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TMI Blog2022 (9) TMI 967X X X X Extracts X X X X X X X X Extracts X X X X ..... t was clarified that the books of accounts were maintained on the basis of which the surplus from both the heads has been demarcated and declared in the Income & Expenditure Account. 3. Because the Hon'ble CIT(A) has erred in law & on fact in not appreciating the fact that "If the profits must necessarily feed a charitable purpose, under the terms of the trust, the mere fact that the activities of the trust yield profit will not alter the charitable character of the trust. The test is very clear that, the genuineness of the purpose tested by the obligation created to spend the money exclusively or essentially on "charity".' This view is supported by Sole Trustee. Lok Shikshana Trust v. Cit. Mysore. 1976 1 SCC 254 that: ( SCC pp. 274-75, para 41) 4. Because the Hon'ble CIT(A) has erred in law and on fact ignoring the ITAT decision that Transport & Hostel Facilities surplus cannot be considered as Business Income of the Society if the same was an integral part of its objects.(ITANO.4639/Del/2015 Addl.CIT, Range- 1, Ghaziabad Vs. Krishna Charitable Trust, Ghaziabad. 5. Because the Hon'ble CIT(A) has erred in law and on facts in not allowing the exemption u/s 11 of I.T. Act, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explaining the delay. Therefore, condonation of delay should not be allowed to the assessee. 5. Placing re-joinder to the above objection, Ld. Counsel for the assessee submitted that the assessee noticed from the Income Tax Portal that outstanding demand of Rs.1,69,060/- was showing on 30.03.2022 then he immediately started to search the First Appellate Order but there was Corona Pandemic situation during that point of time and the assessee filed written application to Ld.CIT(A) on 06.09.2021 and thereafter, on 15.09.2021 requesting to supply certified copy of appellate order and could not receive the same. Thereafter, finally the assessee received copy of First Appellate Order from the earlier Counsel on 25.12.2021 therefore, there is sufficient cause by the assessee for explaining the delay in filing the appeal before the Tribunal. Ld. Counsel for the assessee also submitted that the Hon'ble Supreme Court has directed that the period from 15.03.2020 to 31.01.2022 should not be taken into consideration while computing limitation period for filing LIC before Judicial Forums and Quasi Judicial Authority therefore, delay in filing the appeal may kindly be condoned. 6. I take respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viding of hostel facilities and transportation facilities to the students during the year but has not maintained separate books of accounts for these business activities as per the provisions of section 11 (4A) of the act and therefore assessee was not eligible for exemption under section 11 on receipt from these activities and as such the assessee should have disclosed surplus generated from these activities for taxation in the return of income. such omission on failure on the part of the assessee to disclose truly and fully all material facts necessary for the assessment has necessitated the initiation of proceedings under section 147 of the act. Consequently notice under section 148 was issued to the assessee after obtaining approval of the Commissioner of income tax under section 151 (1) of the act. The assessee complied with the above notice and filed letter dated 17/10/2013 submitting that the return of income filed originally may be treated as return of income in response to the notice under section 148 and requested for issuance of notice for further compliance. 6. The learned assessing officer noted that assessee has provided transport facilities as well as hostel facili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom other sources and not under the head business and profession. Accordingly he upheld that the gross receipt of the assessee of Rs. 344200 for assessment year 2006 - 07 and Rs. 931950/- for assessment year 2007 - 08 respectively has to be treated to be the income of the appellant liable to tax and not liable to the benefit of exemption from the incidence of tax under the provisions of section 251 (1) (a) read with the provisions of section 251 (2) of the income tax act 1961 and no further consideration of the action of the learned assessing officer as detailed in the impugned assessment order is required. Therefore, he enhanced the income of the assessee by determining the total income at the gross receipt of the assessee for both the years. Such order was passed on 30/3/2007 by the learned commissioner appeals. 8. Assessee aggrieved with the order of the learned commissioner of income tax appeals has preferred appeal for both these years before us. The assessee submitted that assessee is carrying on the charitable activities of education. For providing education, it is also providing to the students of the trust transport facilities and hospital facilities. These are not the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not commercial activities rather than this were the necessary activities ancillary to the attainment of the main objectives , receipts for the respective year in the books of accounts were disclosed. It is not the case of the learned assessing officer that the hostel facilities and the transport facilities are provided to the persons who are neither the students nor the staff of the assessee trust. The identical issue has been decided by the coordinate bench in ITA No ITA No. 4639/Del/2015 Assessment Year: 2011-12) where one of us was the author holding that transport facilities and hostel facilities provided by the educational institutes to the students of that particular society and staff of the educational Institute cannot be considered as a separate business of the trust and no requirement of maintaining separate books of account under section 11 (4A) of the income tax act is required to be fulfilled. It was held as under:- "11. We have carefully considered the rival contentions and perused the orders of the lower authorities and other judicial pronouncement placed before us. In the grounds No. 1 - 3 assessee is contesting that addition made by the Ld. assessing officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e property and not education. We are also not averse to considering the latest legal developments too where in the recently introduced new legislation of Goods and service tax it is provided that no GST would be chargeable on the hostel fees etc recovered from the Students , faculties and other staff for lodging and boarding as they are engaged in education activities. Therefore, we reverse the finding of the lower authorities and held that transport and hostel facilities surplus cannot be considered as business income of the assessee society, which is mainly engaged in educational activities, and these activities are subservient to the main object of education of the trust. In the result 1 - 3 of the appeal of the assessee are allowed." The learned departmental representative could not show that how the issue is not squarely covered in favour of the assessee. Therefore respectfully following the decision of the coordinate bench in case of Krishna educational society vs. Additional Commissioner Of Income Tax (supra) , we allow the appeal of the assessee and hold that assessee is entitled to exemption under section 11 and 12 of the income tax act with respect to the hostel and tra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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