9911796707
TMI Blog2021 (11) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... dent by : Ms. Sunita Singh, CIT DR ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the assessee against order dated 12/05/2017 passed by CIT(A)-Ghaziabad for assessment year 2011-12. 2. The grounds of appeal are as under:- 1. That the learned CIT(A) has erred in confirming the findings of the learned AO and has failed to appreciate that the income of the educational institution is not to be included in the total income of the assessee society. 2. That the learned CIT(A) has further erred in failing to appreciate that the only source of income of assessee society is receipt by imparting education and for such students it has to necessarily under law, maintain a hostel and provide such facilities and such an activity is not an independent activity and as such any excess of receipt over expenditure for providing hostel facility but is only an integral part of activity of providing education is also part of education and is not an independent source of an income. 3. That the learned CIT(A) has further failed to appreciate that the assessee institution came into existence in the AY 1998-99 and till the AY 2009-10 such an income was not included in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the learned CIT(A) has further erred in failing to appreciate that the assessee cannot be said to have claim double deduction and otherwise too the depreciation is allowable to it as provided u/s 32(l)(ii) of the Act as has been held by the Hon ble High Court of Delhi in the case of DIT Vs.Vishwa Jagriti Mission reported in 262 CTR 558. The claim of depreciation of ₹ 2,53,09,707/- is liable to be allowed as deduction. It is therefore, prayed that it be held that the entire income of the society running an education institution is not liable to be included in the total income and that it be further held that the assessee is entitled to claim deprecation as held by the Hon'ble High Court of Delhi in the case of DIT Vs. Vishwa Jagriti Mission reported in 262 CTR 558. 3. The assessee society is duly registered with the Registrar of Society, Uttar Pradesh and the renewal was granted vide letter dated 6/2/2012 for the period from 4/1/2012 to five years. The Society has been grated registration u/s 12AA of the Income Tax Act, 1961 on 23/6/1998. The Society was granted exemption u/s 10(23C) (vi) of Income Tax Act, 1961 on 20/7/2005. The Society is running an Engineer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingayata education society [2015] 371 ITR 249 Karnataka High Court viii. Dr KN Modi Institute of pharmaceutical educational and research trust versus JCIT ITA No. A232I0Q\I20\5 dated 26/04/2017 ix. Surajmal Memorial education society versus CIT, ITA No. 2136/del/2016 dated 30/05/2016 Thus, the Ld. AR submitted that activity of running hostel was not a separate business activity of assessee under section 11(4 A) of the Act. The Ld. AR further submitted that the assessee institution came into existence in the AY 1998-99 and till the AY 2009-10 such an income was not included in the total income of the assessee, as being integral part of the total income of the society running an educational institution. In fact, even in the subsequent assessment years i.e. 2012-13 onwards, hostel has not been treated as business u/s 11 (4A) of the Act. In view thereof, the Ld. AR submitted that action of the AO/CIT(A), in treating the providing the hostel facility to the students as business is against the principles of consistency, and hence the disallowance unsustainable in law. The Ld. AR relied upon the judgment of the Hon ble Apex Court in the case of Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or maintenance it had furnished similar details. In fact, the assessee made specific submissions in respect of each of the head of indirect expenses. In such circumstances, the Ld. AR submitted that the approach of the CIT(A) in upholding the order of the Assessing Officer is apparently erroneous both on facts and in law. The assessee had submitted that the findings recorded by the CIT(A) in para 7 is based on mis-appreciation of facts. Thus, the Ld. AR submitted that such findings are not only erroneous but are wholly arbitrary. 6. In so far as the disallowance of depreciation claimed, the Ld. AR submitted that this issue has been settled by the Hon ble Apex Court in the case of CIT vs. Rajasthan Gujarati Charitable Foundation Poona reported in 402 ITR 441, wherein it was held that in case of charitable institution registered under section 12A, even though expenditure incurred for acquisition of capital assets was treated as application of income for charitable purposes under section 11(1 )(a), yet depreciation would be allowed on assets so purchased. The relevant para of the aforesaid judgment is reproduced hereunder: 1. These are the petitions and appeals filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question which arose before the Court for determination was whether depreciation could be denied to the assessee, as expenditure on acquisition of the assets had been treated as application of income in the year of acquisition? It was held by the Bombay High Court that section 11 of the Income-tax Act makes provision in respect of computation of income of the Trust from the property held for charitable or religious purposes and it also provides for application and accumulation of income. On the other hand, section 28 of the Income-tax Act deals with chargeability of income from profits and gains of business and section 29 provides that income from profits and gains of business shall be computed in accordance with section 30 to section 43C. That, section 32(1) of the Act provides for depreciation in respect of building, plant and machinery owned by the assessee and used for business purposes. It further provides for deduction subject to section 34. In that matter also, a similar argument, as in the present case, was advanced on behalf of the revenue, namely, that depreciation can be allowed as deduction only under section 32 of the Income-tax Act and not under general principles. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into account. This view of the Tribunal has been confirmed by the Bombay High Court in the above judgment. Hence, Question No. 2 is covered by the decision of the Bombay High Court in the above Judgment. Consequently, Question No. 2 is answered in the Affirmative I.E., in favour of the assessee and against the Department. After hearing learned counsel for the parties, we are of the opinion that the aforesaid view taken by the Bombay High Court correctly states the principles of law and there is no need to interfere with the same. Further reliance is placed on the judgment of Hon ble High Court of Delhi in the case of Director of Income Tax vs. Vishwa Jagriti Mission 262 CTR 558. In view of the aforesaid judicial pronouncements, the Ld. AR submitted that disallowance of depreciation by the Assessing Officer and sustained by the CIT(A) is unsustainable in law and hence same is liable to be deleted. Thus, the Ld. AR prayed that it be held that the assessee was eligible to the claim of deduction as had been allowed in the preceding assessment years. It be further held that the assessee does not carry any business activity and is only engaged in an activity which is charita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered 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 IT vs. State of UP (1976) 38 STC 428 (All) wherein question arose in Indian Institute of Technology vs. State of UP (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. It was observed that the statutory obligation of maintenance of the hostel, which involved supply, and sale of food was an integral part of the objects of the Institute nor could the running of the hostel be treated as the principal activity of the Institute. The Institute could not be held to be doing business. Further means being supplied in a hostel to the scholars, visitors, guest faculty etc. cannot be eligible to sales tax where main activity is academics as held in scholars home Senior Secondary School 42 VST 530. Further, the reliance placed by the lower authorities on the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
