News Update

CBIC revises tariff value of edible oils, gold & silverFormer IPS officer Sanjiv Bhatt jailed for 20 yrs for planting drugs to frame lawyerCentre receives Rs 18.5 lakh crore tax revenue upto Feb monthUN says Households waste across world is now at least one billion meals a dayExpert Committee on developing GIFT IFSC as 'Global Finance and Accounting Hub' submits report to IFSCAIndia, China hold fresh dialogue for complete disengagement on Western borders: MEADefence Production issues notification for re-organisation of DGQAThakur says India is prepared for 2036 OlympicsCBDT substitutes Form in ITR-5EV Revolution: Lessons for India to learn from US and China!London court green-signals auction of luxury apartment of fugitive Nirav ModiGovt consults RBI; finalises borrowing plan for first half of FY 2024-25Gadkari says Farmers’ protest is politically-motivatedVP calls upon women entrepreneurs to be 'Vocal for Local'America offers USD 10 mn bounty for information on ‘Blackcat’ hackers after UnitedHealth gets hitI-T- The order of the ITSC can only be reopened in cases of fraud or misrepresentation: HC8 persons including Hezbollah militants killed in Israeli strike on LebanonMacron pillories EU-South Africa trade deal; calls it ‘really bad’ in BrazilThailand’s Lower House okays Bill to legitimise same-sex marriageYellen warns China against clean energy dumpingMilky Way’s central black hole - Twisted magnetic field observedCus - Assessee has not proved beyond reasonable doubt that goods in question imported under air way bills/bills of entry were in fact filed by him and hence the only natural corollary available to Revenue is confiscation of same: CESTATSmall investors help Trump Media’s valuation skyrocket to USD 13 billionJustice Ritu Raj Awasthi joins as Judicial member of Lokpal
 
I-T - Major relief for DPS; Transport facility provided by schools to their students only, are incidental to educational activity, and hence exempted: ITAT

 

By TIOL News Service

NEW DELHI, MAY 22, 2018: THE ISSUE BEFORE THE TRIBUNAL IS - Whether collection of fees by a school from the students for their transport facility, will not render it a commercial organization, and hence entitled for exemption u/s 11(4A). YES IS THE ANSWER.

Facts of the case:

The assessee under present case is running a private school. Apart from the tution fees and other administrative expenses, the assessee used to charge seperate fees from its students for providing transport facility to them. During the course of its scrutiny assessment, the AO disallowed a sum of Rs.1,73,20,960/- in relation to the activity of assessee running the school buses, on the premises that the said activity amounts to business in view of the proviso to Section 2(15), and as such the assessee was not entitled for exemption u/s 11(4A). To reach this conclusion, he noted that surpluses generated from running of transport business was not reduced from the fee of the next year.

On appeal, the FAA found that the fee charged from the students was on commercial basis and not on charitable basis, as such the assessee was engaged in commercial activity and could not be termed as education as covered u/s 2(15). The FAA further observed that transport running for the children of school was not an advancement of general public utility and the assessee was not charging as per market rate but had charged more from the students which shows the commercial motive of the assessee. Thus, as per the FAA, the AO had correctly denied exemption u/s 11(4A) of the act.

Tribunal held that,

++ the AO has recorded that the assessee society has charged Rs.3,00,42,296/- towards transport fee which is included in the income and expenditure account and corresponding expenses was debited to Rs.3,09,33,029/- for providing transport facility to students. There is no dispute that the assessee has been running 37 school buses and the AO has allowed the salary of 7 drivers. The contention of the assessee that 37 buses cannot be run by 7 drivers, goes uncontradicted. Further, the AO did not bring on record as to the use of the vehicles for any other purpose than the conveyance of the children and further its repair and periodical maintenance. It is not the case of Revenue also that the assessee has been deriving any income from the use of these vehicles other than collecting the fees from the students for their transport facility. It is, therefore, clear that the material on record suggests that all the buses are being used only for providing facility to the students and staff that also only for transport to and from the school to the respective houses of the children in the given routes;

++ it clear that the entire dispute in this matter revolves around the question whether or not the activity of running school buses exclusively for the facility of the students and staff, is an intrinsic part of the activity of running a school. Such a question is no longer res Integra by the decision in the case of Krishna Charitable Society Vs. Addl CIT - 2017-TIOL-1321-ITAT-DEL, wherein it was held that transport and hostel facility surplus cannot be considered as business income of the society as these activities are incidental to the main object of the assessee society of education. Similarly, in case of Kanha Charitable Trust Vs. ACIT, it was held that in the absence of any clinching evidence to show that the hostel facilities and transport facilities were provided to anybody other than students and staff of the trust, they shall be construed to be the intrinsic part of the 'educational activities' of the assessee and they cannot be considered different than activities of the society of 'education'. In the present case also, it is not the case of Revenue that the transport facility is also provided to the outsider. Therefore, the transport activities of the assessee trust are not in the nature of business, inasmuch as the transport is also incidental to the attainment of the main object of the trust of the education. Therefore, the provisions of Section 11(4A) do not apply to the assessee.

(See 2018-TIOL-741-ITAT-DEL)


POST YOUR COMMENTS
   

AR not Afar by SK Rahman

TIOL Tube Latest

Shri Shailendra Kumar, Trustee, TIOL Trust, giving welcome speech at TIOL Awards 2023




Shri M C Joshi, Former Chairman, CBDT




Address by Shri Buggana Rajendranath, Hon'ble Finance Minister of Andhra Pradesh at TIOL Awards 2023