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TMI Blog2019 (6) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... HELD THAT:- We are of the view that since assessee exist for educational purpose only and hostel facility provided by the assessee society is incidental to the main objectives of the assessee society for education only, therefore, the authorities below were not justified in considering it to be activity of business in nature. Thus, the surplus out of hostel facility shall have to be considered as for educational purpose only which have to be applied for educational purposes only. Therefore, the addition made by the authorities below cannot be sustained. We, accordingly, set aside the Orders of the authorities below and delete the entire addition. - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court in the case of CIT vs. Rajasthan and Gujarat Charitable Foundation (supra), in which it was held that "the assessee is entitled to depreciation under section 32 of the I.T. Act on assets whose cost has been allowed as application to charitable purposes under section 11(1)(a) of the I.T. Act". We may also note that the Amendment in Section 11(6) of the I.T. Act has been brought by Finance Act, 2014, which becomes effective from A.Y. 2015-2016. Therefore, it is not applicable to assessment year under appeal i.e., 2010-2011. In view of the above, we set aside the Orders of the authorities below and delete the addition on account of depreciation. These grounds of appeals of the assessee are allowed. 8. On Ground Nos. 5 and 6, the assessee challenged the addition of ₹ 24,98,271/-. Learned Counsel for the Assessee reiterated the submissions made before the authorities below. He has submitted that hostel/ transportation is composite activity of the main object of the society. It is not separate and cannot be treated as business. The maintenance of the books of account is thus, not mandatory. The assessee carried on only educational activities. The maintaining of hostel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided to college student as business of the society and text the alleged surplus of ₹ 9887873/- as business income of the appellant. It was not the case of the revenue that assessee has rented out these hostels to the students who are not parted education in the above institutes. It was also not the case of revenue that assessee is primarily engaged in the business of providing 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 st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e pleaded before the Ld. CIT(A) that assessee is providing hostel facility as per AICTE guidelines and that in preceding assessment years assessment has been completed under section 143(3) and surplus from the hostel facility have been considered as educational activity and no addition have been made on this account and it was not treated as business activity of the assessee. The Ld. CIT(A) did not rebut the submission of the assessee in the appellate order. The assessee also pleaded before the Ld. CIT(A) that as regards other hostels, assessee has been charging a reasonable amount. This fact is also not rebutted by the Ld. CIT(A) in his findings. It was, therefore, proved that hostel facility provided by the assessee society is incidental to the main objectives of the assessee society of 'Education'. Therefore, it could not be treated as business activity. Thus, there is no requirement to maintain separate books of account for the same. By providing hostel facility, the assessee is providing a conducive atmosphere for study and various opportunities for educational experience, which a day scholar or a commuter is always deprived. The hostel facility is provided only to the stude ..... X X X X Extracts X X X X X X X X Extracts X X X X
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