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2. Though various grounds are raised, but they all relate to disallowance of exemption u/s. 11 of the Income-tax Act, 1961 ["the Act"] with respect of the activities for running hostel in the campus. While denying the benefit of exemption u/s. 11 of the Act, the AO has observed that the assessee trust is running a Dental College in the name & style of "Harsharan Dass Dental College" at Ghaziabad. A certificate of registration u/s. 12A was also granted to it. The AO has also observed that the assessee is providing hostel facilities to students against the hostel fees which was included in the fee receipt and the corresponding expenses was also exclusively shown in Income & Expenditure Account for providing hostel facilities to students. Besides treating the hostel fees charged per student at higher side in comparison with market price, the AO has also observed that the assessee has not maintained separate accounts for the hostel activities. He accordingly invoked the provisions of section 11(4A) and disallowed the exemption claimed with respect to the profit earned from hostel activities. Besides, he also disallowed the depreciation claimed with respect to hostels.

In view of the above, the argument of the appellant fails."

6. Aggrieved, the assessee has preferred an appeal before the Tribunal and reiterated its contentions. It was emphatically argued that the activity of running the hostel is one of the objects of the assessee trust. In support thereof, he invited our attention to the objective of the trust which is available at page nos. 18 to 20 of the compilation. It was further contended that during the impugned assessment year, the assessee did not earn any profit from the hostel activities, rather in the Income & Expenditure account, there was a deficit of Rs.68,198. It was further contended that if it not charitable activities, it would be incidental to the main activities of imparting education, for which the assessee trust is registered u/s. 12A of the Act. It was also stated that the assessee has taken the profit in the accounts in respect of hostel activities, therefore it cannot be said that separate books of accounts are not maintained. He also placed reliance upon the judgment of the Hon'ble Orissa High Court in the case of CIT v. Silicon Institute of Technology (2015) 370 ITR 567 (Orissa) wherein it was held that spending the amount received by assessee by way of collection of tuition fees or collection of hostel fees for building necessary infrastructure for imparting the education in various fields which is the charitable purpose for which the trust was established was entitled for exemption u/s. 11 of the Act. Further, he also placed reliance upon the judgment of the Hon'ble Karnataka High Court in the case of CIT v. Karnataka Lingayat Society (Kar) in ITA No.5004/2012, in which providing hostel to students/staff working for the society was held to be incidental to the achieve the object of providing education, namely, the object of the society. Further, reliance was also placed upon the judgment of Hon'ble Supreme Court in the case of ACIT v. Thanthi Trust, 247 ITR 785 (SC) in which it was held that a business whose income is utilised by the trust or the institution for the purpose of achieving the objectives of the trust or the institution is, surely, a business which is incidental to the attainment of the objectives of the trust. In support of his contention that if the assessee did not carry any business activity for earning profit, it was entitled for exemption u/s. 11 of the Act, further reliance was also placed upon the following judgments:-

(i) DIT v. Lala Lajpatrai Memorial Trust [2016] 383 ITR 345 (Bom)

(ii) PHD Chamber of Commerce & Ind. V. DIT, [2013] 357 ITR 296 (Del)

(iii) DIT v. Apparel Export Promotion Council [2000] 244 ITR 736 (Del)

(iv) CIT v. Bridaranyak Mandal (Trust) [2009] 319 ITR 363 (All)

7. The ld. DR, on the other hand, has contended that the assessee was running a separate activity for running hostel by charging a handsome hostel fees from the students, in comparison to rates prevailing in the market. It was further contended that the assessee has not maintained separate books of accounts, therefore even if the hostel activity is considered to be incidental to the main activity of imparting education, benefit of exemption cannot be allowed relating to hostel activities.

8. Having carefully examined the orders of authorities below and documents placed on record, I find that running of hostel activities is one of the objects of the assessee trust and it is also seen that where the educational institutions are set up, the assessee society or trust provides hostels for the students against the particular hostel fees. In the instant case, the hostel fees were charged @ Rs.4,500 to Rs.5,000 per month per student. During the course of hearing, it was explained that against this hostel fees, the assessee trust is providing all facilities including boarding & lodging to all the students. Therefore, this amount charged as hostel fees cannot be called to be exorbitant in comparison to the prevailing market rates. I have also examined the judgments referred to by the assessee and I find that hostel activity is certainly activity incidental to the main activity of imparting education. In the case of CIT v. Karnataka Lingayat Society (Kar) in ITA No.5004/2012, the Hon'ble High Court has held that providing hostel to the students/staff is incidental to the achieve the object namely the object of the society. In the case of ACIT v. Thanthi Trust, 247 ITR 785 (SC) the Hon'ble Apex Court has held that a business whose income is utilised by the trust or the institution for the purpose of achieving the objectives of the trust or the institution is, surely, a business which is incidental to the attainment of the objectives of the trust.