Iapl/103/2017 Of Daya Nand Pushpa Devi Charitable Trust Ghaziabad v. Additional Commissioner Of Income Tax Ghaziabad

ReservedAFR Case :- INCOME TAX APPEAL No. - 103 of 2017Appellant :- Daya Nand Pushpa Devi Charitable Trust GhaziabadRespondent :- Additional Commissioner Of Income Tax GhaziabadCounsel for Appellant :- Abhinav Mehrotra,Vivek Pratap SinghCounsel for Respondent :- Praveen Kumar,SC Hon'ble Mrs. Sunita Agarwal,J.Hon'ble Deepak Verma,J. Heard Sri Abhinav Mehrotra learned counsel for the appellantand Sri Praveen Kumar learned Advocate for the revenue. This is an Income Tax Appeal arising out of the order dated21.09.2016 passed by the Income Tax Tribunal, Delhi Bench, Delhi inI.T.A No.4238/DEL/2015 whereby the appellate order of CIT(A) andthe assessment order dated 12.03.2013 passed by the AdditionalCommissioner of Income Tax, Range-1, Ghaziabad had been affirmed.The appellant Daya Nand Pushpa Devi Charitable Trust, Ghaziabad,U.P. (hereinafter referred as “Assessee”) is a registered trust created bythe trust deed dated 05.09.1988.As per the objects of the trust, it wascreated for carrying out the cause of public charity within India; few ofthe objects stated in the trust deed are as under:- (ii)“To promote education in commerce, Science, Art,Engineering, Technical subjects, Management Studies, Vocationalor Professional subjects and to Establish and Maintain or give aidto Institution or Institutions:- (a) For giving training in commerce, Trade and Industry andvocational lines and other professions of General Importance.vocational lines and other professions of General Importance. (b) For imparting education to children boys, Girls and to Men and Women.” (ix) To form, assist, support, establish and maintain libraries andreading Room and to establish and maintain Boarding Houses andHostels and assist such institutions.” The trust is running a Dental College in the name & style ofHarsharan Dass Dental College at Ghaziabad. The hostel for residenceof the students admitted in the said college is also being run andmanaged by the trust. The trust claimed that all its activities arecovered under Section 2 (15) of the Income Tax Act' 1961(In shortreferred to as the “Act”); and had applied for the registration underSection 12-A of the Income Tax Act, which had been duly granted bythe Commissioner, Income Tax, Meerut vide order C No.40(40)/Registration/GZB/9902000/CIB/1960 dated 02.05.2000. It has been brought on the record that under the directives of theDental Council of India by the Gazette notification dated 25.07.2007, itis mandatory for the institutions admitting students in the dentaleducation course (BDS) to provide hostel accommodation, based onthe number of admissions, to all the boys and girls in the dental collegecampus itself. A copy of the said notification is appended with thememo of appeal and the same had also been filed before the Tribunalalong with other papers. The issue herein is with regard to the return ofincome filed by the trust for the assessment year 2010-11 wherein theassessee had declared its net income as’'NIL’. The case was selectedunder compulsory scrutiny and notices were issued to the assessee. Theassessment order records that the books of account, bills and vouchersetc. maintained by the assessee had been produced in reply to thenotice and the questionnaire issued by the department/revenue. Afterproviding due opportunity to the assessee, the Assessing Officerconcluded that the hostel activities of the trust is separable from its educational activities and the way the hostel and mess activities arebeing carried on they would fall within the meaning of“business”under section 2(13) and can not be treated as ‘Charitablepurposes’ under Section 2(15) of the Income Tax Act. The benefit ofSection 11 of the Act cannot be given to the assessee, in as much as, ithas not maintained separate books of accounts which is one of the pre-conditions mentioned in Section 11(4A) for grant of such benefits. Itwas concluded in the assessment order that the total hostel receipt ofthe trust was excessively high and the receipt and payment detailsfurnished by the assessee showing net deficit of 68,198/- was nothingbut a cooked up story. It was concluded that the expenditures towardsgenerator, electricity and security were also excessively high. As perthe covered area of the hostel building as compared to the wholecampus only 10% of total expenses could be allowed. The assessingofficer,thus, held that all the figures in the ledger filed by the assesseewere presumptive, without any justification and unsupported byevidence. As regards the expenses towards salary, the AssessingOfficer did not accept the figures shown in the ledger observing thatthe work of a Hostel Warden is only a part time job. While concludingthat only special allowance is to be given to a warden, the amountshown as expenditure for salary of four wardens of the hostel wasdisallowed. Similarly, the expenditures shown towards the payment of salaryto the caretaker, driver were also disallowed. Income from the hostelactivity in view of the section 11(4A) of the Income Tax Act was, thus,computed as under:- “Total Hostel Fees received during the year Rs.66,20,000/- Expenditure claimed Rs.66,88,198/-Less: Expenditure disallowed as discussed above Rs.34,88,089/- Allowable Expenditure Rs.32,00,109/- Rs.32,00,109/-Net surplus as calculated u/s 11 (4A) Rs. 34,19,891” The net surplus income arrived at by the Assessing Officer afterdeduction of allowable expenditure was subjected to tax at theappropriate rate under Section 11 (4A) of the Act. With regard to theother income of the trust, it was observed that it will continue to enjoyexemption under Section 11 of the Act. The assessment order had beenaffirmed in the appeals both by the CIT(A) and the Tribunal. The appeal had been admitted on the substantial questions oflaw. During the course of hearing, the substantial question of law hasbeen re-framed as under:- “(A)Whether under the provisions of Section 11(4A), the Hostelactivity of a charitable institution engaged in imparting education in aresidential institution such as the assessee will be included in theexpression “business” in the said subsection; and the incomegenerated from such Hostel activity can be said to be businessincome so as to attract the pre-conditions of the said sub- section in aclaim of exemption under Section 11 (1) of the Act? Learned counsel for the appellant/assessee argued that theassessee being under statutory obligation to maintain a hostel for thestudents admitted in the institution, its activity of maintaining thehostel by charging hostel fees is an integral part of the objects of thetrust, which is essentially charitable in nature being education. Even ifthe collected hostel fees has created some surplus as per the analysis ofthe Assessing Officer but that surplus by itself cannot be said to beprofit and gains of a business within the meaning of Section 11(4A) ofthe Act, as the hostel activity is not independent to the main object ofimparting education (Dental education). The benefit of Section 11 of Learned counsel for the appellant/assessee argued that theassessee being under statutory obligation to maintain a hostel for thestudents admitted in the institution, its activity of maintaining thehostel by charging hostel fees is an integral part of the objects of thetrust, which is essentially charitable in nature being education. Even ifthe collected hostel fees has created some surplus as per the analysis ofthe Assessing Officer but that surplus by itself cannot be said to beprofit and gains of a business within the meaning of Section 11(4A) ofthe Act, as the hostel activity is not independent to the main object ofimparting education (Dental education). The benefit of Section 11 of the Act, therefore, has to be granted to the assessee for exemption ofthe income from liability of the Income Tax under the Act. TheAssessing Officer on irrelevant considerations had rejected the detailsof receipt and payment account furnished by the assessee in the formof a ledger. The findings returned by the Assessing Officer of the hostelfees charged by the assessee being excessive is based on thecomparison of the expenditures claimed by some other society namelyLaksh Educational Society located in Ghaziabad. The AssessingOfficer had erred in holding that the hostel fee charged by the assesseeis more than the market rate or the fee charged by other institutions,private or government. The submission is that such a comparison wasnot permissible while dealing with the claim of exemption underSection 11 of the Income Tax Act. The contention is that the assessee isgiving hostel facility to only those students who are admitted in thedental college. The provision of hostel facility is for advancement ofeducation and also in order to meet the statutory requirement and assuch it cannot be said to be an activity having limbs of business such ascarrying on in an organised manner with the motive of earning profit soas to fall within the meaning of “business” under the Act. It is vehemently argued that in the facts and circumstances of thecase, sub-section (4A) of Section 11 of the Act has no application and,therefore, the requirement of the said provision to maintain separatebooks of accounts would be wholly inapplicable. The incidentalactivity of the trust in providing hostel facility to its students could notbe construed as a business unless intention to do independent businessor any element of business such as continuous activity with profitmotive are present in the same. Since the hostel facility cannot beconstituted as an activity independent to the main object of impartingdental education treating the same as business within the meaning ofSection 11 (4A) was erroneous. Reliance is placed on the decision of this Court in IndianInstitute of Technology Vs. State of U.P.[1] to submit that thedivision bench of this Court taking note of the principal activity of thepetitioner therein had held that running of visitor’s hostel to providetemporary accommodation to research scholars, research fellowsstudents and teachers cannot be said to be the activity which can besaid to be business in a commercial way. Rather the principal activityof the petitioner institute being academic or charitable, the sale of foodstuff in the visitors' hostel run by it was minor, subsidiary andincidental to the principal activity and being an integral part of itsacademic activity, the petitioner’s institute cannot be dubbed as adealer within the meaning of Section 2(c) of the U.P. Sales Tax Act. Itwas,thus, held that the Sales Tax Officer had no jurisdiction to initiateproceeding for levy of sales tax with regard to the said activity. Learned counsel for the appellant had further invited theattention of the Court to a decision of this Court in Swadeshi CottonMills Vs. Sales Tax Officer[2] to urge that in the similar situation,sale of food and refreshments in the dining hall of the Aligarh MuslimUniversity which was subjected to sales tax, was held to be a non-commercial activity. It was held therein that the supply of food tostudents in the dining hall was incidental to the main academic activityof the University as the dining hall service was an integral part of thehostel facility while imparting education to the students. He further placed the Division Bench judgement of this Court inMahatma Gandhi Kashi Vidyapeeth Vs. State of U.P. &others[3] wherein question was as to whether the petitioner therein wasa dealer within the meaning of U.P. Vat Act’ 2008 and was carrying on 1.1976 (38) STC 4282. AIR 1965 All 862. AIR 1965 All 86 3.2013 (5) ADJ 85 business. The term business in the context of Section 2(h) of the U.P.Vat Act’ 2008 was examined by the Division Bench and taking note ofthe decisions of the Apex Court in the University of Delhi andanother Vs. Ram Nath and others[4], Commissioner of SalesTax Vs. Sai Publication Fund[5], it was held that if the mainactivity of the assessee concerned was not business, any businessactivity incidental or ancillary thereto which is infinitesimal or smallpart of the main activity cannot bring it within the scope of the term'dealer'. It was, thus, held that if the main activity is not commercialthen any other activity which forms integral part of the non-commercial activity would also not be the business so as to include theperson carrying on such activity in the definition of dealer. In the factsand circumstances of the said case, it was held that the main activity ofthe petitioner therein was education and the activity of printingadmission form and realising price for the same will not bring it intothe ambit of the term 'dealer' as defined under the Act. The decision of the Apex Court in Commissioner of SalesTax[5] was placed before the Court to assert that the test is that whenthe transactions which are related to the main activity are only ainfinitesimal or small part of the main activity and if the main activityis not business, then the connected, incidental or ancillary activity ofsale would not normally amount to business unless an independentintention to conduct “business” in these connected incidental orancillary activity is established by the revenue. It was clarified thereinthat in case where the connected incidental transactions are so high soas to render the main activity infinitesimal or very small, then of-course the case would fall under the category of 'business' within themeaning of the Act.The decision of this Court in Swadeshi Cotton 4.AIR 1963 SC 18735.2002 (4) SCC 575.2002 (4) SCC 575.2002 (4) SCC 575.2002 (4) SCC 57 Mills[2], Indian Institute of Technology[1] and of Apex Court in theUniversity of Delhi[4] were taken note of by the Apex Court whiletaking the aforesaid view. With the help of these decisions, it was vehemently argued bythe learned counsel for the appellant that in the instant case looking tothe objects of the trust and the statutory mandate for establishment ofboarding houses for the residence of the student admitted in theinstitute, the hostel activity of the trust cannot be said to be businessactivity so as to bring the case of the assessee within the scope ofSection 11 (4A) of the Act. As the said provision is not applicable, thecomputation made by the Assessing Officer in arriving net surplustaxable income from the hostel fee receipt is erroneous. The exemptionunder Section 11 of the Act was available to the assessee in view of theSection 2(15) of the Act which include “education”within the meaningof “charitable purposes”. With the help of these decisions, it was vehemently argued bythe learned counsel for the appellant that in the instant case looking tothe objects of the trust and the statutory mandate for establishment ofboarding houses for the residence of the student admitted in theinstitute, the hostel activity of the trust cannot be said to be businessactivity so as to bring the case of the assessee within the scope ofSection 11 (4A) of the Act. As the said provision is not applicable, thecomputation made by the Assessing Officer in arriving net surplustaxable income from the hostel fee receipt is erroneous. The exemptionunder Section 11 of the Act was available to the assessee in view of theSection 2(15) of the Act which include “education”within the meaningof “charitable purposes”. Sri Praveen Kumar learned counsel for the revenue, on the otherhand, argued that the word “business” in Section 11(4A) of the Act hasbeen used in the context of any activity which is undertaken by a trustor an institution, such activity is covered under the definition of theword “business”in Section 2(13) of the Act as the definition beinginclusive, the expression business has to be interpreted it its widestamplitude. The Webster Encyclopedic Unabridged Dictionary of theEnglish Language defines “business” as an occupation, profession ortrade and, thus, any kind of occupation which may or may not beprofitable in nature is a “business”. The Apex Court in the case ofT.M.A. Pai Foundation & others Vs. State of Karnataka &others[6] has held that education falls within the expression 2.AIR 1965 All 861.1976 (38) STC 4281.1976 (38) STC 428 4.AIR 1963 SC 1873 6.AIR 2003 SC 355 “occupation” employed under Article19(1)(g).The private educationalinstitutions’ right to establish and administer its institutions has thusbeen recognised as a fundamental right guaranteed under Article 19 (1)(g) of the Constitution of India. It is, thus, argued that even running ofan educational institution is business though under the provision of theIncome Tax Act its income has been exempted treating it to be part ofcharitable purposes. It was, therefore, incumbent on the assessee tomaintain separate books of accounts and produce it before theAssessing Authority for the purpose of computation of benefits underSection 11 of the Act. Reliance is placed on the decisions ofCommissioner of Income Tax Vs. Tamil Nadu DairyDevelopmentCorporationLtd.[7]andAdditionalCommissioner of Income Tax Vs. Ram Kirpal Tripathi[8] tosubmit that the profit motive of the assessee is not a pre-condition fortreating its as activity as business. The opinion of the revenue that theincome of the trust derived from the hostel run by is from acommercial activity is supported by the material on record. It is, thus,argued that even if the hostel activity is incidental to the objects of thetrust, compliance of the second condition of maintaining separatebooks of accounts for claiming exemption under Section 11 of the Actwas mandatory. Having heard learned counsels for the parties and perused therecord. The undisputed facts of the case are that the assessee which isa trust has been registered as charitable trust by the Sub-Registrar,Ghaziabad. The trust has also been recognised and registered under theIncome Tax Act as an institution whose objects are charitable in nature.The registration certificate has been issued by the competentCommissioner under Section 12 (A) of the Act and the same isoperative till date. The trust runs the above named dental college which7.1995 (213) ITR 5358.1980 (125) ITR 408 is a residential institution. As per the statutory scheme, all the studentsof the institutions have to necessarily reside in the halls of residence orhostel built by the institute within its campus. Having heard learned counsels for the parties and perused therecord. The undisputed facts of the case are that the assessee which isa trust has been registered as charitable trust by the Sub-Registrar,Ghaziabad. The trust has also been recognised and registered under theIncome Tax Act as an institution whose objects are charitable in nature.The registration certificate has been issued by the competentCommissioner under Section 12 (A) of the Act and the same isoperative till date. The trust runs the above named dental college which7.1995 (213) ITR 5358.1980 (125) ITR 408 is a residential institution. As per the statutory scheme, all the studentsof the institutions have to necessarily reside in the halls of residence orhostel built by the institute within its campus. In pursuance of this statutory obligation imposed by the DentalCouncil of India, the assessee is running hostel for residence of thestudents (both boys and girls) admitted in the institute. The hostel feesis charged from the students which includes mess fee. Section 2(15) ofthe Act defines “Charitable Purposes” as :- “2(15)Charitable purpose” includes relief of the poor,education, yoga, medical relief, preservation of environment(including watersheds, forests and wildlife) and preservationof monuments or places or objects of artistic or historicinterest, and the advancement of any other object of generalpublic utility: Provided that the advancement of any other object of generalpublic utility shall not be a charitable purpose, if it involvesthe carrying on of any activity in the nature of trade,commerce or business, or any activity of rendering anyservice in relation to any trade, commerce or business, for acess or fee or any other consideration, irrespective of thenature of use or application, or retention, of the income fromsuch activity, unless (i) such activity is undertaken in the course of actualcarrying out of such advancement of any other object ofgeneral public utility; and (ii) the aggregate receipts from such activity or activitiesduring the previous year, do not exceed twenty per cent. ofthe total receipts, of the trust or institution undertaking such activity or activities, of that previous year;” Section 2(13) defines that “business” includes any trade, commerce or manufacture or any adventure or concern in thenature of trade, commerce or manufacture; Section 11 of the Act relates to the income from property heldfor charitable or religious purposes which provides that :- '11. Income from property held for charitable orreligious purposes.(1) Subject to the provisions of sections60 to 63, the following income shall not be included in the totalincome of the previous year of the person in receipt of theincome (a) income derived from property held under trust wholly forcharitable or religious purposes, to the extent to which suchincome is applied to such purposes in India; and, where any suchincome is accumulated or set apart for application to suchpurposes in India, to the extent to which the income soaccumulated or set apart is not in excess of fifteen per cent. ofthe income from such property; (b) income derived from property held under trust in part onlyfor such purposes, the trust having been created before thecommencement of this Act, to the extent to which such income isapplied to such purposes in India; and, where any such income isfinally set apart for application to such purposes in India, to theextent to which the income so set apart is not in excess of 4fifteen per cent. of the income from such property; (c) Income derived from property held under trust (i) created on or after the 1st day of April, 1952, for a charitable purpose which tends to promote internationalwelfare in which India is interested, to the extent towhich such income is applied to such purposes outsideIndia, and (b) income derived from property held under trust in part onlyfor such purposes, the trust having been created before thecommencement of this Act, to the extent to which such income isapplied to such purposes in India; and, where any such income isfinally set apart for application to such purposes in India, to theextent to which the income so set apart is not in excess of 4fifteen per cent. of the income from such property; (c) Income derived from property held under trust (i) created on or after the 1st day of April, 1952, for a charitable purpose which tends to promote internationalwelfare in which India is interested, to the extent towhich such income is applied to such purposes outsideIndia, and (ii) for charitable or religious purposes, created beforethe 1st day of April, 1952, to the extent to which suchincome is applied to such purposes outside India: Provided that the Board, by general or special order, hasdirected in either case that it shall not be included in thetotal income of the person in receipt of such income; (d) income in the form of voluntary contributions madewith a specific direction that they shall form part of thecorpus of the trust or institution. Explanation1. For the purposes of clauses (a) and (b), (1)in computing the fifteen per cent. of the income whichmay be accumulated or set apart, any such voluntarycontributions as are referred to in section 12 shall bedeemed to be part of the income;. Sub-section (4) of Section 11 says that:- “For the purposes of this section property held under trustincludes a business undertaking so held, and where a claim ismade that the income of any such undertaking shall not beincluded in the total income of the persons in receipt thereof, theAssessing Officer shall have power to determine the income ofsuch undertaking in accordance with the provisions of this Actrelating to assessment; and where any income so determined is inexcess of the income as shown in the accounts of theundertaking, such excess shall be deemed to be applied to purposes other than charitable or religious purposes.” Sub-section (4-A) provides as under:- “(4-A) Sub-section (1) or sub-section (2) or sub-section (3) orsub-section (3A) shall not apply in relation to any income of atrust or an institution, being profits and gains of business, unlessthe business is incidental to the attainment of the objectives ofthe trust or, as the case may be, institution, and separate booksof account are maintained by such trust or institution in respectof such business.” A careful reading of the above provisions shows that under theAct the “business” means to include any adventure or concern in thenature of trade, commerce or manufacture whereas the words“charitable purposes” include “education”. The word “education” inSection 2(15) of the Act is not qualified by any restrictions. It has beenused in its widest amplitude so as to include education of all level to allclasses of the society or category. Clearly, it can not been confined toany section or class of the society or any particular type or level ofEducation. Meaning thereby any activity which includes or relates toeducation would be for charitable purposes within the meaning ofSection 2(15) of the Act. Section 11(1)(a) provides that the incomederived from property held the trust, wholly for charitable or religiouspurposes shall be exempted from the total income to the extent towhich such income is applied for such purposes and where any suchincome is accumulated or set apart for application to such purposes, tothe extent to which the income so accumulated or set apart is not inexcess of 15% of the income from such property. The assessee hereinis seeking benefit of Section 11(1)(a) of the Act with the assertion thatthe income derived from the hostel facility, a property held under thetrust, had been wholly utilised for charitable purposes for imparting education and hence the same has to be excluded from the total incomeand the Assessing Officer cannot treat the surplus, if any, on account ofthe hostel receipt as taxable income by applying the conditions ofSection 11(4A) of the Act. It is argued that the hostel income being subservient to the mainobject of the education, the Assessing Officer has gravely erred intreating the same as business income for disallowing the exemptionsunder Section 11(1) of the Act. Sub-section (4A) of Section 11 is the bone of contention betweenthe parties. A careful reading of the said provision indicates that it talksof any income of the trust or an institution which is in the nature of“profit and gains of business” and states that sub-section (1) of Section11 would not apply unless two conditions mentioned therein arefulfilled, i.e (i) such business is incidental to the attainment of theobjectives of the trust;(ii) and separate books of accounts aremaintained by such trust or institutions in respect of such business. Sub-section (4) of Section 11 states that for the purpose ofSection 11 “property held under the trust” includes “businessundertaking so held”. The crucial word in sub-section (4A) is “business” which has tobe understood as per the meaning provided under Section 2(13) of theAct. The “business” in sub-section (4A) can mean any activityincluding any trade, commerce, or manufacture or any adventure orconcern in the nature of trade, commerce, or manufacture. A businessundertaking of the trust may also be included as property held underthe trust in view of the sub-section (4) of Section 11. But for gettingthe benefit of sub-section (1) of Section 11, the income derived from property held under the trust whether wholly or in part, must be usedfor charitable or religious purposes. Under sub-section (4A) of Section11, income of any business of the trust in the nature of profit and gainsof such business can be exempted under sub-section (1) of Section 11only if two pre-conditions mentioned in the said sub-section arefulfilled. The first condition is that the business must be incidental tothe attainment of objectives of the trust. While considering the scope of sub-section (4A) of Section 11which came into effect by the Finance (No.2) Act 1991 w.e.f.01.04.1992, in Assistant Commissioner of Income Tax Vs.Thanthi Trust[9], the Apex Court had noted that the substituted sub-section (4A) gave trust and institution a wider latitude than the earliersub-section (4A). In the wide language of sub-section (4A),a trust isentitled to the benefit of Section 11, if it utilises the income of itsbusiness for the purpose of achieving its charitable objects. In this way,the trust is allowed to create a corpus by indulging in business activityto feed the charity. As the provision stands, all that is required for thebusiness income of the trust or institutions to be exempted from the taxis that the business should be incidental to the attainment of theobjectives of the trust or institution. A business whose income isutilised by the trust or the institution for the purpose of achieving theobjectives of the trust or the institutions, is, surely, a business which isincidental to the attainment of the objectives of the trust. It was, thus,held that the substituted sub-section (4A) is more beneficial to a trustor institution than the original provision. It can, thus, be seen that sub-section (4A) of Section 11presupposes a business venture of the trust or institution which isthough independent to its main activity but incidental to the attainment 9.2001 (247) ITR 785 of the objectives of the trust. The “business” as mentioned in the saidsub-section can be an adventure or concern in the nature of trade,commerce or manufacture. It can, thus, be seen that sub-section (4A) of Section 11presupposes a business venture of the trust or institution which isthough independent to its main activity but incidental to the attainment 9.2001 (247) ITR 785 of the objectives of the trust. The “business” as mentioned in the saidsub-section can be an adventure or concern in the nature of trade,commerce or manufacture. Having held that the applicability of the sub-section (4A) of Section11 presupposes income from a business, being profit and gains of thebusiness, the test applied is whether the activity which is pursued isintegral or subservient to the dominant object or isindependent/ancillary/incidental to the main object or forms a separateactivity in itself. The issue whether the institution is hit by sub-section(4A) of Section 11 of the Act will essentially depend upon theindividual facts of the case of the institutions where considering thenature of the individual activity, it will have to be tested whether thesame forms incidental, ancillary, connected activity (ies) and whetherthe same was carried out pre-dominantly with the profit motive in thenature of trade, commerce etc. The question, therefore, would be whether the hostel activity of thetrust which is imparting dental education in the institution establishedby it is a business activity incidental to the attainment of its objectivesor it is an activity which is an integral and inseparable part of the mainactivity(education) carried on by the assessee. The determinative testshall be the theory of dominant purpose which has all through theyears, been upheld to be the determining factor laying down whetherthe Institution is Charitable in nature or not. In the instant case, however, there is no dispute about the nature ofthe institution/trust being charitable in nature. The main activity of thetrust being education is covered within the meaning of 'Charitablepurposes' defined under Section 2(15) and it has been registered underSection 12-A of the Income Tax Act. In our considered opinion, running of hostel constitutes an integral and inseparable part of theacademic activities carried on by the assessee and it is not possible toisolate or insulate it from the main activity and treat as business withinthe meaning of Section11(4A). It has to be noticed that the hostel is being run in discharge of astatutory obligation as institution in question cannot impart dentaleducation without providing for the hostel. There is no dispute aboutthe fact that the assessee has provided hostel and mess facilities only tothose students who are attached with the educational institution. It isnot the case of the revenue that the income generated out of the hostelfees is not used for the educational purposes. Only reason given by theAssessing Officer to deny exemption under sub-section (11)(1) of theIncome Tax Act is that the income from the hostel fee is excessive anddisproportionate to the income derived by other educational institutionswhich indulge in similar activity i.e. maintaining hostel for the studentsadmitted in the institution, whether government or private. Accordingto us, such a comparison was not open, in as much as, whether aventure or activity of the assessee is a business venture separable fromits main activity and whether such activity constitutes an integral andinseparable part of the main activity, are matters to be decided on thefacts and circumstances of the individual case,i.e. looking to the natureof establishment and its activities. The issues as to whether the feecharged is excessive or what should be the reasonable amount of hostelfee are wholly extraneous to the dominant purpose test. The hostel feecharged would obviously depend upon the facility provided to thestudents. Having regard to the object and purpose for which the institutionin question has been established by the trust and the mandate of theDental Council of India in the gazette notification of the year 2007, we Having regard to the object and purpose for which the institutionin question has been established by the trust and the mandate of theDental Council of India in the gazette notification of the year 2007, we find that it is one of the primary duties and objects of the trust toestablish, maintain and managed halls and hostel for the residence ofthe students studying in the institutions established by it. Theinstitution in question being a residential institution, its activity inmaintaining the hostel by charging hostel fee (for its maintenance andproviding mess facility) is an integral part of the main activity“education” of the assessee. The hostel and mess facility subserves themain object and purpose of the trust and and are inseparable part of itsacademic activity. It would be unrealistic to segregate the said activityand treat the same as business. A clear distinction is to be madebetween the activity which is though ancillary or incidental to the mainactivity but a distinct activity and the one which is an integral orincidental part of the main activity as one single activity. Such a distinction has been drawn by the Division bench of thisCourt in Swadeshi Cotton Mills[2]wherein this Court was dealingwith the batch of cases where different bodies were running canteens.One of the cases was concerned with the Aligarh Muslim Universitywhich was maintaining dining halls where it was serving food andrefreshments to its resident students. Referring to the observations ofthe Apex Court in University of Delhi[4]It was held thereinthat itwas incongruous to call educational activities of the University same as“carrying on business”. The activity of serving food in the dining hallwas a minor part of the overall activity of the University. The dininghall service was held to be an integral part of the university whileimparting education to the students. It was observed that the dining hallservice is indissolubly blended with, and is an inseparable componentof educational activity of the university. On the said reason, it was heldthat the activity of the Aligarh Muslim University of providing food toits residential students is such a minor, subordinate and insignificant2.AIR 1965 All 864..AIR 1963 SC 1873 part that it would be unreasonable to allow this work to lend a businesscolour to the university so as to make it an institution carrying on thebusiness of sale of food, for holding it liable to be taxed. Similarly in the Indian Institute of Technology[1], theDivision Bench of this Court considering the two above noteddecisions has held that:- “19.The distinction laid down in the aforesaid decisions between acase, on the one hand, where the principal activity of an institutionis doing business in a commercial way, and, on the other hand, acase where its principal activity is predominantly academic orcharitable and an activity which may appear to have someincidents of business is only minor, subsidiary and incidental to theprincipal activity and is an integral part of it, is apposite andaffords valuable guidance.” In the said case, the sale of foods stuff to the residents of thevisitor’s hostel maintained by the Institution (IIT) was subjected to taxunder the U.P. Sales Tax. It was observed that it could not be said thatthe principal activity of the assesse was doing business in a commercialway of buying and selling food stuff. It was, thus, held that theprincipal activity of the assessee being predominantly academic andthe supply of food stuff in its hostel was minor, subsidiary andincidental to the principal activity, it was an integral part of itsacademic activity. The Apex Court in Commissioner and Sales Tax[5] has heldthat the question of profit motive or non- profit motive would berelevant only where a person carries on trade, commerce, manufactureor adventure in the nature of trade, commerce etc. It was held that the 1.1976 (38) STC 428 5.2002 (4) SCC 57 The Apex Court in Commissioner and Sales Tax[5] has heldthat the question of profit motive or non- profit motive would berelevant only where a person carries on trade, commerce, manufactureor adventure in the nature of trade, commerce etc. It was held that the 1.1976 (38) STC 428 5.2002 (4) SCC 57 sole object of the assessee trust therein was to spread the message ofSaibaba of Shirdi. The books and literature etc. containing the messageof Saibaba were distributed by the trust to the devotees of Saibaba atthe cost price. There was no dispute that the primary and dominantactivity of the trust was to spread the message of Saibaba. This mainactivity does not amount to "business". The activity of publishing andselling literature, books and other literature obviously, could not bebusiness as such even without profit motive and it was in a way ameans to achieve the object of the trust through which message ofSaibaba was spread. In Mahatma Gandhi Kashi Vidyapeeth[3], the DivisionBench of this Court had considered the question as to whether theactivity of the assessee therein amounted to business as defined underthe U.P. Vat Tax Act’ 2003. While interpreting the term "business"which includes any trade, commerce, or manufacture etc.in thedefinition under the said Act, the Court had held therein that if themain activity was not business then any transaction incidental orancillary would not normally amount to business unless an independentintention to carry on the business activity, incidental or ancillary, wasestablished. It was held that emphasis has to be laid on the mainactivity of the person to fall within the definition of business. Theinclusion of incidental or ancillary activity in the definition of businesspresupposes the existence of trade, commerce etc. In the light of the above discussion, considering the definition of“business” under Section 2(13) of the Act ; “Charitable purposes”under Section 2(15) as also the provisions of Section 11, 11(4A) and12-AA of the Act, in the fact and circumstances of the case, it isapparent that the principal activity of the petitioner is pre-dominantly academic and charging of fees for the accommodation provided to thestudents admitted in the dental education course, is minor, subsidiaryand subservient to the principal activity and is an integral part of itsacademic activity. It cannot be said that the assessee’s principal activityis doing business in a commercial way of letting out theaccommodation. Consequently, the petitioner cannot be said to be doing“business” in terms of sub-section (4A) of Section 11 and its activity ofmaintaining hostel and charging fees does not fall within the meaningof “business” under Section 2(13) of the Act. The hostel fee cannot besaid to be income derived from the “business” of the trust. The saidintegral activity being directly linked to the attainment of the mainobjectives of the trust, the requirement of maintaining separate booksof accounts with regard to such activity for seeking benefit ofexemption under Section 11 (1) of the Act , therefore, not attracted. The element of trade and commerce in the hostel activity cannotbe found so as to bring the same within the meaning of “business”. Thegrounds taken by the revenue that the assessee was carrying on thecommercial activity which is not incidental to the objects of the trustand that the assessee has not complied with the provisions underSection 11 (4A) of the Act by not maintaining separate books ofaccounts of the income of the said business even if said business is saidto be incidental to the objectives of the trust, are found faulty. Therevenue has committed wrong in holding that the business carried onby the assessee having no direct relationship with the objectives of thetrust, the mandate of Section 11(4A) of the Act had to be compliedwith. There was no material on record with the revenue to hold that thehostel activity is a separate business. From any angle, it could not beproved by the revenue that the income from the hostel fee can be treated as profit and gains of the separate business or commercialactivity and that it is not an integral part and parcel of education, whichis the main objective of the trust. Applying the theory of dominant purpose in the facts of the presentcase it can be safely concluded that the surplus, if any, generated out ofthe activity of maintaining halls and residents for the students being anintegral part of the main object of education, was liable to be treated asincome from the property held by the trust wholly for charitablepurposes and was, therefore, deductible from the total income of thetrust (person in receipt of the income) by granting exemption underSection 11 of the Act. The argument of the assessee further is that the balance as shownin the ledger of income and expenditure account of the hostel fees wasin negative. There was no surplus over receipt. The assessee had notgained any profit out of the hostel activity. To prove the said point, theassessee had filed the balance sheet showing loss in the said activity. As regards, the contention of Sri Praveen Kumar learnedAdvocate for the revenue that the profit motive or profit earning is notan element of any activity to be termed as business. He contends that inthe literal parlance, business means any “occupation” and educationbeing an industry or occupation as held in T.M.A Pai Foundation& others[6], even an activity relating to or incidental to education hasto be treated as business. This contention of learned counsel for the revenue does notimpress the Court, in as much as, it is settled that the taxing statutecannot be interpreted on any presumption or assumption. The Courtmust look squarely at the words of the statute and interpret them. It6.AIR 2003 SC 355 must interpret a taxing statute in the light of what it clearly expressed;it cannot imply anything which is not expressed; it cannot importprovision in the statute so as to supply any assumed deficiency.[Reference Commissioner of Sales Tax, U.P. Vs. Modi SugarMills Ltd.[10]] (para 11). The rule of construction of a taxing statute as discussed inCommissioner of Income Tax, Patiala Vs. M/s ShahzadaNand & sons & others[11] is relevant:- “In a Taxing Act one has to look merely at what is clearly said. There isno room for any intendment. There is no equity about a tax. There is nopresumption as to a tax. Nothing is to be read in, nothing is to beimplied. One can only look fairly at the language used." We may also note the statement of Hon'ble S.P. Bharucha, J. ( asthe Hon'ble Judge then was) speaking for the bench in V.V.S. SugarsVs. Govt. Of A.P. & others[12] as a guiding principle. Relevantparagraph No.4 is quoted as under:- “4. The said Act is a taxing statute and a taxing statute must beinterpreted as it reads, with no additions and no subtractions, on theground of legislative intendment or otherwise.” In view of the above noted legal position, any interpretation ormeaning given to the word “business” in the literal parlance cannot beread into the Income Tax Act as the word “business” has been definedin the Act itself. The Court has to read the statute namely the IncomeTax Act to find out as to whether the activity of the assessee inmaintaining the hostel would be exempted under Section 11(1) of theAct and whether the provisions of Section 11(4A) would be attracted inthe facts and circumstan