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TMI Blog2018 (7) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... tive in nature. In brief, grievance of the assessee is that the ld.CIT(A) has erred in upholding the action of the AO that activities of the assessee trust are in the nature of trade, commerce or business, hence covered under proviso to section 2(15) of the Income tax Act, 1961. The ld.CIT(A) has further erred in confirming the taxability of surplus over expenditure amounting to Rs. 13,82,059/-. Similarly, the ld.CIT(A) has erred in denying deduction of Rs. 14,18,305/- as application of income. 3. Brief facts of the case are that the assessee-trust was created in the year 1947. It has been enjoying registration under section 12AA of the Income tax Act. It is also enjoying benefit of section 80G(5) of the Act. It has filed its return of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reads as under: "8. In view of the above stated facts and considering the assessee's receipts as business receipts, after allowing the expenses as claimed in its income and expenditure a/c the surplus of income over expenditure amounting to Rs. 13,82,059/- (profit) is treated as income in the hands of the assessee trust. 8.1 As discussed above the claim of exemption u/s.11 and 12 of the Act is disallowed/denied. During the year under consideration the assessee has incurred capital expenditure of Rs. 19,71,648/- (construction of building) and has also claimed it an application of fund, as the activity of the trust is treated/considered as business in the nature of trade and commerce capital expenditure is not allowed. 8.1.1 In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless- (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;]] 6. Short question required to be adjudicated by the Tribunal is, whether providing hostel facility to the students by appellant-trust is to be considered as imparting education within the meaning of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents. They provide residential opportunities for the students to continue the process of education. It is a place where students stay for pursuing formal education away from their homes. The concept of hostel is not only limited to place of residence, rather it is a human practical laboratory for development of students. It is a center of education. Students learn as much as from their teachers as well as fellows during hostel stay. It enriches understanding of the curriculum through analytical discussion amongst the students living in the hostels, and may contribute to character building as well. Students in hostel not only learn the theoretical material, they also learn how to enhance their personal abilities and learn to live independent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asses. The ld.AO failed to note that the stand of the assessee was always to the effect that, to run hostel particularly for the students is an activity according to the object of the trust, and it is an aid for attaining educational objects. The AO thereafter made an analysis of alleged profit earned by the assessee. He looked into gross receipts minus expenditure, and surplus generated during the year. It is pertinent to note that surplus in the assessment year 2013-14 is Rs. 13.82 crores. Otherwise, in all other years, it is in between Rs. 2 to 4 lakhs. The assessee has to maintain building. It has to incur expenditure in capital field. If a small percentage of surplus is being generated then how all of a sudden the "charitable activity" ..... X X X X Extracts X X X X X X X X Extracts X X X X
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