JUDGMENT B. N. Mahapatra J.-The present income-tax appeal under section 260A of Income-tax Act, 1961 (hereinafter referred to as "the IT Act"), which arises out of order passed in I. T. A. No. 316/CTK/2011 and C. O. No. 18/CTK/2011, dated September 23, 2011, passed by Income- tax Appellate Tribunal, Cuttack Bench, Cuttack, for assessment year 200708, has been filed at instance of Commissioner of Income-tax, Ayakar Bhawan, Rajaswa Vihar, Bhubaneswar, District Khurda. According to appellant, following substantial questions of law are involved in present income-tax appeal: "(i) Whether, in facts and in circumstances of case and in view of decision of hon'ble High Court of Uttarakhand in case of CIT v. Queens' Educational Society reported in [2009] 319 ITR 160 (Uttarakhand), learned Income-tax Appellate Tribunal is correct in law in holding that assessee-trust is not running with profit motive and is eligible for exemption under section 11 of Income-tax Act, 1961? (ii) Whether, in facts and in circumstances of case and when assessee-trust is not eligible for exemption under section 11 of Act, learned Income-tax Appellate Tribunal is correct in law in holding that capital expenditure incurred by assessee-trust shall be allowed as application of income?" facts leading to filing of present appeal are that assessee is trust registered under section 12A of Income-tax Act with effect from September 2, 2002. It filed its return of income on October 31, 2007, for assessment year 2007-08 disclosing its total loss at Rs. 3,96,54,653. On December 3, 2009, Assessing Officer completed assessment under section 143(3) of Income-tax Act determining total income at Rs. 3,06,53,610. In assessment order, Assessing Officer did not allow benefit of exemption under section 11 of Income-tax Act to trust on ground that assessee-trust is making systematic profit year after year; incurred capital expenditure of Rs. 51,24,483 and diverted income to capital funds amounting to Rs. 28,75,204 which did not amount to application of income as per section 11(1) of Income-tax Act. Depreciation of Rs. 95,90,956 was also added to income of trust. To support his view, Assessing Officer relied upon decision of Uttarakhand High Court in case of Queens' Educational Society (supra). Being aggrieved by assessment order, assessee went in appeal before Commissioner of Income-tax (Appeal), who after considering submissions of assessee, allowed appeal by deleting all additions made in assessment order and directed Assessing Officer to allow benefit of exemption to trust under section 11 of Income-tax Act. Against order of Commissioner of Income-tax (Appeals), Department went in appeal before Income-tax Appellate Tribunal, Cuttack Bench, Cuttack (for short, "the ITAT") and learned Income-tax Appellate Tribunal in its order dated September 23, 2011, in I. T. A. No. 316/CTK/2011 has upheld order of Commissioner of Income-tax (Appeals). Hence, present appeal. Mr. A. Mohapatra, learned senior standing counsel for Income-tax Department, submitted that trust deed of assessee never had condition that assessee will run institution and invest surplus to expand its activity out of fees collected from students who are pursuing their course. assessee's activity of collecting fees from students as their course fee for studying in assessee's institution do not find place in trust deed, aims and objectives or notes on activity, which had been submitted to Commissioner of Income-tax for purpose of registration under section 12AA. Therefore, registration granted in favour of assessee by Commissioner of Income-tax on premise of trust deed, aims and objectives and notes on activity has no relevance regarding real activity carried on by assessee after obtaining registration. Year after year, assessee had been generating profit and creating fixed assets. For said purpose, huge amount of loans have been availed of from banks and financial charges had been claimed as expenditure out of students' fees. As assessee had been collecting fees much more than amount required for imparting education, collection of said excess amount fits to definition of capitation fees, which is illegal. hon'ble Supreme Court held that educational institutions are set up for charitable purpose and banned collection of capitation fees and such decision of hon'ble Supreme Court is binding on all authorities. order of Income-tax Appellate Tribunal is not based either on facts or correct application of law. Placing reliance on judgment of Jharkhand High Court in case of Queens' Educational Society (supra), Mr. Mohapatra submitted that reasons given by Tribunal for granting exemption to respondent-educational institution is not sustainable in law. Therefore, Mr. Mohapatra prayed to admit tax appeal for adjudication on substantial questions of law as stated hereinabove. Mr. J. Sahoo, learned senior advocate appearing for respondenteducational institution, submitted that no substantial question of law is involved in case. Tribunal is fully justified in granting exemption under section 11 of Income-tax Act, 1961, for assessment year 2007-08 for reasons stated therein. learned Assessing Officer is not correct in applying ratio of Queens' Educational Society (supra), as that case is not in context of organisations registered under section 11 of Income-tax Act. said judgment was rendered in context of section 10(23C) of Income-tax Act. Non-applicability of ratio of Queens' Educational Society (supra) has been considered and decided by number of High Courts and Tribunals and Revenue has not been able to sustain its plea even in single judgment in light of plethora of decisions in favour of assessee. There is strong reason for not applying ratio of Queens' Educational Society (supra) in case of appellant. In support of above contentions, Mr. Sahoo relied upon decisions of different High Courts, viz., Pinegrove International Charitable Trust v. Union of India [2010] 327 ITR 73 (P&H); [2010] 188 Taxman 402 (P & H) ; St. Lawrence Educational Society (Regd.) v. CIT [2011] 197 Taxman 504 (Delhi); [2013] 353 ITR 320 (Delhi); Vanita Vishram Trust v. Chief CIT [2010] 327 ITR 121 (Bom); Maa Saraswati Educational Trust v. Union of India [2010] 194 Taxman 84 (HP); [2013] 353 ITR 312 (HP); Kashatriya Sabha Maharana Pratap Bhawan v. Union of India [2010] 194 Taxman 442 (P & H); Sanatan Dharam Shiksha Samiti v. Chief CIT (Writ Petition No. 4155 of 2011 disposed of on October 3, 2011, by Punjab and Haryana High Court); CIT v. Manav Mangal Society [2009] 184 Taxman 502 (P & H); [2010] 328 ITR 421 (P&H). Placing reliance upon judgment of hon'ble Supreme Court in case of CIT v. B. C. Srinivasa Setty [1981] 128 ITR 294 (SC) and CIT v. P. J. Chemicals Ltd. [1994] 210 ITR 830 (SC), it was submitted that preponderance of judicial views in favour of assessee should be honoured. Placing reliance upon judgment of Punjab and Haryana High Court in case of Pinegrove International Charitable Trust (supra), Mr. Sahoo submitted that assessee having valid registration under section 12AA is required to be assessed by applying all provisions of section 11 and section 13 of Income-tax Act. Assessing Officer having not done so, order is bad in law. Mr. Sahoo further submitted that since registration was not withdrawn on date of assessment order, income of assessee was exempted in entirety. learned Assessing Officer is wrong in holding that capital expenditure is not applicable for charitable purpose. Concluding his argument, Mr. Sahoo submitted for dismissal of appeal. Before proceeding to examine whether questions Nos. (i) and (ii) as raised by Revenue in present case are substantial questions of law or not, it would be appropriate to know as to what is "substantial question of law". hon'ble Supreme Court in case of Sir Chunilal V. Mehta and Sons Ltd. v. Century Spinning and Manufacturing Co. Ltd., AIR 1962 SC 1314, held as under: "6 proper test for determining whether question of law raised in case is substantial would, in our opinion, be whether it is of general public importance or whether if directly and substantially affects rights of parties and if so whether it is either open question in sense that it is not finally settled by this court or by Privy Council or by Federal Court or is not free from difficulty or calls for discussion of alternative views. If question is settled by highest court or general principles to be applied in determining question are well settled and there is mere question of applying those principles or that plea raised is palpably absurd question would not be substantial question of law." hon'ble Supreme Court in case of Kondiba Dagadu Kadam v. Savitribai Sopan Gujar [1999] 3 SCC 722, held as under: "6. If question of law termed as substantial question stands already decided by larger Bench of High Court concerned or by Privy Council or by Federal Court or by Supreme Court, its merely wrong application on facts of case would not be termed to be substantial question of law. Where point of law has not been pleaded or is found to be arising between parties in absence of any factual format, litigant should not be allowed to raise that question as substantial question of law in second appeal. mere appreciation of facts, documentary evidence or meaning of entries and contents of document cannot be held to be raising substantial question of law. But where it is found that first appellate court has assumed jurisdiction which did not vest in it, same can be adjudicated in second appeal, treating it as substantial question of law. Where first appellate court is shown to have exercised its discretion in judicial manner, it cannot be termed to be error either of law or of procedure requiring interference in second appeal. This court in Reserve Bank of India v. Ramkrishna Govind Morey [1976] 1 SCC 803 held that whether trial court should not have exercised its jurisdiction differently is not question of law justifying interference." Now, coming to case at hand, undisputed facts are that assessee is trust registered under section 12A of Income-tax Act with effect from September 2, 2003. main object of respondent is to impart education. Year after year respondent-assessee has been generating profit and creating fixed assets. assessee claims capital expenditure as application of income in terms of section 11 of Income-tax Act. On date of assessment, registration granted under section 12AA was not withdrawn. learned Assessing Officer held that respondent-educational institution is not entitled to exemption under section 11 of Income-tax Act but both first appellate authority and learned Income-tax Appellate Tribunal held that respondent-educational institution is eligible for exemption under section 11 of Act. In this context, it would be relevant to refer to following decisions of hon'ble Supreme Court. hon'ble Supreme Court. five-judge Constitution Bench of hon'ble Supreme Court in case of Addl. CIT v. Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1 (SC); [1979] 13 CTR (SC) 378, dealt with question of interpretation of clause (15) of section 2 of Act. In said case it has been held as follows (page 25): "The test which has, therefore, now to be applied is whether predominant object of activity involved in carrying out object of general public utility is to subserve charitable purpose or to earn profit. Where profit making is predominant object of activity, purpose, though object of general public utility, would cease to be charitable purpose. But where predominant object of activity is to carry out charitable purpose and not to earn profit, it would not lose its character of charitable purpose merely because some profit arises from activity. exclusionary clause does not require that activity must be carried on in such manner that it does not result in any profit. It would indeed be difficult for person in charge of trust or institution to so carry on activity that expenditure balances income and there is no resulting profit. That would not only be difficult of practical realisation but would also reflect unsound principle of management. We, therefore, agree with Beg, J. when he said in Sole Trustee, Loka Shikshana Trust v. CIT 1975 CTR (SC) 281; [1975] 101 ITR 234 (SC), 256 that:'If profits must necessarily feed charitable purpose under terms of trust, mere fact that activities of trust yield profit will not alter charitable character of trust. test now is, more clearly than in past, genuineness of purpose tested by obligation created to spend money exclusively or essentially on charity'." aforesaid view has been cited with approval by hon'ble Supreme Court in case of American Hotel and Lodging Association Educational Institute v. CBDT [2008] 301 ITR 86 (SC). hon'ble Supreme Court in case of Aditanar Educational Institution v. Addl. CIT [1997] 224 ITR 310 (SC); [1997] 139 CTR (SC) 7 held that in case of educational institution, after meeting expenditure, if any surplus results incidentally, then institution will not cease to be one existing solely for educational purposes and when surplus is utilised for educational purpose, i.e., for infrastructure development it cannot be said that institution was having object to make profit. Thus, surpluses used for management and betterment of institution could not be termed as profit. Strong reliance has been placed by Revenue on judgment of Uttarakhand High Court in Queens' Educational Society (supra) by learned senior standing counsel for appellant to canvas that trust is running with profit motive and, therefore, it is not eligible for exemption under section 11 of Income-tax Act. decision in case of Queens' Educational Society (supra) is misplaced by Department. said case is not applicable to case of respondent-educational society claiming exemption under section 11 as judgment in case of Queens' Educational Society (supra) was delivered in context of section 10(23C)(iiiad) and not in context of availing of exemption under section 11 of Income-tax Act by institutions registered under section 12A/12AA of Income-tax Act. It may be profitable to extract here following relevant observations of Punjab and Haryana High Court in case of Pinegrove International Charitable Trust (supra) (page 116 of 327 ITR): "We have not been able to persuade ourselves to accept view expressed by Division Bench of Uttarakhand High Court in case of Queens' Educational Society (supra). There are variety of reasons to support our opinion. Firstly, scope of third proviso was not under consideration, in as much as, case before Uttarakhand High Court pertained to section 10(23C)(iiiad) of Act. third proviso to section 10(23C)(vi) is not applicable to cases falling within purview of section 10(23C)(iiiad). Secondly, judgment rendered by Uttarakhand High Court runs contrary to provisions of section 10(23C)(vi) of Act including provisos thereunder. Section 10(23C)(vi) of Act is equivalent to provisions of section 10(22) existing earlier, which were introduced with effect from April 1, 1999 and it ignores speech of Finance Minister made before introduction of said provisions, namely, section 10(23C) of Act (see observations in American Hotel and Lodging Association Educational Institute's case (supra)). Thirdly, Uttarakhand High Court has not appreciated correctly ratio of judgment rendered by hon'ble Supreme Court in case of Aditanar Educational Institution (supra) and while applying said judgment including judgment which had been rendered by hon'ble Supreme Court in case of Municipal Corporation of Delhi v. Children Book Trust [1992] AIR 1992 SC 1456, it lost sight of amendment which had been carried out with effect from April 1, 1999 leading to introduction of provisions of section 10(23C) of Act. Lastly, that view is not consistent with law laid down by hon'ble Supreme Court in American Hotel and Lodging Association Educational Institute (supra)." Apart from above, perusal of assessment order reveals that, for withdrawal of exemption, Assessing Officer assigned various reasons, viz., (i) limitation in objects of trust deed; (ii) assessee generating profit year after year; (iii) capital expenses are not application of income; (iv) income or property of trust is applied/used for benefit of persons specified in section 13(3) (section 13(1)(c) read with section 13(2) and 13(3)); (v) valuation of old vehicles purchased; (vi) collection of fees out of canteen expenses of students; (vii) miscellaneous placement expenses; (viii) claim of transport expenses against outside vehicle; and (ix) collection from students over and above prescribed fees. Commissioner of Income-tax (Appeals) has considered every aspect of assessment order with reference to reasons given by learned Assessing Officer for disallowing exemption and relying upon latest judicial pronouncements expressed in similar facts that are involved in present case, came to conclusion that Assessing Officer's approach denying exemption to respondent-educational institution is not in accordance with law and held that respondent-educational institution is entitled to claim exemption under section 11 of Act. learned Tribunal, which is final fact finding authority, after hearing appeal filed by Department, did not incline to interfere with order of first appellate authority, inter alia, with following observations and findings: "Apart from that on going through impugned order, it is found that learned Commissioner of Income-tax (Appeals) has thread bare considered issues in question with reference to admitted facts that assessee is registered under section 12A of Act and running educational institution, imparting education in fields of technical engineering and computer applications with parameters laid down by AICTE and guidelines given by Ministry of Human Resource Development, Government of India, New Delhi and fees collected by assessee from students for imparting such education having been approved by AICTE. assessee is spending amount received by it by way of collection of tuition fees or collection of hostel fees is being spent for building necessary infrastructure for imparting education in various fields which is charitable purpose for which trust was established. assessee has also spent said amount for raising infrastructure necessary for carrying out object of imparting education and thereby assessee was found to be entitled for exemption under section 11 of Income-tax Act and view of Assessing Officer that there is contravention of section 13 of Income-tax Act is found to be baseless by Commissioner of Income-tax (Appeals) after thread bare considering all relevant facts. On overall consideration of impugned orders, we found that order of leaned Commissioner of Income-tax (Appeals) is in accordance of majority views of judicial pronouncements that were rendered by various judicial forums stated in impugned order. Hence, we find no infirmity in order of learned Commissioner of Income-tax (Appeals) requiring no interference." In view of above, question No. (i) is not substantial question of law. Question No. (ii) is also not substantial question of law as respondent-educational institution is eligible for exemption under section 11 of Income-tax Act for reasons stated hereinabove and it is settled position of law that capital expenditure incurred by educational institution is basic necessity if such expenditure promotes object of Trust. hon'ble Supreme Court in case of S. Rm. M. Ct. M. Tiruppani Trust v. CIT [1998] 230 ITR 636 (SC) and High Court of Delhi in case of CIT v. Divine Light Mission [2005] 196 CTR (Del) 135; [2005] 278 ITR 659 (Delhi) have held that capital expenditure incurred by trust for acquiring/constructing capital asset would be application of money and assessee would be entitled to exemption under section 11(1) of Act. Madras High Court in case of CIT v. Kannika Parameswari Devasthanam and Charities [1982] 133 ITR 779 (Mad) held as under (page 782): "The income from trust properties has to be applied on objects of trust. As far as objects of trust are concerned, application of amount can be for revenue or capital purposes... So long as expenditure had to be incurred out of income earned by trust, even if such expenditure is for capital purposes on objects of trust, income would be exempt. Tribunal is, therefore, wrong in proceeding on basis that improvement of property held under trust would by itself come within scope of application of income for charitable purposes. However, facts will have to be investigated to find out whether assessee had, in incurring expenditure of capital nature, promoted objects of trust by applying income to those objects. Income-tax Officer will have to go into this question, as assessment itself has been set aside by Tribunal and restored to his file. result is that question referred to us would have to be answered as follows: So long as income derived from property held under trust had been expended on objects of trust, income would be exempt under section 11 of Act. If this was not done, then income would not be exempt." High Court of Uttarakhand in case of CIT v. Jyoti Prabha Society [2009] 177 Taxman 429 (Uttarakhand) has held that educational society which had utilised rental income for purposes of imparting education by maintaining buildings and constructing new building for same purpose, would be entitled to exemption claimed under section 11 of Act. Section 11(1)(a) is in pari materia to third proviso to section 10(23C)(vi) of Act and only difference is with regard to percentage of income and period for which it can be carried forward. Allahabad High Court applied legal ratio of hon'ble Supreme Court in CIT v. Mool Chand Sharbati Devi Hospital Trust [2010] 190 Taxman 338 (All) and held that capital expenditure on building and infrastructure are basic necessity and, therefore, it should be treated as expenditure under section 11(1) of Income-tax Act. In view of above, capital expenditure if incurred by educational institution for attainment of object of society, it would be entitled to exemption under section 11 of Income-tax Act. For reasons stated above, issues involved in present case are no more res integra and, therefore, no question of law arises for adjudication in present appeal. In result, appeal is dismissed. I. Mahanty J.-I agree. *** Commissioner of Income-tax v. Silicon Institute of Technology