M/S. NABADIGANT EDUCATIONAL TRUST,BHUBANESWAR vs. ITO, WARD-2(1), BHUBANESWAR, BHUBANESWAR

This is an appeal filed by the assessee against the order of CIT(A)-

Berhampur, camp-Bhubaneswar, dated 27.10.14, for the assessment year

2007-08.

upholding the action of the Assessing Officer for treating the income from sale

of laptops as business not incidental to the carrying out the objectives of the

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assessee trust although the sale of laptops has been made to the students of

the college run by the assessee and not to outside parties.

authorities and materials available on record. The brief facts of the case are

that the assessee is a trust registered under section 12A of the Act. It runs

various educational institutions including two engineering colleges at

Bhubaneswar. In the return of income filed for the impugned assessment year

on 31.10.2007, the assessee disclosed Nil income. During the assessment

proceedings, on verification of financial statement, the Assessing Officer

observed that the assessee has sold laptops worth Rs.33,27,500/-, which was

purchased by it for Rs.27,87,000/-. The Assessing Officer held that purchase

and sale of laptops is a business activity not incidental to the main objectives

of the assessee and, accordingly, held it as business transaction and brought

the same to tax.

observing as under:

“5.3 I have carefully considered the matter. As mentioned by the AO in his report, the average purchase price of a laptop was Rs.3 5,540/- whereas the average sale price was Rs.46,215/-. In other words, the profit on each laptop is more than 30%. This can hardly be called a charitable activity, incidental to the objective of the appellant to run an educational institution. By taking advantage of its captive student community, the appellant, in a pure and simple business transaction, has procured laptops in bulk and sold the same to the students at a handsome

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profit. I, therefore, find no reason to differ from the finding of the AO that the above transaction is a pure and simple business transaction and, accordingly, confirm the action of the AO in bringing to tax the surplus from this transaction u/s. 11(4A). The grounds are, accordingly, dismissed.”

authorities and submitted that the profit from sale of laptops to the students

of the college was incidental to the charitable activities carried on by the

assessee trust and, therefore, was exempt u/s.11 of the Act.

laptops were sold to the students at a higher price than the cost price thereby

making profit of Rs.5,48,500/-, ld A.R. of the assessee submitted that the

assessee purchased laptops in bulk and, therefore, got a higher discount from

the dealer of the laptops. The laptops were sold to the students at the retail

price of the laptops in the market. When questioned by the Bench that why

charity was not done to the students by selling the laptops at the cost price

by the assessee, as the assessee is a charitable trust, ld A.R. had no answer

for the same. As no material has been brought on record by ld A.R. of the

assessee to show that the profit of Rs.5,48,500/- earned by the assessee was

incidental to the carrying on the charitable activity of the assessee trust, I find

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no good reason to interfere with the order of ld CIT(A), which is hereby

confirmed. Hence, grounds of appeal of the assessee are dismissed.

Order pronounced in the open court on 24/01/2017 in the presence of parties.

(N.S Saini) ACCOUNTANT MEMBER

Cuttack; Dated 24/01 /2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : M/s. Nabadigant Educational Trust, Plot No.No 2/17, IRC Village, Bhubaneswar. 2. The Respondent. ITO, Ward 2(1), Bhubaneswar 3. The CIT(A),Bhubaneswar 4. Pr.CIT, Bhubaneswar. 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,

ASST.REGISTRAR, ITAT, Cuttack Date Initial 1. Draft dictated on 24/01/17 Sr.PS 2. Draft placed before author 24/01/11 (dictation pad has Sr.PS been enclosed along with original file) 3. Draft proposed & placed before the AM second member 4. Draft discussed/approved by Second AM Member. 5. Approved Draft comes to the Sr.PS/P Sr.PS/PS S 6. Kept for pronouncement on Sr.PS 7. File sent to the Bench Clerk Sr.PS 8. Date on which file goes to the H.C. 9. Date on which file goes to the AR 10. Date of dispatch of Order.

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