taxmann.....
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..... 10. In the result appeal No. 6957/Del/2017 for the AY 2008-09 is allowed accordingly. 11. Now we come to the appeal of the assessee for AY 2009-10 in ITA No. 6960/Del/2017. 12. This appeal is filed by the assessee against the order of the ld CIT(A)- IV, Kanpur dated 21.09.2017 wherein, the assessee has raised the following grounds of appeal for Assessment Year 2009-10:- "1. That on facts and circumstances of the case, the order passed by the Ld. CIT (Appeal) is bad both in the eyes of law and on facts. 2. The Ld. CIT(A) has erred in law and on facts by upholding the decision of Assessing Officer in framing the assessment u/s. 153A when no proceedings for the relevant assessment year were pending on the date of search and no incriminating material was found during the course of search. 3. The Ld. CIT(A) has erred in law and on facts by ignoring the fact that hostel is an integral part of the business and the income generated from hostel is exempted u/s. 11 of the income Tax Act, 1961. 4. The Ld. CIT(A) has erred in law and on facts by not appreciating that the addition of Rs.2,90,25,290/- made by the Assessing Officer without any cogent....
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....in nature and therefore, they are not adjudicated. 18. In the result ITA No. 6960/Del/2017 for Assessment Year 2009-10 is allowed. 19. Now we come to ITA No. 3706/Del/2017 for Assessment Year 2010-11 which is filed by the assessee against the order of the ld CIT(A)- Muzaffarnagar dated 02.03.2015 raising following grounds of appeal:- 1. That on the facts and circumstances of the case and in the law the learned commissioner of income-tax (Appeals) has grossly erred in confirming the additions made by Assessing Officer treating Hostel facility provided to college students as business of the appellant society considering the alleged surplus of Rs.2,72,79,769/- as business income in the hand of appellant society. The observation made and basis adopted are erroneous, unjustified, unwarranted, bad in law and are without sufficient material on records. 2. That the Learned Commissioner of Income-tax ( Appeals) has grossly erred in confirming the additions made by A.O. holding that hostel/ mess facility for students is separate business activity in terms of section 11(4A) merely on irrelevant consideration like surplus should have been reimbursed to students or used ....
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....3) was passed on 28.03.2013 at total income of Rs. 27279769/-. The main issue in dispute in the present appeal is that assessee is running certain educational institution in the field of engineering, management and computer sciences. During the course of assessment proceeding the assessee filed note on hostel and transport facilities vis a vis income generated therefrom and applicability of provisions of section 2(15) and 11(4A) of the Act. Assessee submitted that providing hostel, mess and transport facilities to the students which are studying in the colleges of the assessee is as per AICTE guidelines. It was further stated that the NBA Accreditation also requires these facilities. It was further stated that these facilities are not separate but part of the educational activities of the assessee. It was therefore, stated that assessee is not carrying on any business activity in the form of hostel and transport facilities provided to the students of the society. 21. The ld Assessing Officer did not accept the explanation of the assessee and held that running hostel, mess and transport activities is in the form of business and therefore the assessee should have maintained separa....
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....ty Vs. ACIT in ITA No. 4639/Del/2015 dated 15.09.2017. He therefore, submitted that orders of the lower authorities are not sustainable. 25. The ld CIT Departmental Representative relied on the decision of Dayanand Puspadevi Charitable Trust Vs. Addl CIT (2016-TIOL-1810- ITAT-Del and Yong Women‟s Christian Association of Madras Vs. JDIT 41 Taxmann.com 142 (Chennai ) and CIT Vs. Mehta Charitable Prajnalaya Trust 28 Taxmann.com 73 (Delhi). It was therefore, stated that hostel activities are the business activities of the assessee. He vehemently supported the orders of the lower authorities. 26. We have carefully considered the rival contentions and also perused the orders of the lower authorities. The assessee is a society running an engineering college in the name and style of M/s. Academy of Business and Engineering Sciences, assessee is affiliated with all India Council for Technical Education (AICTE). It is also undisputed that assessee is carrying on the educational activities and running certain colleges etc. During the year it is also undisputed that assessee has earned gross receipt of Rs. 16.71 crores on account of educational activities whereas assessee is also ....
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....ntal 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 to the Institute in connection with education and the academic activities of the Institute. It was observed that the statutory obligation of maintenance of the hostel, which involved supply, and sale of food was an integral part of the objects of the Institute nor could the running of the hostel be treated as the principal activity of the Institute. The Institute could not be held to be doing business. Further meals being....
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....ental college and also provided hostel facilities on fee basis. The ld Assessing Officer treated the hostel fees at higher side in comparing the market price and therefore, applying the provisions of section 11(4A), as he did not maintain separate books of accounts, the exemption was denied. The above decision is rendered by the strength of single member whereas the decision relied upon by the ld AR is of division bench and therefore, has more binding strength. Furthermore, in para NO. 8 of that it is accepted that hostel activity is incidental to the attainment of the object of the trust. Therefore, the decision even after referring the decision of the Hon'ble Karnataka High Court it was so held. As decision of division bench, held otherwise, this decision cannot be relied upon. 29. The next decision relied upon in case of Young Women‟s Christian Association of Madras Vs. JDIT 41 Taxmann.com 142 the assessee was carrying on advancement any other object of general utility running orphanage, old age homes etc . The dominant part of the income was from running a working women hostel. Such hostel activities were not found to be incidental to the main object of the trust. ....