2019 (6) TMI 653

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....ing schools and other educational institutions and looking to its educational activity, it was granted registration u/s 12AA as a charitable trust. Ld. AO on the perusal of the details furnished during the course of assessment proceedings, noted that assessee has taken fees in respect to Hostel facilities and transportation charges from the students which he has treated to be a separate activity in the nature of trade and commerce and after invoking proviso to section 2(15) and applying section 11 (4A), held that these are separate activities for which no separate books of accounts have been maintained and, therefore, these receipts from these activities have to be treated as business activities. The detailed discussion of the AO contains from pages 3 to 14 of the assessment order. 3. AO has also disallowed the claim of depreciation amounting to Rs. 2,37,86,974/-, following the ratio laid down by the Hon'ble Supreme Court in the case of Escorts Ltd. and also the assessment order for the assessment year 2010-11. 4. Ld. CIT (A) too has confirmed the said additions. 5. Before us, Ld. Counsel for the assessee submitted that in so far as issue of taxing the hostel and transportation ....

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....ic School Ghaziabad Society vs. ACIT (supra) and we find that the averment of the Ld. Authorised Representative that the assessee's case is covered in favour of the assessee by this order in the case of Delhi Public School Ghaziabad Society is correct. The relevant paragraphs of the Co-ordinate Bench in the case of Delhi Public School Ghaziabad Society are paragraphs 10, 11, 12 and 13 and the same are being reproduced herein under for a ready reference :- "10. It is, therefore, clear that the entire dispute in this matter revolves around the question whether or not the activity of running school buses exclusively for the facility of the students and staff, is an intrinsic part of the activity of running a school. Such a question is no longer res Integra. In the case of Krishna Charitable Society vs. Addl. CIT in ITA No. 4639/Del/2015 for AY 2011-12 dated 15.09.2017, a similar question had arisen. Vide para No.11, a coordinate bench of this Tribunal held that transport and hostel facility surplus cannot be considered as business income of the society as these activities are incidental to the main object of the assessee society of education. Relevant observations on this aspect....

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.... 530. Further, the reliance placed by the lower authorities on the decision of the Hon'ble Madras High Court in case of DCIT versus Wellington charitable trust is also misplaced because in that case, the only activity of that particular trust was renting out of the property and not education. We are also not averse to considering the latest legal developments too where in the recently introduced new legislation of Goods and service tax it is provided that no GST would be chargeable on the hostel fees etc recovered from the Students, faculties and other staff for lodging and boarding as they are engaged in education activities. Therefore we reverse the finding of the lower authorities and held that transport and hostel facilities surplus cannot be considered as business income of the assessee society which is mainly engaged in business activities and these activities are subservient to the main object of education of the trust." 11. In Kanha Charitable Trust Vs. ACIT ITA Nos.3297 & 5987/Del/2015, while placing reliance on its earlier decision in the case of Krishna Charitable Society Vs. ACIT it was held that in the absence of any clinching evidence to show that the hostel f....

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....n by the co-ordinate bench of the ITAT in the case of Delhi Public School Ghaziabad Society vs. ACIT in ITA no. 3593/Del/2015, we are of the considered view that hostel activities and transport activities of the assessee society are not in nature of business inasmuch as these two activities are incidental to the attainment of the main object of education. Accordingly, we allow the grounds of appeal raised by the assessee." 8. Thus, respectfully following the same we decide in this issue in favour of the assessee and hold that these activities are incidental to the attainment of the main object of the trust of the education and consequently assessee is entitled for benefit u/s 11. 9. In so far as issue of disallowance of depreciation is concerned now this matter stands in favour of the assessee by the judgment of Hon'ble High Court after taking note of decisions relied upon by the Ld. AO. In sums and substance the finding of the Hon'ble High Court is as under:- * The revenue had pointed out that there is an amendment in section 11 inserting sub section (6) by Finance Act (No. 2) of 2014, with effect from 1.4.2015 which reads that where any income is required to be applied for ac....