TaxTMI 
TaxTMI 
2018 (7) TMI 1477
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....ut 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 to reduce fee or giving contents of some website about fall in demand for rooms at Meerut etc, even after accepting that maintenance of such hostel is mandatory as per the concerned controlling Authority and it was an integral and inalienable part of educational activity. Thus finding is perverse. 3. That the learned assessing officer has failed to appreciate the fact that maintaining hostel/mess facility to students is an essential & integral part of "education" u/s 2(15) of the Act and not a separate business activity covered under section 11(4A) as also accepted in the past assessments and there is no change in law about the first three limbs of section 2(15) even after 01.04.2009, , hence overall surplus of the society as worked out in Income & Expenditure account of the society and consequently used and invested in the fulfi....
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....438/- claimed by the assessee as depreciation by debiting the same to the Income & Expenditure Account of the society for the purposes of working out the surplus in the hands of the society. 3. The Assessee carried the matter before the Ld. CIT(A) by way of filing the appeal, who has dismissed the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal. 4. We have heard the Ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 5. Undisputedly, the assessee society has been granted registration u/s 12AA of the Act and has also been found entitled for exemption u/s 80G of the Act. It is also not in dispute that the assessee society has been running the hostel and mess facilities for its students and no outsider is allowed in the hostel as well as in the mess. 6. The Ld. AR for the assessee contended that the assessee's case is covered by the decisions rendered by the Hon'ble Supreme Court of India and also the decision rendered by the Co-ordinate Bench of Tribunal in the cases ....
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....table Foundation Poona, Civil Appeal No. 7186/2014, date of order 13.12.2017, (Supreme Court of India) and decision rendered by Hon'ble High Court of Delhi in the case cited as DIT (exemption) vs. M/s Indraprastha Cancer Society, ITA No. 240/2014, date of Order 18.11.2014, (High Court of Delhi). 12. The Hon'ble Supreme Court in the case of Rajasthan and Gujarati Charitable foundation Poona (supra) upheld the view taken by the Tribunal and affirmed by Hon'ble Bombay High Court in case of Commissioner of Income Tax vs. Institute of Banking Personnel Selection (IBPS)' [(2003) 131 Taxman 386 (Bombay)] vide which the contention of the Revenue that disallowing the depreciation on the ground that once the capital expenditure is treated as application of income for charitable purposes, the assessee had virtually enjoyed 10% right off of the cost of assets and therefore grant of depreciation would amount to giving double benefit to the assessee has not been accepted by the Tribunal as well as Hon'ble High Court. The Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection (supra) turned down the contention of the Department on double benefit by returning the follow....
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....ccount of depreciation. It was held that income of a Charitable Trust derived from building, plant and machinery and furniture was liable to be computed in normal commercial manner although the Trust may not be carrying on any business and the assets in respect whereof depreciation is claimed may not be business assets. In all such cases, section 32 of the Income Tax Act providing for depreciation for computation of income derived from business or profession is not applicable. However, the income of the Trust is required to be computed under section 11 on commercial principles after providing for allowance for normal depreciation and deduction thereof from gross income of the Trust.In view of the aforesatated judgment of the Bombay High Curt, we answer question No. 1 in the affirmative i.e., in favour of the assessee and against the Department. 4.Question No. 2 herein is identical to the question which was raised before the Bombay High Court in the case of Director of Income-tax (Exemption) v. Framjee Cawasjee Institute [1993] 109 CTR 463. In that case, the facts were as follows: The assessee was the Trust. It derived its income from depreciable assets. The assessee took into ac....