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4.3. The issue travelled in appeal before the CIT(A) where relying upon the order of the ITAT for 2009-10 A.Y. and taking note of the fact that there was a similar denial in 2010-11 A.Y. also on identical fact which issue also stood concluded in favour of the assessee, the appeal of the assessee was allowed by the CIT(A) holding as under:-

4. "The facts emanating from the order of the AO and the submissions of the assessee is that the assessee is charitable Trust and is registered as per I.T.A .No.-3635/Del/2015 Trust Deed dated 10.08.1961. The Trust is registered u/s 12AA(1) dated 15.05.11974 and also u/s 80G dated 02.12.2009. The Trust was founded with the object of charitable work of promoting the welfare with youth etc. The Trust was founded by the World Assembly of Youth, India and the following trustees were appointed:-

4.6. The inference drawn on those facts for concluding that there was commercial activity was dispelled by the ITAT in the aforesaid order concurring with the following conclusion of the CIT(A):-

4.1. "The CIT(A) further elaborated the finding arrived at in para 6.2 by holding that the AO has not been able to appreciate the nature of the hostel and canteen activities and the AO had also not appreciated that the receipt on account of the auditorium and Conference Hall of Rs. 1.43 crore odd included the sum of Rs.1.02 crore odd on account of the rental and the balance amount represented the receipt on account of conferences organized in the auditorium. He held that all these activities were part of the I.T.A .No.-3635/Del/2015 objects of the trust and for the cause of the youth only. Considering the finding of the AO that the assessee had received money from corporate houses, he held that the receipts were in the nature of sponsorship fees received for organizing conference in the Auditorium as such could not be considered to be a commercial activity. Examining the allegations of the AO as per Inspector's Report that the food by the canteen was provided to everyone and there was no control on an outsider having food, the CIT(A) was of the view that merely because somebody here and there obtained a service because of the lack of control will not mean that the trust has become commercial and as such lost its charitable character. The objects and the activities continued to be charitable despite the stray instance and cannot be the ground for holding that the trust is not charitable. Similarly, the instances of sponsorship for which tax had been deducted by various corporates as per Form No.-26AS, it was held will not make the trust non-charitable. The reliance placed upon the decisions by the AO which were assailed by the assessee and argued to be distinguishable after discussion were found to be rightly objected to by the assessee.

1. Omvir Singh, Sr. TA

2. Arun Kumar, TA

3. (emphasis provided) 4.8. The arguments of the Revenue were equally vehemently contested by the Ld.AR. For the sake of completeness these are reproduced hereunder:-

5.2. "Ld. AR on the other hand heavily relying upon the impugned order contended that the CIT(A) has met each and every argument/objections of the AO with cogent reasoning. It was his submission that the AO on the other hand has failed to appreciate that the activities of the trust were towards the aims and objects of the trust alone. It was also his contention that undue emphasis has been laid upon the Inspector's Report by the AO as apart from that this which has been explained there are only suspicious which it was submitted cannot take the place of evidence. It was argued where the inmates of the hostel necessarily utilize the facility for short duration the hostel inmates frequently change in such a scenario it is practically impossible for anyone to ensure control to the extent that no stray incident of "outsider" eating occurs. It was argued that the assessee cannot be penalized to do the impossible based on suspicious. The very fact that the hostel is not situated in a commercial hub and is situated in a diplomatic area ensures that stray outsiders do not come unless they are residing in the hostel or attending seminars or conferences held towards the aims of the trust. Addressing the background of the trust the facts leading the creators of the trust whose aims and objects have continuously been considered to be charitable in nature as they aim to address, harness, channel and focus the energies of the youth aiming and preparing the youth to perform productive, gainful and responsible roles in the environment has all along been accepted and it cannot be doubted to be a non-charitable merely because the canteen staff in good faith allowed the Inspector and her team of two tax advisors to have a meal. The queries answered in good faith by the canteen staff also do not make trust to be operating on commercial lines. It was his submission that auditorium and seminar halls are made routinely available to Government Education Bodies etc. and NGOs having the same aims and objects as the assessee and stringent documentations is maintained by the assessee trust which he would address which has been before the AO and the CIT(A). Accordingly mere oral queries casually answered by canteen staff who definitely were not making the booking does not lead to any conclusion against the assessee's trust. It was his submission that the assessee trust started with a very humble corpus of Rs. 1000/- towards its laudable aim. The hostel facilities it was submitted are utilized by various students either from different parts of the country or the world and provides a platform where the youth can be exposed to conferences and activities in the auditorium which co-incide with the aims and objects of the assessee trust. It was submitted that as and when the same are not required by the I.T.A .No.-3635/Del/2015 assessee towards the same, they are available on rent to the corporate entities etc. and the receipts so generated are fully utilized only to meet the objects of the trust. The canteen/cafeteria facility is exclusively for the benefit of the students staying in the hostel facilities and considering the fact that the hostel cannot be in continuous use of more than 28 days the amounts vary. Looking at the sheer number of students who utilize the facilities it was submitted makes it impossible to monitor whether the person utilizing the facilities is actually a resident of the hostel or an outsider and if any stray person has utilized these facilities hoodwinking the serving staff than the assessee trust cannot penalized. Inviting attention to paper book page no-27 which contains the copy of the trust deed whose objects are enshrined at page 31, the said deed it was submitted underwent a change in regard to its name by way of a supplementary deed of trust copy placed at page 23-35 of the paper book.

I.T.A .No.-3635/Del/2015

(e) The centre for also sponsor programmes for bilateral ...........of youth leaders, young workers and students with a view to better National Integration and international understanding and co-operation.

(f) The Trustee may join, contribute to or .....financially or otherwise, any other institutions with similar objects to carry out or implement any of the objects of this Trust."

6.1. The Inspector's Report reproduced in the earlier part of this order in para 5.1 has also been taken into consideration. It is seen that the AO has been guided by the fact that the assessee is charging fees for hostel facilities and has also in its income shown receipts from canteen facilities over and above receipts from hiring of conference hall/auditorium etc. Apart from that he has also been guided by the fact that the Inspector accompanied by tax advisors was allowed to utilize the canteen facilities without any effort or the part of the serving personnel to ensure that only inmates of the hostel were being served. The explanation of the assessee that its hostel facilities are utilized by NGOs and Government schools, Education Departments etc. who stay/attend for a few days as students, professors, scholars etc attending seminars, conferences and then move on thereby making it difficult for canteen staff to ascertain whether the persons are staying in the hostel or not has not been accepted. The chances of stray incidents where unconnected person may avail of services has not been accepted as sufficient compliance. The argument that canteen staff may not be in a position to identify whether the person availing the services is staying in the hostel or is merely attending conference or is a rank outsider has not been accepted. On account of this lack of full control by the canteen staff on their facilities being used as is evidenced by Inspector's Report, the Revenue would want to argue that the assessee trust through its canteen facilities is functioning on commercial lines. Similarly the Revenue has also assailed the impugned order on the ground that information as per the 26 AS is that certain corporate entities have utilized the facilities thereby leading to the presumption that the hostel and canteen facilities are being used on commercial lines. On the other hand, on behalf of the assessee, the contention has been that the assessee maintains very strict checks for making available its hostel facilities. Various pages in the paper book referred to show that the assessee requires the filling of Membership Form which requires the specific and relevant information of the organization making a booking. If it is a Trust/NGO etc., the copy of the Deed of Registration, financial statements, sources of fund, the purpose of the stay, the aims and objects the thrust area, the target group etc. are required to be mentioned. It has also been stated that the facilities are available to outsiders only when they are not being utilized by the assessee trust or NGO's etc. having identical aim and then too the receipts thereof are utilized for the objects of the trust as in response to the Sr. DR's objections based on paper book page -78. Ld. AR has pointed out that Bill No-26949 has been issued for NAWO giving customer No-12306 dated 07.09.2008. The specific organization had booked 15 rooms for 17 persons belonging to NAWO and the period of I.T.A .No.-3635/Del/2015 booking was 07.09.2008 to 10.09.2008. Details of this are available on the list at page 465 Sl. No-631 given again to the AO. Note mentioned at the bottom of the Bill has been pointed out showing that membership fee is valid only for 28 days and the Ld. AR has said that as per the Rules the hostel cannot be used for more than 28 days by the person/organization as evidently hostel inmates are not admitted for an academic year as is normally done in hostel of colleges etc. where students are studying for graduation and post- graduation courses. The hostel of the trust is only for students, scholars, professors attending seminars/conferences which aim to build leadership qualities in the youth; educate, inform, encourage and empower them by knowledge etc. by programmes/conference held by NGOs or by foreign visiting organizations whose aims are identical. Consequently at the time of admission it is seen that hostel facilities are made available only after the assessee trust is satisfied that the aims and objects of the charitable trust organizations are also for promotion of youth activities evidenced by relevant financial statement, certifications of registration narrating the purpose of visit etc and only then hostel facilities are made available for a maximum period of only 28 days which results at times where odd figures may be worked out depending on facilities used. We may reproduce for ready-reference from page 78 of paper book, the Note printed at the bottom of the Bill demonstrating the duration:-