Charitable trust exemption sustained where yoga, medical relief and poor relief were held to be genuine charitable activities.

A registered charitable trust was found entitled to exemption under sections 11 and 12 because its actual activities fell within medical relief, education, and relief to the poor. The Tribunal accepted that ayurveda, naturopathy and yoga constituted medical relief on the facts, and that organised yoga training amounted to imparting education. It also held that the proviso to section 2(15) did not apply because the trust's activities fell within the first three limbs of charitable purpose. Business undertakings were treated as incidental to the charitable objects, with profits applied for charity and separate books maintained, satisfying section 11(4A).

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Issues: Whether the assessee trust was entitled to exemption under sections 11 and 12 of the Income-tax Act, 1961 on the footing that its activities amounted to medical relief, imparting education, and relief to the poor, and whether its business activities were only incidental to its charitable objects.

Analysis: The trust had been registered under section 12A and had consistently been treated in earlier years as carrying on charitable activities. The Tribunal found, on the material on record, that the assessee was providing medical relief through ayurveda, naturopathy and yoga, and that yoga could be accepted as a recognized system with therapeutic effect. It also held that organized and systematic yoga training amounted to imparting education. On the facts, the assessee was further found to be engaged in relief to the poor through its hospitals and related charitable activities. The proviso to section 2(15) was held inapplicable because the trust fell within the first three limbs of the definition of charitable purpose. The Tribunal further held that the business undertakings were incidental to the charitable objects, profits were applied for charitable purposes, and separate books were maintained, satisfying section 11(4A).

Conclusion: The assessee was entitled to exemption under sections 11 and 12, and the revenue's challenge to the charitable character of the trust failed.

Final Conclusion: The order granting exemption was upheld, and the revenue appeal was dismissed.

Ratio Decidendi: Where a registered trust's predominant objects and actual activities constitute medical relief, education, or relief to the poor, the proviso to section 2(15) does not apply, and business income remains eligible for exemption if the business is incidental to those objects and separate books are maintained.

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