DCIT(Examption), Circle - 1(1), Kolkata, Kolkata V. Maa Saraswati Gyan Mandir Education Society , Kolkata

ITA 2002/KOL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9330 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 08-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Assessee Lawyers: S M SURANA
• Keywords: Capital asset; Depreciation; Charitable institution; Cost of acquisition; Revised return; Capital expenditure; Capital Gains; CHAPTER IV
• Section: 143(3); 12AA; 11(1A); 264; 13; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI A.T. VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.2002/KOL/2017 ( / ASSESSMENT YEAR: 2012-13) DCIT(EXEMPTION), CIRCLE- 1(1), KOLKATA VS. MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY P-1, HIDE LANE, KOLKATA-700073 ./ ./ PAN/GIR NO. :AABTM 0777 H (APPELLANT) .. (RESPONDENT) APPELLANT BY :SHRI RADHEY SHYAM, CIT RESPONDENT BY : SHRI S. M. SURANA, ADVOCATE / DATE OF HEARING : 17/10/2019 /DATE OF PRONOUNCEMENT : 10/01/2020 / O R D E R PER DR. A. L. SAINI, AM: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTA INING TO ASSESSMENT YEAR 2012-13, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL)-25, KOLKATA, IN APPEAL NO. LD. CIT(A), KOL KATA-25/10121/2015-16, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PAS SED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT T HE ACT) DATED 27/03/2015. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW, THE LD. CIT(A) HAS ERRED IN GRANTING RELIEF TO THE ASSESSEE ON ACCOUNT OF DEPRECIATION AMOUNTING TO RS. 2,84,67,351/-. MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY ITA NO.2002/KOL/2017 ASSESSMENT YEAR:2012-13 2 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW, CLAIM OF DEPRECIATION ONASSETS FOR WHICH THE ACQUISITION COS T TO THE ASSESSEE IS NIL, ALLOWS THE ASSESSEE TO ENJOY DOUBLE DEDUCTION. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONSIDERING CAPITAL GAIN OF RS. 8,40,000/- ON SALE OF CARS TO BE QUALIFIED FOR EXEMPTION U/S. 11(1 A) OF THE INCOME TAX ACT, 1961 IGNORING THAT THE SALE PROCEEDS WAS NOT UTILIZED TO ACQUIRE NEW ASSETS AS REQUIRED IN THE PROVISION, INSTEAD SALE PROCEED WAS DEDUCTED FROM THE BLOCK OF FIXED ASSETS IN A CASE WHERE COST OF ACQUISITION OF AIL FIXED ASSETS IS CO NSIDERED AS NIL AFTER EXEMPTION U/S. 11(1)(D) OF THE INCOME TAX ACT, 1961 . 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING ADMINISTRATIVE AND ESTABLISHMENT EXPENSES' OF RS. 3,54,12,977/- IN COMPUTATION FOR DETERMINATION OF QUANTUM OF ACCUMUL ATION U/S. 11(1)(A) OF THE I. T. ACT, 1961. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING TO SET OFF OF EARLIER LOSS OF RS. 6,04,16, 031/- AGAINST THE PRINCIPLES THAT LOSS IS NEGATIVE PROFIT AND WHEN PROFIT IS EXE MPTED, LOSS IS ALSO EXEMPTED. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING LOSS OF RS. 1,14,75,323/- FROM THE BUSINES S OF RUNNING SCHOOL BUS AND LOSS OF RS. 20,56,394/- FROM RUNNING OF HOSTEL QUAL IFIED FOR EXEMPTION U/S. 11(4A) OF THE INCOME TAX ACT, 1961 IGNORING THAT NO SEPARATE ACCOUNT WAS SUBMITTED ALONG WITH THE RETURN OF INCOME AS REQUIR ED IN THE PROVISION. 7. THAT THE APPELLANT CRAVES FOR LEAVE TO AMEND, AL TER, MODIFY, SUBSTITUTE, ADD OR ABRIDGE AND/OR RESCIND ANY OR ALL OF THE GROUNDS OF APPEAL DURING ANY STAGE OF APPEAL. 3. GROUND NOS. 1 AND 2 RAISED BY THE REVENUE RELATE S TO GRANT OF RELIEF TO THE ASSESSEE ON ACCOUNT OF DEPRECIATION AMOUNTING TO RS . 2,84,67,351/-. 4. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE AS SESSMENT PROCEEDINGS, THE AO NOTICED THAT ASSESSEE TRUST, IN THE COURSE OF ITS A CTIVITIES, ACQUIRED DIFFERENT ASSETS, WHICH WERE PURCHASED WITH THE SURPLUS FUNDS AVAILAB LE. THE ENTIRE EXPENDITURE INCURRED FOR ACQUISITION OF CAPITAL ASSETS WAS TREA TED AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES UNDER SECTION 11(1)(A) OF THE A CT, IN THE RESPECTIVE YEARS IN WHICH SUCH ASSETS WERE PROCURED. MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY ITA NO.2002/KOL/2017 ASSESSMENT YEAR:2012-13 3 IN ADDITION TO THIS, ASSESSEE TRUST IN ITS COMPUTAT ION OF INCOME AND EXPENDITURE ACCOUNT HAD CLAIMED DEPRECIATION AMOUNTING TO RS.2, 84,67,351/- AS APPLICATION OF INCOME. THEREFORE, THE AO WAS OF THE VIEW THAT THE PRACTICE SO FOLLOWED BY THE ASSESSEE HAS RESULTED INTO DOUBLE DEDUCTION. THAT IS, WHEN ACQUISITION OF ASSETS IS TREATED AS APPLICATION OF INCOME FOR CHARITABLE PUR POSES, THE VALUE OF ASSETS STANDS FULLY WRITTEN OFF, AND OVER AND ABOVE, IF DEPRECIAT ION IS ALLOWED, THE SAME WILL RESULT IN DOUBLE DEDUCTION OF CAPITAL EXPENDITURE L EADING TO VIOLATION OF THE PROVISIONS OF SECTION 11(1) OF THE ACT, THEREFORE, AO DISALLOWED THE DEPRECIATION CLAIM OF RS.2,84,67,351/-. 5. ON APPEAL, LD CIT(A) DELETED THE ADDITION. AGGRI EVED, BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 6. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE THR OUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLU DING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS BROUGHT ON RECORD. LEARN ED DR FOR THE REVENUE SUBMITTED BEFORE THE BENCH WRITTEN SUBMISSIONS, THE SAME IS NOT BEING REPRODUCED IN THIS ORDER FOR THE SAKE OF BREVITY. T HE SUM AND SUBSTANCE OF THE WRITTEN SUBMISSIONS FILED BY LD DR IS THAT THE LD C IT(A) HAS ERRED IN GRANTING RELIEF TO THE ASSESSEE ON ACCOUNT OF DEPRECIATION A MOUNTING TO RS. 2,84,67,351/-, AS THE CLAIM OF DEPRECIATION ON ASSETS FOR WHICH TH E ACQUISITION COST TO THE ASSESSEE IS NIL, ALLOWS THE ASSESSEE TO ENJOY DOUBL E DEDUCTION, WHICH IS NOT PERMITTED UNDER THE ACT. THE LD DR FURTHER SUBMITTE D THAT SECTION 11(6) OF THE ACT, INSERTED IN THIS FINANCE ACT, PUT THE DEBATE TO REST. SECTION 11(6) OF THE ACT CLEARLY STATED THAT CLAIM OF DEPRECIATION WOULD NOT BE ALLOWED IF THE COST OF THE ASSET IS TAKEN AS APPLICATION, THEREFORE, THE ADDIT ION MADE BY THE AO SHOULD BE SUSTAINED. ON THE OTHER HAND, LD COUNSEL FOR THE AS SESSEE DEFENDED THE ORDER PASSED BY THE LD CIT(A). MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY ITA NO.2002/KOL/2017 ASSESSMENT YEAR:2012-13 4 WE NOTE THAT SUB-SECTION (6) TO SECTION 11 WAS INSE RTED BY THE FINANCE (NO. 2) ACT, 2014, W.E.F. 01.04.2015, WHICH STATES THAT IF ACQUISITION OF ASSETS HAD BEEN CLAIMED AS APPLICATION, THEN DEPRECIATION IS NOT AL LOWABLE. WE NOTE THAT THE SAID SUB-SECTION(6) OF SECTION 11 IS APPLICABLE W.E.F. 01.04.2015 BUT IN ASSESSEE`S CASE UNDER CONSIDERATION THE ASSESSMENT YEAR IS 2012-13, THEREFORE AMENDED SECTION 11(6) DOES NOT APPLY TO THE ASSESSEE. HENCE, THE DE CISION OF THE JURISDICTIONAL HIGH COURT OF CALCUTTA IN CIT VS. SILIGURI REGULAT ED MARKET COMMITTEE (2014) 366 ITR 51,WILL HOLD GOOD, WHEREIN IT WAS HELD THAT THE CLAIM OF DEPRECIATION IS TO BE ALLOWED EVEN IF THE COST OF THE ASSET IS TREA TED AS APPLICATION. FINDINGS OF THE HON`BLE COURT IS GIVEN BELOW: SECTION 11, READ WITH SECTION 32, OF THE INCOME-TA X ACT, 1961 - CHARITABLE OR RELIGIOUS TRUST - INCOME FROM PROPERTY HELD UNDER (DEPRECIATI ON ALLOWANCE) - WHETHER OBJECT OF SECTION 11 IS TO FEED PUBLIC CHARITY AND BY PERMITT ING COMPUTATION OF INCOME IN A COMMERCIAL MANNER, OBJECT OF FEEDING PUBLIC CHARITY IS ACHIEVED - HELD, YES - WHETHER A BUILDING USED FOR PURPOSE OF CHARITY DIMINISHES IN VALUE OVER TIME LIKE ANY OTHER BUILDING AND, THEREFORE, ALLOWING DEPRECIATION FOR SUCH DIMINITATION OF VALUE WOULD KEEP CORPUS OF TRUST INTACT OTHERWISE CORPUS OF TRUST IT SELF IN COURSE OF TIME MAY GET DISSIPATED - HELD, YES - WHETHER THEREFORE, DEPRECIATION IS TO BE ALLOWED ON ASSETS COST OF WHICH HAD ALREADY BEEN TREATED AS APPLICATION OF INCOME F OR CHARITABLE PURPOSE - HELD, YES [PARAS 11 AND 12] [IN FAVOUR OF ASSESSEE] AS REGARDS WHETHER THE INSERTED SUB-SECTION (6) COU LD HAVE RETROSPECTIVE APPLICATION, JUDICIAL DECISIONS HAVE HELD THAT IT C ANNOT BE INTERPRETED SO. THIS SECTION IS NOT RETROSPECTIVE IN EFFECT WHICH IS EVI DENT FROM THE AMENDMENT ITSELF. THE INSERTION IS PROSPECTIVE W.E.F. 01.04.2015 AS H ELD BY THE HON`BLE DELHI HIGH COURT IN THE CASE OF INDRAPRASTHA CANCER SOCIETY (I TA NO. 240 OF 2014) 18.11.2014 ( DELHI HIGH COURT), AND SIMILAR VIEW WE RE ALSO UPHELD BY THE HON`BLE KARNATAKA HIGH COURT IN THE CASE OF DIT (EX EMPTION) VS. AL AMEEN CHARITABLE FUND TRUST (2016) 67 TAXMANN.COM 160 (KA RNATAKA HIGH COURT). CONSIDERING THE JUDICIAL PRECEDENTS AVAILABLE ON TH E SUBJECT WE ARE OF THE VIEW THAT THERE IS NO INFIRMITY IN THE ORDER OF LD CIT(A ).THAT BEING SO, WE DECLINE TO INTERFERE WITH THE ORDER OF ID. C.I T.(A) IN DELETI NG THE AFORESAID ADDITIONS. HIS MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY ITA NO.2002/KOL/2017 ASSESSMENT YEAR:2012-13 5 ORDER ON THIS ADDITION IS, THEREFORE, UPHELD AND TH E GROUNDS OF APPEAL OF THE REVENUE IS DISMISSED. 7. GROUND NO. 3 RAISED BY THE REVENUE READS AS FOLL OWS: 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN CONSIDERING CAPITAL GAIN OF RS. 8,40,000/- ON SA LE OF CARS TO BE QUALIFIED FOR EXEMPTION U/S. 11(1A) OF THE INCOME TAX ACT, 1961 I GNORING THAT THE SALE PROCEEDS WAS NOT UTILIZED TO ACQUIRE NEW ASSETS AS REQUIRED IN THE PROVISION, INSTEAD SALE PROCEED WAS DEDUCTED FROM THE BLOCK OF FIXED ASSETS IN A CASE WHERE COST OF ACQUISITION OF ALL FIXED ASSETS IS CO NSIDERED AS NIL AFTER EXEMPTION U/S. 11(1)(D) OF THE INCOME TAX ACT, 1961 . 8.BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE ASS ESSMENT PROCEEDINGS THE AO NOTICED THAT ASSESSEE TRUST HAD SOLD CAPITAL ASSETS FOR RS. 8,40,000/-. THE AO NOTED THAT IN CASE OF ENTITIES REGISTERED U/S 12AA OF THE ACT, ENTIRE EXPENDITURE INCURRED FOR ACQUISITION OF CAPITAL ASSETS ARE TREA TED AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES U/S 11 (L)(A) OF THE ACT, IN TH E RESPECTIVE YEARS IN WHICH SUCH ASSETS ARE PROCURED. WHEN CAPITAL EXPENDITURE IS TR EATED AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES, THE ASSESSEE VIRTUALLY ENJ OYS A 100% WRITE OFF OF THE COST OF ASSETS, THEREFORE WHEN THE TRUST SALES THE SAID CAPITAL ASSETS THEN NET SALE CONSIDERATION IS TAXABLE AS CAPITAL GAIN. THAT IS, THE AO WAS OF THE VIEW THAT WHEN ACQUISITION OF ASSETS IS TREATED AS APPLICATIO N OF INCOME FOR CHARITABLE PURPOSES, THE VALUE OF ASSETS STANDS FULLY WRITTEN OFF, AND OVER AND ABOVE, IF IT IS AGAIN ALLOWED TO DETERMINE THE CAPITAL GAINS, THEN THE SAME WILL RESULT IN DOUBLE DEDUCTION OF CAPITAL EXPENDITURE LEADING TO VIOLATI ON OF THE PROVISIONS OF SECTION 11(1) WHICH REQUIRES AVAILABILITY OF ACTUAL INCOME FOR CHARITABLE PURPOSES. THEREFORE, AO MADE ADDITION OF 8,40,000/- UNDER THE HEAD CAPITAL GAIN ON SALE OF OLD ASSETS. 9. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED, THE REVENUE IS IN FUR THER APPEAL BEFORE US. MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY ITA NO.2002/KOL/2017 ASSESSMENT YEAR:2012-13 6 10. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE TH ROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLU DING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS AVAILABLE ON RECORD. LEA RNED DR REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER. WE NOTE THAT ASSES SEE TRUST, DURING THE YEAR, SOLD THREE CARS BEING CAPITAL ASSET FOR RS. 8,40,000/-. THE ASSESSING OFFICER HAS TREATED THE ENTIRE SALE CONSIDERATION AS CAPITAL GA IN ON SALE OF ASSET. THE LD. COUNSEL SUBMITTED BEFORE US THAT AS PER THE RULES O F DEPRECIATION, THE CONSIDERATION RECEIVED ON SALE OF ASSETS IS TO BE R EDUCED FROM WDV OF THE BLOCK OF ASSETS, THE ASSESSEE REDUCED THE SAME FROM WDV A ND ON THE REDUCED WDV DEPRECIATION WAS CLAIMED. IT HAS BEEN HELD IN A NUM BER OF CASES THAT FOR THE PURPOSE OF COMPUTATION OF TOTAL INCOME OF CHARITABL E TRUST NORMAL PROVISIONS OF THE I.T. ACT SHOULD APPLY. IN FACT, THE ISSUE IS EL ABORATELY DISCUSSED BY US WHILE ADJUDICATING GROUND NO. 1 AND 2 RAISED BY THE ASSES SEE. THE CONSIDERATION RECEIVED WAS DEDUCTED FROM BLOCK OF ASSETS WHICH IS APPARENT FROM THE DETAILS OF DEPRECIATION AS PER TAX AUDIT REPORT WHICH DEPRECIA TION WAS CLAIMED ON THE REDUCED VALUE AFTER DEDUCTING RS. 8,40,000/-. NEEDL ESS TO REPEAT, SALE CONSIDERATION OF A DEPRECIABLE ASSET IS TO BE REDUC ED FROM THE BLOCK OF ASSET WHICH IS PART OF THE PROCESS OF THE COMPUTATION OF DEPRECIATION. THE ASSESSEE DULY REDUCED THE SAID SALE CONSIDERATION FROM THE BLOCK OF ASSETS WHICH IS NOT IN DISPUTE. IN VIEW OF THE ABOVE THE AMOUNT OF RS. 8,4 0,000/- SEPARATELY ADDED AS INCOME HAS RIGHTLY BEEN DELETED BY LD CIT(A). WE HAVE ALREADY ADJUDICATED THE GROUND NO. 1 AND 2 RAISED BY THE REVENUE, IN PARA NO.6 OF THIS ORDER, WHEREIN WE HAVE HELD THAT THE CLAIM OF DEPRECIATION IS TO BE ALLOWED EVEN IF THE COST OF THE ASSET IS TREATED AS APPLICATION. WE NOTE THAT SECTION 11 (1A) IS ON THE UTILIZATION OF THE NET CO NSIDERATION, THEREFORE THE CAPITAL GAINS QUALIFY FOR EXEMPTION U/S 11 (1A) OF THE ACT. 11. GROUND NO. 4 RAISED BY THE REVENUE READS AS FOL LOWS: MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY ITA NO.2002/KOL/2017 ASSESSMENT YEAR:2012-13 7 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING ADMINISTRATIVE AND ESTABLISHMENT EXPENSES' OF RS. 3,54,12,977/- IN COMPUTATION FOR DETERMINATION OF QUANTUM OF ACCUMUL ATION U/S. 11(1)(A) OF THE I. T. ACT, 1961. 12. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE A SSESSMENT PROCEEDINGS THE AO NOTICED THAT ASSESSEE HAD CLAIMED ADMINISTRATIVE & ESTABLISHMENT EXPENSES OF RS.3,54,12,977/- WHICH WERE NEITHER DIRECTLY NOR PR OXIMATELY RELATED TO CHARITABLE PURPOSE. THESE EXPENDITURES WERE NOT DIRECTLY RELAT ED TO ACHIEVE THE OBJECTIVES OF CHARITY. IT IS THE NET INCOME, AFTER DEDUCTING THES E EXPENSES, IS AVAILABLE IN THE HANDS OF THE ASSESSEE TRUST FOR CHARITABLE ACTIVITY . THESE ARE EXPENSES ATTRIBUTABLE TO EARNING INCOME AND NOT APPLICATION OF INCOME U/S 11 OF THE ACT. THUS AO WAS OF THE VIEW THAT ALL APPLICATIONS ARE UNDOUBTEDLY EXPENSES BUT ALL E XPENSES ARE NOT APPLICATION OF INCOME. THE AO NOTED THAT INCOME AVAILABLE FOR APPLICATION U/S 11 IS TO BE COMPUTED IN NORMAL COMM ERCIAL MANNER. THE ADMINISTRATIVE AND ESTABLISHMENT EXPENSES WHICH ARE ALLOWABLE UNDER NORMAL COMMERCIAL PRINCIPLE BUT CANNOT BE A PART OF APPLIC ATION OF INCOME U/S 11 AS THESE ARE NOT DIRECTLY AND PROXIMATELY RELATED TO THE PRO CLAIMED OBJECTIVE OF THE TRUST. THE AO WAS OF THE VIEW THAT, ADMINISTRATIVE & ESTAB LISHMENT EXPENSES BEING ATTRIBUTABLE TO EARNING INCOME ARE DEDUCTIBLE FROM GROSS RECEIPT TO DETERMINE THE NET INCOME AVAILABLE FOR APPLICATION FOR CHARITABLE PURPOSES FOR THE PURPOSE OF CALCULATION OF ALLOWABLE ACCUMULATION OF 15% UNDER SECTION 11(L)(A) OF THE ACT. THEREFORE, AO HELD THAT FOLLOWING EXPENSES WERE NEI THER DIRECTLY OR PROXIMATELY CONNECTED WITH THE CHARITABLE ACTIVITIES AND THEREF ORE IS TAKEN AS ADMINISTRATIVE AND ESTABLISHMENT EXPENSES, THE PARTICULARS OF THES E EXPENSES ARE GIVEN BELOW: SL. NO. PARTICULARS AMOUNT (RS.) 1. ADVERTISEMENT 3,28,034 2. AUDIT FEES 82,725 3. CONVEYANCE 29,01,707 4. OTHER EXPENSES 6,18,663 5. LICENSE FEE 6,34,225 MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY ITA NO.2002/KOL/2017 ASSESSMENT YEAR:2012-13 8 6. PROFESSIONAL CHARGES 12,21,945 7. EXPENSES OF THE SOCIETY 2,96,25,678 TOTAL 3,54,12,977 THE ENTIRE EXPENSES OF THE SOCIETY WERE TO BE TREAT ED AS ADMINISTRATIVE AND ESTABLISHMENT EXPENSES, AS THEY WERE NOT DIRECTLY A ND PROXIMATELY CONNECTED WITH EDUCATION. SUCH EXPENSES WERE RS. 5,55,15,965/-. HO WEVER, AS SOME OF THE EXPENSES ARE SEPARATELY BOOKED IN THE INCOME AND EX PENDITURE ACCOUNT THE SAME IS TAKEN OUT TO AVOID DOUBLE TREATMENT OF THE SAME AMOUNT. THIS IS DONE BY AO AS FOLLOWS: SL. PARTICULARS AMOUNT(RS.) AMOUNT(RS.) 1 EXPENSES OF THE SOCIETY 5,55,15,965 2 LESS: ADVERTISEMENT 80,220 AUDITORS REMUNERATION 82,725 PROFESSIONAL CHARGES 1,24,000 DEPRECIATION 2,56,03,342 2,58,90,287 3 EXPENSES OF THE SOCIETY(1-2) 2,96,25,678 THEREFORE, RS. 3,54,12,977/- WAS TREATED AS ADMINIS TRATIVE AND ESTABLISHMENT EXPENSES BUT NOT AS APPLICATION. 13. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELE TED THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE LD . CIT(A) THE REVENUE IS IN APPEAL BEFORE US . 14. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE TH ROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY ITA NO.2002/KOL/2017 ASSESSMENT YEAR:2012-13 9 RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLU DING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS AVAILABLE ON RECORD. WE NOTE THAT LD. DR HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSI NG OFFICER WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND THE SAME IS N OT BEING REPEATED FOR THE SAKE OF BREVITY AND ON THE OTHER HAND THE LD. COUNSEL FOR T HE ASSESSEE RELIED ON THE ORDER OF THE LD CIT(A). WE NOTE THAT LD CIT(A) DELETED TH E ADDITION MADE BY AO OBSERVING THE FOLLOWING: SO HERE TOO- IT IS PRESUMPTION, SO CHOOSE AND PIC K. ADVERTISEMENT: IT IS NORMAL AND EXPECTED FOR A SCHO OL TO ADVERTISE. HOW ELSE WOULD BE GENERAL PUBLIC KNOW ABOUT IT. AUDIT FEES: AUDIT IS STATUTORY; SO THE FESS NECESSA RY. CONVEYANCE: UNLESS CONVEYANCE IS INCURRED, HOW WILL THE TEACHERS / STAFF, ADMINISTRATION ARRIVE / COMMUTE TO THE SCHOOL. OTHER EXPENSES: ARE INCIDENTAL EXPENSES. LICENSE FEES: NECESSARY FEES FOR THE SCHOOL TO FUNC TION. PROFESSIONAL CHARGES: INCURRED AS CONSIDERED NECESS ARY BY THE SCHOOL. EXPENSES OF THE SOCIETY: ARE EXPENSES INCURRED FOR THE SOCIETY, SO THAT THE SCHOOL IS RUNNING AND FUNCTIONING. SO, EVEN ON FACTS, IT IS BUT PRESUMPTION AND SURMIS ES. A MOOT POINT THAT REQUIRES TO BE CONSIDERED, OVER A ND ABOVE THESE DEBATES, IS THAT IN THE CASE OF ASSESSMENT U/S 11, THERE CAN BE ONLY 2 SITUATIONS WHERE THERE COULD BE TAXABLE INCOME- EITHER THAT THE REGISTRATI ON IS CANCELLED U/S 12AA(3), OR THAT THERE HAS BEEN CONTRAVENTION OF PROVISIONS IN THE CHARGING SECTION 13. EVERYTHING ELSE- IS BUT MERE DISCOURSE AND DEBATE O NLY. THUS, THE DISPUTED EXCLUSION FROM THE GROSS RECEIPT S AND AS NOT BEING APPLICATION OF INCOME IS HEREBY DELETED ON LAW, AS ALSO ON FACTS. WE HAVE GONE THROUGH THE ORDER OF LD CIT(A) AND NOT ICED THAT ADVERTISEMENT EXPENSES CLAIMED BY ASSESSEE IS NORMAL AND EXPECTED FOR A SCHOOL TO ADVERTISE ABOUT ITS FEATURES SO THAT GENERAL PUBLIC MAY KNOW ABOUT IT. PAYMENT OF AUDIT FEES IS STATUTORY OBLIGATION. CONVEYANCE EXPENSES IS INC URRED, FOR TEACHERS / STAFF, AND MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY ITA NO.2002/KOL/2017 ASSESSMENT YEAR:2012-13 10 ADMINISTRATIVE WORKERS. OTHER EXPENSES ARE INCIDENT AL EXPENSES. LICENSE FEES IS NECESSARY FOR THE SCHOOL TO FUNCTION. PROFESSIONAL CHARGES ARE INCURRED AS CONSIDERED NECESSARY BY THE SCHOOL. EXPENSES OF THE SOCIETY ARE INCURRED SO THAT THE SCHOOL MAY RUN AND FUNCTION PROPERLY. THESE EXP ENSES ARE NECESSARY TO ACHIEVE THE OBJECTIVE OF THE ASSESSEE TRUST. THAT B EING SO, WE DECLINE TO INTERFERE WITH THE ORDER OF ID. C.I T.(A) IN DELETING THE AFO RESAID ADDITIONS. HIS ORDER ON THIS ADDITION IS, THEREFORE, UPHELD AND THE GROUNDS OF APPEAL OF THE REVENUE IS DISMISSED. 15. GROUND NO. 5 RAISED BY THE REVENUE READS AS FOL LOWS: 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING TO SET OFF OF EARLIER LOSS OF RS. 6,04,16, 031/- AGAINST THE PRINCIPLES THAT LOSS IS NEGATIVE PROFIT AND WHEN PROFIT IS EXE MPTED, LOSS IS ALSO EXEMPTED. 16. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE S CRUTINY PROCEEDINGS THE AO NOTICED THAT ASSESSEE CLAIMED SET OFF OF EARLIER YE ARS EXCESS OF EXPENDITURE OVER INCOME WITH THE INCOME OF THIS YEAR. THE CLAIM OF S UCH SET OFF IS RS.6,04,16,031/. HOWEVER, IN THE COMPUTATION OF INCOME FILED ALONG W ITH THE RETURN OF INCOME NO SUCH CLAIM OF SET OFF OF EARLIER YEARS DEFICIT WAS MADE. THE CLAIM WAS MADE DURING THE PROCEEDING U/S 143(3) OF THE ACT. THEREF ORE, AO WAS OF THE VIEW THAT THE ASSESSEE CANNOT MAKE ANY FRESH CLAIM WHICH WAS NOT IN THE RETURN OF INCOME OTHER THAN FILING A REVISED RETURN OF INCOME. THE H ONBLE SUPREME COURT HAS BEEN SPECIFIC ON THIS ISSUE IN THE CASE OF GOETZ (INDIA) LTD. VS. CIT ON 24 TH MARCH, 2006 REPORTED IN [2006] 284 ITR 323 (SC). FURTHER THE AS SESSEE CANNOT BASE A FRESH CLAIM OF THIS YEAR BY DIGGING OUT FACTS FROM EARLIE R YEARS, PROCEEDING OF WHICH HAS LONG BEEN BARRED BY LIMITATION OF TIME. IN THOS E YEARS THE RETURNED AND ASSESSED INCOME WAS NIL AND NOT AT LOSS. IN VIEW OF ALL THE ABOVE, THE CLAIM OF THE ASSESSEE IN RESPECT OF SET OFF OF EARLIER YEARS EX CESS OF EXPENDITURE OVER INCOME WITH THE INCOME OF THIS YEAR WAS NOT ALLOWED BY ASS ESSING OFFICER. MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY ITA NO.2002/KOL/2017 ASSESSMENT YEAR:2012-13 11 17. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS STAT ED IN HIS ORDER THAT HE HAD ALLOWED SUBSTANTIVE GROUNDS THEREFORE ISSUE RAISED BY THE ASSESSEE BECAME NON EST IN THE EYE OF LAW, AS THE REVISED TOTAL INCOME IS AT RS. NIL. HOWEVER, LD CIT(A) ALSO MADE IT CLEAR THAT SUCH CLAIM FOR SET O FF IS ALLOWABLE AS PER JUDICIAL DECISIONS OF THE SAID ISSUE. 18. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE R EVENUE IS IN APPEAL BEFORE US. 19. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE TH ROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLU DING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS AVAILABLE ON RECORD. THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSI NG OFFICER WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND THE SAME IS N OT BEING REPEATED FOR THE SAKE OF BREVITY AND ON THE OTHER HAND THE LD. COUNSEL FOR T HE ASSESSEE RELIED ON THE ORDERS OF THE LD CIT(A). WE NOTE THAT GROUND RAISED BY THE REVENUE RELATES TO THE DISALLOWANCE OF SET OFF OF THE DEFICIT OF EARLIER Y EAR AMOUNTING TO RS. 6,04,16,031/- AGAINST THE TOTAL INCOME COMPUTED FOR ASSESSMENT YEAR IN QUESTION. WE NOTE THAT THE SAID SET OFF IS ALLOWABLE UNDER TH E PROVISIONS OF ACT IN VIEW OF THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE C ASE OF INSTITUTE OF BANKING REPORTED IN 264 ITR.110. THE SAID ISSUE WAS ALSO D ISCUSSED BY HON`BLE MADRAS HIGH COURT IN THE CASE OF GOVINDU NAICKER ESTATE VS CIT REPORTED IN 248 ITR 368. THE SAID JUDGMENT WAS ALSO FOLLOWED BY THE CH ENNAI BENCH OF 1TAT IN THE CASE OF MARIAMMAN EDUCATIONAL HEALTH AND CHARITABLE TRUST IN ITA NO. 142, 143/MAD/20L0. WE NOTE THAT LD. AO HAS REFERRED TO T HE JUDGMENT OF THE ALLAHABAD HIGH COURT IN THE CASE OF RAMJILAL RAIS F OR THE PROPOSITION THAT THE LOSS OF EARLIER YEAR CANNOT BE SET OFF AGAINST THE INCOME OF THE SUBSEQUENT YEAR. SIMILAR ISSUE CAME UP FOR CONSIDERATION BY GUJARAT HIGH COURT REPORTED IN 242 ITR 20. WE NOTE THAT AO HAS NOT CORRECTLY APPRECIAT ED THE PRINCIPLES LAID DOWN BY THE AFORESAID JUDGMENTS WHICH RELATES TO THE SET OFF OF LOSS AGAINST THE INCOME MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY ITA NO.2002/KOL/2017 ASSESSMENT YEAR:2012-13 12 OF A SUBSEQUENT YEAR. IN THE CASE OF TRUST IT IS NO T THE CASE OF THE ASSESSEE TO SET OFF THE LOSS BUT EXCESS AMOUNT WAS UTILIZED IN THE EARLIER YEAR IN ANTICIPATION OF GENERATION OF THE INCOME IN THE SUBSEQUENT YEAR. TH EREFORE THE ASSESSEE TRUST IS ENTITLED TO SET OFF THE CARRY FORWARD APPLICATION O F INCOME. WE NOTE THAT HON`BLE HIGH COURT OF MADRAS IN THE CASE OF MATRISEVA TRUST [2003] 128 TAXMAN 261 (MADRAS) HELD AS FOLLOWS: 5. WITH REGARD TO THE SECOND QUESTION, THE TRIBUNAL H AS HELD THAT THE TRUST IS ENTITLED TO SET OFF THE AMOUNT OF EXCESS APPLICATION OF THE LAS T YEAR AGAINST THE DEFICIENCY OF RS. 82,516 OF THE PRESENT ASSESSMENT YEAR. WHEN SIMILAR QUESTIONS CAME UP BEFORE THE RAJASTHAN HIGH COURT AND THE GUJARAT HIGH COURT IN THE CASES OF CIT V. MAHARANA OF MEWAR CHAR ITABLE FOUNDATION [1987] 164 ITR 439 AND CIT V. SHRI PLOT SWETAMBER MURTI PUJAK JAIN MA NDAL [1995] 211 ITR 239, RESPECTIVELY, BOTH THE RAJASTHAN HIGH COURT AND THE GUJARAT HIGH COURT HAVE ANSWERED THE QUESTIONS IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 6. FOLLOWING THE AFORESAID DECISIONS OF THE RAJASTHAN AND THE GUJARAT HIGH COURTS, WE ANSWER THE SECOND QUESTION REFERRED TO US IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 20. THE FINDINGS OF LD CIT(A), IN BRIEF IS GIVEN BE LOW: 11.3.1 I WAS WONDERING, WAS BEMUSED- THAT WHEN THI S ISSUE HAS BEEN RAISED IN THE BEGINNING PART OF THE IMPUGNED ASSESSMENT ORDER [AND THE QUANTUM INVOLVED ALSO BEING THE HIGHEST, AT RS. 6,04,16,031/-] THE OPENING OVERTURE TO THE IMPUGNED ASSESSMENT ORDER; THEN WHY DID THE APPELLA NT /A.R PUT THIS ISSUE ONLY TOWARDS THE END OF THE GROUNDS OF APPEAL? AND THE A .RS SUBMISSIONS TOO- SNAPPY? UPON CONSIDERING THE ENTIRE APPEAL, AND THE PRECEDI NG GROUNDS OF APPEAL ABOVE THEN IT IS SEEN AS TO WHY THE APPELLANT / A.R. HA D APTLY PUT THIS ISSUE TOWARDS THIS END OF THE GROUNDS OF APPEAL BECAUSE IT IS O NLY A RESIDUARY / ALTERNATE ISSUE. RESIDUARY BECAUSE- THE PRECEDING QUANTUM GRO UNDS OF APPEAL WERE THE DETERMINANT GROUNDS. AS STATED IN THE IMPUGNED ASSESSMENT ORDER THAT NO SUCH CLAIM WAS MADE IN THE RETURN OF INCOME, BUT THAT THE CLAIM WAS MADE ONLY IN THE COURSE OF THE ASSESSMENT PROCEEDINGS IT IS OBVIOUS SO, BECAUSE OF THE DCIT ASSESSING OFFICERS INTENDED DISALLOWANCES [PRECEDING GROUNDS OF APPEAL ABOVE]. THE MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY ITA NO.2002/KOL/2017 ASSESSMENT YEAR:2012-13 13 DCIT A.O WOULD HAVE ASSESSED AT TAXABLE INCOME; AND SO THE ASSESSEE/ A.R. PUT FORTH THIS ALTERNATE CONTENTION FOR SET-OFF OF EARL IER YEARS DEFICIT. SO- THIS ISSUE HAS APTLY BEEN PUT TO THE TAIL PART; NOT THE BEGINNING. 11.3.2. SO, NOW, THAT I HAVE ALLOWED THE ABOVE PREC EDING QUANTUM GROUNDS OF APPEAL (NOS. 2,3,4 AND 5) THIS ISSUE FOR SET OFF WI LL NOT ARISE; FOR THE REVISED ASSESSED INCOME UPON GIVING EFFECT TO THIS APPEAL O RDER- WILL BE AS PER THE RETURN OF INCOME FURNISHED BY THE APPELLANT, I.E. AT RS. N IL. 11.3.3 ANY WAY, FOR ACADEMIC DISCUSSION SAKE, BRIEF LY: WHEN IN NORMAL ASSESSMENT OF TAXABLE TOTAL INCOME [ UNDER CHAPTER IV OF THE ACT] THERE ARE PROVISIONS FOR CARRY FORWARD OF LOSSES TO BE SET OFF AGAINST FUTURE INCOME; THEN SO MUST BE THE LOGIC IN CHAPTER-III, RATHER EVEN JUSTIFIABLY MORE SO- WHEN CHAPTER III EXEMPTS CERTAIN INCOMES- INCOME WHICH DO NOT FORM PART OF TOTAL INCOME. WHY THERE IS NO SUCH SPECIFIC PROVISION- IS SIMPLY BECAUSE CHAPTER III IS ON EXEMPTED INCOMES. IF THERE WERE PROVISION , THEN IT WOULD TANTAMOUNT TO INTERFERING WITH THE EXEMPTED INCOMES. IT WOULD BE OUT OF PLACE. VARIOUS JUDICIAL DECISIONS DIRECTLY ON THIS ISSUE RECENT DECISIONS, EXTRACTS THEREFROM: WE NOTE THAT LD CIT(A) DID NOT DIRECT THE AO TO ALL OW SETOFF. AS PER LD CIT(A) THE ISSUE FOR SET OFF WILL NOT ARISE; FOR THE REVISED ASSESSE D INCOME UPON GIVING EFFECT TO HIS APPEAL ORDER, BECAUSE AS PER THE RETURN OF INCOME FURNISHE D BY THE APPELLANT, THE INCOME WAS TO THE TUNE OF RS. NIL. HOWEVER, AFTER GOING THROUGH THE JUDICIAL PRECEDENT S, AS NOTED ABOVE, IT CLEAR THAT SUCH CLAIM FOR SET OFF IS ALLOWABLE TO THE ASSESSEE TRUST, THEREFORE, WE DIRECT THE AO TO ALLOW THE SET OFF BENEFIT TO THE ASSESSEE TRU ST. 21. GROUND NO. 6 RAISED BY THE REVENUE IS AS FOLLOW S: 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING LOSS OF RS. 1,14,75,323/- FROM THE BUSI NESS OF RUNNING SCHOOL BUS AND LOSS OF RS. 20,56,394/- FROM RUNNING OF HOSTEL QUALIFIED FOR EXEMPTION U/S. 11(4A) OF THE INCOME TAX ACT, 1961 IGNORING THAT NO SEPARATE ACCOUNT WAS SUBMITTED ALONG WITH THE RETURN OF INCOME AS REQUIR ED IN THE PROVISION. MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY ITA NO.2002/KOL/2017 ASSESSMENT YEAR:2012-13 14 22. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE S CRUTINY PROCEEDINGS THE AO NOTICED THAT ASSESSEE TRUST IS PROVIDING SCHOOL BUS SERVICE TO THE STUDENTS AND ALSO PROVIDING HOSTEL FACILITY FOR STUDENTS ON PAYMENT B ASIS WHICH IS AGAINST THE OBJECTIVE OF THE TRUST. THE AO WAS OF THE VIEW THAT THESE ARE PURE BUSINESS ACTIVITIES BUT PERTAINING TO ATTAINMENT OF THE OBJE CTIVE OF THE TRUST. THE TOTAL RECEIPT FROM THESE SERVICES AMOUNTING TO RS. 7,79,5 7,500/- AND RS. 64,50,000/- ON ACCOUNT OF SCHOOL BUS AND HOSTEL FEES RESPECTIVELY WERE BOOKED IN THE INCOME SIDE OF THE INCOME & EXPENDITURE ACCOUNT AND THE RE SPECTIVE EXPENSES AMOUNTING TO RS. 8,94,32,823/- AND RS. 85,06,304/- WERE BOOKE D ON THE EXPENSES SIDE. THE AO WAS OF THE VIEW THAT ASSESSEE TRUST IS DOING BUS INESS BY PROVIDING BUS SERVICES AND HOSTEL SERVICES, HENCE ASSESSEE TRUST NEEDS TO MAINTAIN SEPARATE BOOKS OF ACCOUNTS. THEREFORE, AO DISALLOWED THE LOS S ON ACCOUNT OF SCHOOL BUS SERVICE AT RS. 1,14,75,323/-( RS.7,79,57,500-RS.8,9 4,32,823) AND INCOME OF RS.20,56,304/-( RS.85,06,304 -RS.64,50,000) ON ACCO UNT OF HOSTEL SERVICE. 23. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELE TED THE ADDITION MADE BY THE ASSESSING OFFICER. 24. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE TH ROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLU DING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS AVAILABLE ON RECORD. AGG RIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. LD. DR HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAK E OF BREVITY AND ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF LD CIT(A). WE NOTE THAT ASSESSEE TRUST IS PROVIDING SCHOOL BU S SERVICE TO THE STUDENTS AND ALSO PROVIDING HOSTEL FACILITY FOR STUDENTS ON PAYM ENT BASIS. THE MAIN OBJECTIVE MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY ITA NO.2002/KOL/2017 ASSESSMENT YEAR:2012-13 15 OF THE SCHOOL IS TO IMPART EDUCATION. HOWEVER, AO W AS OF THE VIEW THAT ACTIVITY OF RUNNING SCHOOL BUS AND PROVIDING HOSTEL FACILITY IS NOT DIRECTLY AND PROXIMATELY CONNECTED WITH THE OBJECTIVE OF IMPARTING EDUCATION . THESE SERVICES ARE PROVIDED AGAINST FEES THEREFORE AO NOTED THAT NATURE OF SUCH INCIDENTAL ACTIVITY IS BUSINESS, THEREFORE HE MADE ADDITION TO THE TOTAL INCOME OF T HE ASSESSEE TRUST. WE NOTE THAT ASSESSING OFFICER HAS HIMSELF STATED I N HIS ORDER THAT THESE ARE PURE BUSINESS ACTIVITIES BUT PERTAINING TO ATTAINMENT OF THE OBJECTIVE OF THE TRUST. HENCE, IT IS ABUNDANTLY CLEAR FROM THE ORDER OF THE AO THAT SCHOOL BUS SERVICE AND HOSTEL SERVICE IS PERTAINING TO ATTAINMENT OF THE O BJECTIVE OF THE TRUST. WE NOTE THAT THE SCHOOL BUS SERVICE IS ONLY USED TO DROP AND PICK UP THE STUDENTS. SIMILARLY, HOSTEL FACILITY IS PROVIDED TO THE NEEDY STUDENTS. THESE SERVICES ARE PART AND PARCEL OF THE SCHOOL AND CANNOT BE TERMED AS BU SINESS AND HENCE THE PROVISION OF SECTION 11(4)/ (4A) OF THE ACT IS NOT ATTRACTED IN THIS INSTANT CASE. THE MAIN OBJECTIVE OF THE SCHOOL IS TO IMPART EDUCATION . THE ACTIVITY OF RUNNING SCHOOL BUS AND PROVIDING HOSTEL FACILITY IS DIRECTL Y AND PROXIMATELY CONNECTED WITH THE OBJECTIVE OF IMPARTING EDUCATION. THESE AR E INCIDENTAL ACTIVITIES FOR ATTAINMENT OF THE OBJECTIVE OF THE ASSESSEE TRUST. 25. THELD CIT(A) HAS RIGHTLY DELETED THE ADDITION O BSERVING THE FOLLOWINGS: 8.2.3 DISCUSSION AND APPELLATE DECISION: THE APPELLANT IS RUNNING AN EDUCATIONAL INSTITUTION - THE DELHI PUBLIC SCHOOL, MEGA CITY, KOLKATA. THE SCHOOL BUS, AND, THE HOSTEL ACTIVITIES - ARE BUT NECESSARY, AND ARE INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST. SEPARATE BOOKS OF ACCOUNTS ARE MAINTAINED. THUS THE SE ACTIVITIES ARE SQUARELY COVERED BY THE EXEMPTION U/S 11 (4A). FURTHER, FROM THE FIGURES OF THE RECEIPTS AND EXPEN SES ITSELF, STATED IN THE DISCUSSION IN THE IMPUGNED ASSESSMENT ORDER, IT IS CLEARLY EVIDENT THAT IN THESE ACTIVITIES THE APPELLANT HAD INCURRED LOSS. SO WHER E IS THE ISSUE OF BEING BUSINESS UNDERTAKING U/S 11(4), OR, BUSINESS U/ S 11 (4A). SECTION 11(4) DOES NOT ARISE AT ALL - AS THE SCHOOL BUS, AS ALSO THE H OSTEL ARE NOT BUSINESS UNDERTAKING. AS ALREADY STATED IN PRECEDING SUB-PA RA ABOVE - THESE ARE COVERED BY THE EXEMPTION U/S 11(4A). IN THIS REGARDS, FOR A CADEMIC DISCUSSION SAKE, THE DCIT AO FOR HIS VIEWS STATES THAT THE INCOME/LOSS N EED TO BE BOOKED IN THE COMPUTATION OF INCOME AS PER SECTION 11(4) READ WIT H 11(4A). THIS CANNOT BE SO. MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY ITA NO.2002/KOL/2017 ASSESSMENT YEAR:2012-13 16 SECTION 11(4) AND 11(4A) ARE SEPARATE AND EXCLUSIVE - SECTION 11(4) IS WHEN THERE IS BUSINESS UNDERTAKING AND THAT THE AO MAY DETERMINE THE EXCESS OVER AS SHOWN IN THE ACCOUNTS; WHEREAS SECTION 11(4A) IS FOR EXEMPTION OF BUSINESS PROVIDED THAT THE BUSINESS IS INCIDENTAL TO THE ATT AINMENT OF THE OBJECTIVES OF THE TRUST, AND SEPARATE BOOKS OF ACCOUNTS ARE MAINTAINE D. THE APPELLANTS CASE IS SQUARELY COVERED BY THE EXEMPTION U/S 11(4A). AS TO THE DCIT AOS REASONING: 6.2 THE MAIN OBJECTIVE OF THE SCHOOL IS TO IMPART EDUCATION. THE ACTIVITY OF RUNNING SCHOOL BUS AND PROVIDING HOSTEL FACILITY IS NOT DIRECTLY AND PROXIMATELY CONNECTED WITH THE OBJECTIVE OF IMPARTING EDUCATION . THESE ARE INCIDENTAL ACTIVITIES FOR ATTAINMENT OF THE OBJECTIVE OF THE A SSESSEE. THE SERVICE IS PROVIDED AGAINST FEES WHICH CLEARLY SHOW THAT THE NATURE OF SUCH INCIDENTAL ACTIVITY IS BUSINESS. THEREFORE, THE ARGUMENT OF THE LD. A.R IS NOT ACCEPTED. EVERY ALTERNATE SENTENCE IS SELF-CONTRADICTORY TO T HE PRECEDING SENTENCE. THE DCIT AO, AT THE 3 RD SENTENCE, AGREES THAT THE ACTIVITIES ARE INCIDENTA L FOR ATTAINMENT OF THE OBJECTIVES OF THE ASSESSEE. THIS IS THE MAIN DECIDING POINT. THE ISSUE ON SCHOOL BUS, AND, HOSTEL, IS THUS ALLOW ED - AS BEING COVERED BY THE EXEMPTION U/S 11(4A); AND IN ANY CASE, LOSS HAD BEE N INCURRED. WE NOTE THAT SCHOOL BUS AND HOSTEL ACTIVITIES ARE I NCIDENTAL TO THE ATTAINMENT OF OBJECTIVES OF THE TRUST, HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD CIT(A), HIS ORDER ON THIS ISSUE IS HEREBY ACCEPTED AND GROUNDS OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 26. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 10.01.2020 SD/- ( A.T. VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 10 /01/2020 ( SB, SR.PS ) MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY ITA NO.2002/KOL/2017 ASSESSMENT YEAR:2012-13 17 COPY OF THE ORDER FORWARDED TO: 1. DCIT(E), CIRCLE-1(1), KOLKATA 2. MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATABENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES