TaxTMI 
TaxTMI 
2020 (5) TMI 655
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.... both on the facts and in law in confirming the addition of Rs. 60,91,641/- against the returned income filed by the assessee/appellant. b. That having regard to the facts and circumstances of the case, the learned CIT (Appeals) erred both on the facts and in law in concluding that the hostel running activity is a business activity and failed to appreciate the fact that appellant is a registered with AICTE , hostel facility is a mandatory requirement of AICTE to run the educational Institute. c. That having regard to the facts and circumstances of the case, the learned CIT (Appeals) erred both on the facts and in law in concluding that running of hostel is a business activity covered by the provisions of section 11 (4A) of the act and failed to appreciate the fact that the appellant had been running the hostel facility for last so many years and the same has been assessed as a charitable activity. d. That having regard to the facts and circumstances of the case, the learned CIT (Appeals) erred both on the facts and in law in allowing the expense of Rs. 2,43,68,399/- against the hostel receipts and calculating the surplus of Rs. 60,91,641/- from maintainin....
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....bers of the hostel or else could have reduced the cost of subsequent year to the fees charged from hostel student. He noted that Institute charges fees per student which is also comparable with market price ranging between Rs. 4500 - Rs. 5500 per month per student. Therefore,relying on the decision of the honourable Supreme Court in case of MUNICIPAL CORPORATION OF DELHI versus Children Book Trust in which it was pointed out that education cannot be regarded as a charitable object, he held that amendment in section 2 (15) of the act, word educational activities not-for-profit has been removed which clearly shows that the profit is allowed but its application can be given deduction as per section 11, 12 and 13 of The Income Tax Act. According to him,educationalactivities like of assessee are not charitable as on date. He further relied on the decision of Sole Trustee Lokshikshan Trust versus CIT [101 ITR 234] and held that hostel running and Mess running activity cannot be stated to be educational activity because educational activity means systematic education. Thereafter he proceeded to examine the expenditure of the assessee on hostel and mess activities. Thereafter, he noted tha....
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....has also made an application for admission of the additional ground of appeal stating that the learned CIT - A has erred in law and on facts in not allowing depreciation of Rs. 27410629/- as deduction and application of income. It is submitted that the above issue is squarely covered in favour of the assessee by the decision of the Honourable Supreme Court in case of CIT versus Rajasthan and Gujarati charitable foundation order in civil appeal numbers 7186/2014. It was further stated that above ground does not require any fresh facts to be investigated. Therefore, relying on the decision of the honourable Supreme Court in case of NTPC Ltd [229 ITR 383] and Sinhgad education society [397 ITR 344] , assessee submitted that this additional ground may be admitted for adjudication. 11. At the time of hearing, none appeared on behalf of the assessee. No adjournment application is also received. The appeal is already fixed twice earlier and on both the occasions, the assessee seeks the adjournment. Looking to the nature of the issues involved in this appeal, the appeal is decided on the merits of the case as per information available on record. 12. The learned departmental repres....
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....ent. It was held that normal depreciation can be considered as a legitimate deduction in computing the real income of the assessee on general principles or under section 11(1)(a) of the Income-tax Act. The Court rejected the argument on behalf of the revenue that section 32 of the Income-tax Act was the only section granting benefit of deduction on account 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 Court, we answer question No. 1 in the affirmative i.e., in favour of the assessee and against the D....
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....: "3. As stated above, the first question which requires consideration by this Court is: whether depreciation was allowable on the assets, the cost of which has been fully allowed as application of income under section 11 in the past years? In the case of CIT v. Munisuvrat Jain 1994 Tax Law Reporter, 1084 the facts were as follows. The assessee was a Charitable Trust. It was registered as a Public Charitable Trust. It was also registered with the Commissioner of Income Tax, Pune. The assessee derived income from the temple property which was a Trust property. During the course of assessment proceedings for assessment years 1977-78, 1978-79 and 1979-80, the assessee claimed depreciation on the value of the building @ 2½% and they also claimed depreciation on furniture @ 5%. The question which arose before the Court for determination was : whether depreciation could be denied to the assessee, as expenditure on acquisition of the assets had been treated as application of income in the year of acquisition? It was held by the Bombay High Court that section 11 of the Income-tax Act makes provision in respect of computation of income of the Trust from the property held for....
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..... The main addition has been challenged by the assessee as per ground number 2-4 of the appeal and therefore this ground of appeal is dismissed. 16. Ground number 2-4 of the appeal are with respect to the claim of the assessee that the hostel earning activity is not a business activity but charitable activity, subservient to main educational activity for which assessee exists and therefore surplus arising there from is not chargeable to tax as business income of the assessee u/s 11 (4A) of the Act . It should be taxed as an income derived from the charitable activities under section 11, 12 and 13 of The Income Tax Act. Accordingly, claim of the assessee is that it should be allowed the complete deduction of expenditure incurred by the assessee on hostel and mess activities. Admittedly the issue is squarely covered in favour of the assessee by the decision of the coordinate bench in case of019 (6) TMI 653 - ITAT DELHI SETH ANANDRAM JAIPURIA EDUCATION SOCIETY SETH ANAND RAM JAIPURIA SCHOOL VERSUS ACIT, EXEMPTION CIRCLE GHAZIABAD, JCIT, RANGE-2 GHAZIABAD and 2017 (9) TMI 1030 - ITAT DELHI KRISHNA CHARITABLE SOCIETY VERSUS ADDL. CIT, RANGE-1, GHAZIABAD where in identical issues has ....
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....ol 42 VST 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. In the result 1 - 3 of the appeal of the assessee are allowed." 17. There is no change in the facts and circumstances of the case. It is not the case of the revenue that assessee has provided the hostel and mess facilities to the students....