SANJO CHARITABLE SOCIETY,GHAZIABAD vs. JCIT, GHAZIABAD

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ITA 4771/DEL/2015Status: DisposedITAT Delhi19 February 2016AY 2010-114 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the bus facility provided to students was an incidental business activity to the attainment of the society's educational objectives. Therefore, the income derived from it qualified for exemption under Section 11 of the Income Tax Act.

What were the facts?

The assessee, a charitable society running a school, provided bus facilities to students. The Income Tax Officer and CIT(A) treated the surplus from this activity as business income, denying exemption. The assessee contended it was incidental to their educational objectives.

What were the issues?

Whether surplus from providing bus facility to students is business income or exempt income incidental to the charitable object of running a school.

Which sections of the Income-tax Act were involved?

Section 11

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI

Hearing: 10.12.2015Pronounced: 19.02.2016

ORDER PER C.M.Garg, J.M. This appeal by the assessee has been preferred against the order of CIT(A), Ghaziabad dated 06.05.2015 passed in appeal no. 32/2013-14/GZB. 2. The sole ground raised by the assessee-appellant reads as follows :-

1. That the learned Commissioner of Income- Tax(Appeals) erred in law and on facts of the case in confirming the order of assessing officer treating surplus arising from providing bus facility for coming to school and going back to home to the students of the school as business income without appreciating the facts and material available on records.”

2 Sanjo Charitable Society 3. We have heard arguments of both the sides and carefully perused the relevant material placed on record before us. The Ld. AR contended that the authorities below were not justified in holding that the surplus from providing bus facility for coming to school and going back to home to the students of the school as business income, without property appreciating the facts and material available on record placed by the assessee.

4.

Replying to the above the Ld. Departmental Representative (DR) contended that the income from bus operations is a business income which is not entitled exemption u/s 11(1), (2), (3) & (3A) of the Income Tax Act, 1961 (For short the Act.) The ld. DR further contended that as per sub section (4A) of section 11 of the Act said provisions of sub section (1) to (3A) of section 11 of the Act do not apply to income which is of business income in nature, hence, the AO was quite correct in making additions in this regard and the CIT(A) rightly upheld the same.

5.

The Ld. AR placing rejoinder to the above contentions of the Revenue, submitted that the income arose from bus facilities providing activities in an incidental to the attainment of the objectives of the institution or society hence, exemption u/s 11(1) of the Act is available for the assessee society and thus AO may be directed to allow the same.

6.

On careful consideration of above rival submissions of both the sides at the outset, it is pertinent to note that as per sub section (4A) of section 11 of the Act earlier sub sections (1) to (3A) shall not apply in relation to any income of a trust or an institution, being profits and gains of business, unless the business is incidental 3 Sanjo Charitable Society to the attainment of the objectives of the trust or institution. Admittedly and undisputedly, the present assessee society is running school and the bus facility is being provided to the students for coming to school and going back to home without any profit motive on reasonable charges, and the same is nothing but incidental business activity which obviously incidental to the attainment of objectives of imparting and disbursing education. In this situation, the income arose therefrom can not be treated as business income and the same qualify the exceptional situation carved out by the legislation in the second limb of sub section (4A) of section 11 of the Act.

7.

Thus, we are included to hold that the assessee is entitled for exemption of tax on the income accrued during the relevant period from bus facility providing activities and the AO was not correct in dismissing the claim of the assessee and the CIT(A) was not justified in upholding the action of the AO in this regard. Accordingly, sole ground of the Assessee is allowed and AO is directed to allow the claim of the assessee.

8.

In the result, appeal of the assessee is allowed.

Order Pronounced in the Court on 19/02/2016

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