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It has been brought on the record that under the directives of the Dental Council of India by the Gazette notification dated 25.07.2007, it is mandatory for the institutions admitting students in the dental education course (BDS) to provide hostel accommodation, based on the number of admissions, to all the boys and girls in the dental college campus itself. A copy of the said notification is appended with the memo of appeal and the same had also been filed before the Tribunal along with other papers. The issue herein is with regard to the return of income filed by the trust for the assessment year 2010-11 wherein the assessee had declared its net income as''NIL'. The case was selected under compulsory scrutiny and notices were issued to the assessee. The assessment order records that the books of account, bills and vouchers etc. maintained by the assessee had been produced in reply to the notice and the questionnaire issued by the department/revenue. After providing due opportunity to the assessee, the Assessing Officer concluded that the hostel activities of the trust is separable from its educational activities and the way the hostel and mess activities are being carried on they would fall within the meaning of "business"under section 2(13) and can not be treated as ''Charitable purposes' under Section 2(15) of the Income Tax Act. The benefit of Section 11 of the Act cannot be given to the assessee, in as much as, it has not maintained separate books of accounts which is one of the pre-conditions mentioned in Section 11(4A) for grant of such benefits. It was concluded in the assessment order that the total hostel receipt of the trust was excessively high and the receipt and payment details furnished by the assessee showing net deficit of 68,198/- was nothing but a cooked up story. It was concluded that the expenditures towards generator, electricity and security were also excessively high. As per the covered area of the hostel building as compared to the whole campus only 10% of total expenses could be allowed. The assessing officer,thus, held that all the figures in the ledger filed by the assessee were presumptive, without any justification and unsupported by evidence. As regards the expenses towards salary, the Assessing Officer did not accept the figures shown in the ledger observing that the work of a Hostel Warden is only a part time job. While concluding that only special allowance is to be given to a warden, the amount shown as expenditure for salary of four wardens of the hostel was disallowed.