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TMI Blog2017 (11) TMI 1650X X X X Extracts X X X X X X X X Extracts X X X X ..... RDER Prashant Maharishi, A. M. 1. These are the appeals filed by the assessee against the order of the ld CIT(A)-Ghaziabad dated 02.03.2015 and 10.09.2015 for the Assessment Year 2010-11 and 2011-12. 2. The assessee has raised the following grounds of appeal in ITA No. 3297/Del/2015 Assessment Year 2010-11:- 1. That on the facts and circumstances of the case and in the law the learned commissioner of income-tax (Appeals) has grossly erred in confirming the additions made by Assessing Officer treating Hostel facility provided to college students as business of the appellant society considering the alleged surplus of ₹ 61,08,599/- as business income in the hand of appellant society. The observation made and basis adopted are erroneous, unjustified, unwarranted, bad in law and are without 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 cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the law the learned commissioner of income-tax (Appeals) has grossly erred in confirming the additions made by Assessing Officer treating Hostel facility provided to college students as business of the appellant society considering the alleged surplus of ₹ 14,22,076/- as business income in the hand of appellant society. The observation made and basis adopted are erroneous, unjustified, unwarranted, bad in law and are without 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 faci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the ld Assessing Officer on 28.03.2013 determining the total taxable income of the assessee at ₹ 6108599/-. The ld Assessing Officer has held that hostel receipts earned by the assessee of ₹ 9297000/- does not fall under the definition of education as per section 2(15) of the Act. According to the ld Assessing Officer the hostel fees earned by the assessee is a business activity. He therefore held that assessee should have maintained separate books of account as provided u/s 11(4A) of the Act. Though ld Assessing Officer treated the hostel facilities as business income of the assessee however, out of total expenditure shown of ₹ 10317499/- of hostel expenditure he only allowed ₹ 3188401/- out of salary, electricity, interest, gardening and other expenses as well as bus running and maintenance expenses. The ld Assessing Officer further disallowed the depreciation of ₹ 2019769/- relying on the decision of the Hon'ble Supreme Court in case of Escorts Ltd and Hon'ble Kerala High Court in case of Lissie Medical Institution. 6. Assessee aggrieved with the order of the ld Assessing Officer preferred appeal before the ld CIT(A), who vide order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviding hostel facilities to the students. The above issue is no more res Integra in view of the decision of the Hon ble Karnataka High Court in CIT versus Karnataka Lingayat education society in ITA No. 5004/2012 dated 15/10/2014 wherein it has been held that providing hostel to the students/staff working for the society s incidental to achieve the object of providing education, namely the object of the society. In view of this we are of the opinion that providing of hostel facilities and transport facilities to the student and staff member of the educational Institute cannot be considered as business activity but is subservient to the object of educational activities performed by the society. We are also supported by our view by the decision of the Hon ble Allahabad High Court in IIT versus state of UP, (1976) 38 STC 428 (All) wherein question arose in Indian Institute of Technology v. State of U.P. (1976) 38 STC 428 (All) with respect to the visitors' hostel maintained by the Indian Institute of Technology where lodging and boarding facilities were provided to persons who would come to the Institute in connection with education and the academic activities of the Institute. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DDIT Vs. Indraprastha Cancer Society ITA No. 240/2014 dated 18.11.2014. Therefore, respectfully following the decision of the Hon'ble Delhi High Court where the decision of the Hon'ble Supreme Court relied upon by the ld Assessing Officer are considered, ground No. 4 is allowed directing the Assessing Officer to delete the disallowance of depreciation of ₹ 18991092/-. 15. In the result in ITA No. 3297/Del/2015 filed by the assessee is allowed. 16. Now we come to the ITA No. 5987/Del/2015 for Assessment Year 2011-12, both the parties agreed that all the grounds of this appeal are similar to the grounds of appeal of the assessee for AY 2010-11. They also stated that their arguments are also similar. 17. We have carefully considered the rival contentions and also perused the orders of the lower authorities and are convinced that issue involved in this appeal are similar to the issues in appeal of the assessee for AY 2010-11. Therefore, for the similar reason as given by us while deciding ground No. 1 to 3 of the appeal for AY 2010-11 we also allow ground No. 1 to 3 of the appeal of the assessee for AY 2011-12 holding that hostel activities are incidental to edu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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