TaxTMI 
TaxTMI 
2024 (1) TMI 967
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....by the AO was neither erroneous nor prejudicial to the interests of revenue. 2. For that the Ld PCIT erred in holding that the rent received from the building which was let out since lying idle for some period constituted income from business when the objects the predominant object of the Society was providing education and therefore the question of maintaining separate books of accounts in respect of such receipts does not arise. 3. For that the Ld PCIT erred in holding that the rent received from the building constituted income from business when the investment in the immovable property was in accordance with the provisions of section 11(5) read with proviso 3 of section 10(23C) and income from such investments cannot be income from business . 4. For that the Ld PCIT erred in holding that the AO made no enquiry with regard to the applicability of 7^th proviso to section 10(23C)(vi) when the AO had treated the rental income as income from other sources which view was not unsustainable in law and hence merely because the same was not discussed in the order did not make the order erroneous. 5. For that the income of the society was to be computed ....
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....of the assessee. The assessee had not maintained separate books of accounts for this rental income as per records available. The assessee had explained during the course of assessment that it had rented out its properties for revenue generation to meet its expenditure. So, the rental income was not incidental to attainment of the objectives of the trust Hence, this rental income amounting to Rs. 2,02,34,592/- was not incidental to the attainment of the objectives of the trust as per section 11(4A) of the act and the same is not be exempted as per 7th proviso to section 10(23C)(vi) and resulting erroneous assessment of the same. The tax calculation should be as follows: Particulars Amount Taxable Income 2,02,34,592 Income Tax 58,82,678 Surcharge 8,82,432 E.Cess 2,02,959 Interest u/s 234B 24,35,870 Total tax effect 94,07,139 In view of the above the assessment order passed by the AO is found to be erroneous in so far as it is prejudicial to the interest of the revenue. As such, the assessment order is proposed to be reviewed in exercise of power conferred under section 263 of the Income Tax Act, 1961 enhancing/modifying the assessed ....
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.... in the instant case, the assessee is claiming exemption u/s 10 (23C) of the Act. The Hon'ble Supreme court, in the case of M/s New Noble Educational society, has categorically observed that income of educational institution from letting out of properties and utilization of infrastructure for conducting training programmes and seminars are not incidental to education. In the instant case, the assessee claimed exemption u/s 10(23C)(vi) of the Act, which was allowed by the A.O in the assessment u/s 143(3) of the Act . The assessee has shown income of Rs. 2,02,34,592/- from the source letting out of building' out of the total receipt of Rs. 3,97,86,089/-. It is apparent that substantial portion of the receipt of the society is from the rental income. As discussed in forgoing Para that seventh proviso of the section 10(23C) (vi) of the Act provides that: "Provided also nothing contained in sub clause (iv) or sub-clause (v) [or sub-clause (vi) or sub clause (via) shall apply in relation to any income of the fund or trust or institution [or any university or other educational institution or any hospital or other medical institution] being profit and gai....
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....In view of the above facts, the said assessment order u/s 143(3) of the Income Tax Act." 6. Aggrieved the assessee is now in appeal before this Tribunal. 7. The ld. Counsel for the assessee, stated that the assessee society has given the unutilised portion of building on rent for earning income and applying that income for charitable purposes of the society. It was also submitted that the issue about the institution being solely existing for educational purposes and not for purposes of profit has been the subject matter of litigation before various Hon'ble Courts and most of the decisions are in favour of the assessees. Reference was made to the decision of the Hon'ble Jurisdictional High Court in the case of DIT (Exemption) vs. Sahu Jain Trust [(2011) 243 CTR 131(Cal.). Reference was further made to the judgement of the Hon'ble Apex Court in the case of New Noble Educational Society V. Chief CIT 448 ITR 594 (SC), wherein the Hon'ble Court has held that since the present judgement has departed from the previous rulings regarding the meaning of the term 'solely', in order to avoid disruption, and to give time to institutions likely to be affected to make appropriate changes an....
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....decrease in the flow of students and some part of the buildings remained vacant, however, the fixed expenditure were being incurred regularly. It is claimed by the assessee that to cover up such expenditure, the need was felt to give the building on rent and to earn some revenue and with this intention, the buildings were given on rent. This exercise by the assessee society was for the object of the society and to carry out the activity of education at the institutions. It has been submitted that all these details have been submitted before the AO and also reliance was placed on various judgements including that of Hon'ble Jurisdictional High Court in the case of DIT(Exemption) vs. Sahu Jain Trust (supra) as well as the judgment of the Hon'ble Madras High Court in the case of CIT v. Madras Stock Exchange Ltd. [1976] 105 ITR 546 and since two views were possible on the issue in challenge of which one was in favour of the assessee, the ld. Assessing Officer adopted the same considering the judgement of the Hon'ble Jurisdictional High Court and allowed the benefit of Section 10(23C)(vi) of the Act to the assessee. 11. So far as the judgement of the Hon'ble Supreme Court in the case....