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TMI Blog2017 (11) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... ents. Therefore it cannot be said that it is not incidental to the education. None of the instances were found by the ld AO or appellate Authorities where the student is not studying in the school and is providing transport or games facility. It is also not the case of the revenue that surplus generated by the assessee in transportation activity is not used for the educational activities. Further the provisions of section 11 (4A) does not apply in case the activity generating profit is incidental to the attainment of the objectives of the trust. In the present case it is not disputed that activities of the games and transportation is for the students of the society and hence both these activities are incidental to the main objects of the trust. Hence the lower authorities erroneously applied the above provisions and taxed the surplus as the separate income of the assessee denying benefit of section 11 and 12 of the act. Transportation activities and Games activity are incidental to the educational activity of the trust. See Queens‟s Educations Case [2015 (3) TMI 619 - SUPREME COURT ] - Decided in favour of assessee. Disallowance being payment of interest etc to provident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax without having the benefit of section 11 and 12 of the income tax act and further depreciation on the assets which are allowed as application fully was decided by the Ld. CIT appeal by confirming the addition on account of transportation business and deleting the disallowance of depreciation. c. ITA No. 2500/del/2017 for assessment year 2010- 11 and ITA number 2501/Del/2017 for assessment year 2011-12 against the order of the Commissioner of income tax (Appeals), Ghaziabad dated 01/03/2017 for both the years wherein the penalty of ₹ 5170420/- ₹ 1388394/ under section 271 (1) of the income tax act 1961 and levied by the Ld. additional Commissioner of income tax, range 1, Ghaziabad wide order dated 21/03/2016 confirmed. d. ITA No. 1387/del/2016 filed by the DCIT (exemption)( ld Assessing officer ) filed again the order of the Commissioner of income tax (appeals), Ghaziabad dated 21/12/2015 against deleting the disallowance on account of depreciation of ₹ 1 891 8933/ on account of application of income for charitable purposes the assets which are been hundred percent allowed as deduction. Furthermore the revenue has further challenged the deletio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other school is neither reliable nor confronted to assessee, there is no material against the assessee, past history and AO‟s computation is giving absurd results etc. hence order is without any application of mind . 7. Because, the learned lower authority has grossly erred in upholding disallowance expenses of ₹ 15,03,344/- being payment of interest etc. to PF without even writing a single word or giving any finding on the issue. 8. Because, without prejudice to above but only as an alternative , the learned lower authority also erred in not appreciating the fact that in any eventuality admittedly assessee has already utilized more than 85% of its income for charitable purposes‟ and so any surplus will also be exempt u/s 11-12. 9. Because, learned commissioner of income tax (appeals) grossly erred in confirming the disallowance of depreciation ₹ 1,51,68,229/- without properly appreciating the law on the issue and arguments put forward by the assessee including the one that where there are two views than the one which is favorable to assessee shall apply. 3. The assessee has raised the following grounds in ITA No. 910/Del/2016:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome for charitable purposes is not allowable as the capital expenditure on acquiring fixed assets has already been allowed in respective years. 2. Ld. CIT(A) erred in law and on facts in deleting the addition of ₹ 12,32,699/- on account of sports activities ignoring the facts that the expenses have been claimed on estimated basis and assessee has tried to segregate these expenses from the combined income expenditure account of the society without maintaining separate set of books of account as required in the law as per section I 1(4A) of the l.T. Act. 3. Ld. C1T(A) erred in law and on facts in deleting the addition of ₹ 13,19,605/- on account of transport activities ignoring the facts that the expenses have been claimed on estimated basis and assessee has tried to segregate these expenses from the combined income expenditure account of the society without maintaining separate set of books of account as required in the law as per section 11(4A) of the l.T. Act. 5. The assessee has raised the following grounds in ITA No. 2500/Del/2017:- 1. That, the notice issued U/s 271 (1) (c) and order imposing penalty at ₹ 51,70,422.00 under said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in not providing proper and adequate opportunity of hearing to the Appellant to place the evidence/details on record to substantiate its claim during the assessment proceedings. 10. That, the penalty proceedings have been initiated and imposed without any specific charges, hence, the same are liable to be deleted. 11. That in any case the penalty imposed is unjust, arbitrary and highly excessive 12. That, the appellant reserves its right to add, amend/modify the grounds of appeal. All of the above grounds of appeal are without prejudice and are mutually exclusive to each other. 6. The assessee has raised the following grounds in ITA No. 2501/Del/2017:- 1. That, the notice issued U/s 271 (1) (c) and order imposing penalty at ₹ 1388394/- under said section are illegal, bad in law, and without jurisdiction. 2. That, the Assessing Officer has erred in issuing the penalty notice and initiating the proceedings U/s 27l(l)(c) without recording the requisite satisfaction, as required by the provision of the Income Tax Act, 1961, which is illegal, bad in law and without jurisdiction and the same is erroneously uphold by the CIT(A). 3. Tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcessive 12. That, the appellant reserves its right to add, amend/modify the grounds of appeal. All of the above grounds of appeal are without prejudice and are mutually exclusive to each other. 7. Briefly stated the facts for assessment year 2010 11, that the assessee is a trust carrying on the educational activities for about 30 years. It is also registered under section 12A of the income tax act. The assessee has earned income from fees, income from games and transportation. The Ld. assessing officer enquired that games income, transportation income and other incomes, why the provisions of section 11 (4A) of the income tax act should not be applied to that as according to him these are in the nature of business. The assessee replied to the Ld. assessing officer that these are the activities provided by the Society for the purpose of furtherance of the education activity and is not in business. These are incidental to the educational activities of the assessee. The Ld. assessing officer rejected the contention of the assessee and held that educational activity not-for-profit are now only covered under section 2 (15) of the income tax act. Therefore he held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation amounts to double deduction. 11. Aggrieved by the same the assessee preferred an appeal before the Ld. CIT (A). The Ld. CIT (Appeal) passed an order on 24/02/2015 wherein he held that appellant has not forwarded any argument as to why separate fees is charged for transportation and sports activity. He further held that there is no dispute that merely getting admission to the course will not make a student eligible to get transport facility and huge fees charging that they most forceful which no justification has been given by the appellant. He further held that when getting of transport activities not linked to getting admission in the College it has no force in the argument of the appellant that the transportation activity should be termed as education.Therefore aggrieved by the order of the lower authorities. The assessee is in appeal before us. 12. The ground No. 1 is general in nature and therefore same is dismissed. 13. Ground No. 2 of the appeal of the assessee is against the transport facilities, sports activity of the school provided exclusively to the students was not considered as an incidental to educational activity under section 2 (15) of the soc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is nothing but providing an additional facility to the students. Therefore it cannot be said that it is not incidental to the education. None of the instances were found by the ld AO or appellate Authorities where the student is not studying in the school and is providing transport or games facility. It is also not the case of the revenue that surplus generated by the assessee in transportation activity is not used for the educational activities. Further the provisions of section 11 (4A) does not apply in case the activity generating profit is incidental to the attainment of the objectives of the trust. In the present case it is not disputed that activities of the games and transportation is for the students of the society and hence both these activities are incidental to the main objects of the trust. Hence the lower authorities erroneously applied the above provisions and taxed the surplus as the separate income of the assessee denying benefit of section 11 and 12 of the act. The honourable supreme court also said in the Queens‟s Educations Case ( Supra) that If after meeting expenditure, a surplus arises incidentally from the activity carried on by the educational insti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is allowed. 18. In the result appeal of the assessee in ITA No. 2733/del/2015 for assessment year 2010 11 is partly allowed. 19. Now we come to the appeal of the assessee in ITA No. 910/Del/2016 for assessment year 2011 12. 20. The ground No. 1 of the appeal of the assessee is general in nature and therefore dismissed. 21. Ground No. 2 5 of the appeal of the assessee is pertaining to treatment of Transportation facility, sports activity of the school provided exclusively to the students of the society which are held by the Ld. assessing officer as separate business activities and therefore applied section 11 (4A) and denied the deduction/exemption under section 11 and 12 of the income tax act. Both the parties confirmed before us that the facts and circumstances of the case in the present appeal is identical to the facts and circumstances of the case of the assessee in ITA No. 2733 del 2015 for assessment year 2010 11. 22. We have carefully considered the rival contentions and also perused the orders of lower authorities. We‟ve already held in the appeal of the assessee for assessment year 2010 11 in ITA No. 2733/Del/2015 wherein we have held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this we dismiss ground No. 2 and 3 of the appeal of the revenue. 27. In the result ITA No. 1387/del/2016 for assessment year 2011 12 filed by the revenue is dismissed. 28. ITA No. 2500/Del/2016 for assessment year 2010 11 and ITA number 02501/Del/2017 for assessment year 2011 12 filed by the assessee are against the order of the Ld assessing officer levying penalty under section 271 (1) of ₹ 1388394/- and ₹ 5170422/- for respective years, by order dated 21/03/2016 on addition on account of transportation activity and games activity of the assessee held by the Ld. assessing officer as business income. The Ld. CIT appeal confirmed the penalty levied by the assessing officer. Therefore, assessee is in appeal before us. 29. As we have already directed the Ld. assessing officer to consider the transportation activity and games activity of the assessee as activities incidental to the main object of the society of education and allow benefit of section 11 and 12 of the act on profits generated by these activities. In view of this, as the addition has already been deleted by us in the respective appeals we also allowed the appeal of the assessee against the pen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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