TaxTMI 
TaxTMI 
2013 (10) TMI 211
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....2(15) of the Act. 3. That the Commissioner of Income-tax (Appeals) erred on facts and in law in failing to appreciate that the Revenue authorities have, in the past years, consistently accepted that the objects of the appellant are in the nature of providing 'medical relief, inter alia, by treating patients through ayurveda, yoga. naturopathy- acupressure, etc. 3.1 That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that propagation of yoga does not qualify as providing "medical relief", on the ground that yoga unlike other medical systems is not a curative system for alleviating diseases, but is only a spiritual system having indirect salutary benefits on the health of an individual. 3.2 That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that yoga as a system falls in the residuary category of 'advancement of any other object of general public utility' contained in section 2(15) of the Act. 3.3 That the Commissioner of Income-tax (Appeals) erred on facts and in law in failing to appreciate that yoga is not only a traditional system of physical exercise and meditation for ....
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....ioners had categorically stated that they also prescribed medicines manufactured by other pharmaceutical companies. 5.6 That the Commissioner of Income-tax (Appeals) erred on facts and in law in alleging that the appellant's activities are similar to private pharmaceutical companies in the market, who are working on commercial basis and earning profits. 6. That the Commissioner of Income-tax (Appeals) failed to appreciate the distinction between pursuing predominant charitable objectives of providing "medical relief and imparting "education" vis-a-vis carrying on of business incidental to the main objects of the trust referred to in section 11 (4A) of the Act. 6.1 That the Commissioner of Income-tax (Appeals) erred on facts and in law in alleging that the appellant's activities in relation to production and sale of ayurvedic preparations were not incidental to its main objective as the same are commercial in nature. 7. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that the appellant was not engaged in pursuing the objective of imparting education. 7.1 I That the Commissioner of Income-tax (App....
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....e Act. if any. should have been restricted only to the amount remaining unpaid/payable as on the last date of the previous year. 13. Without prejudice, that the Commissioner of Income-tax (Appeals) erred on facts and in law in not appreciating that in case the appellant was held to be non-charitable, then the donations received amounting to Rs. 3,99,14,400/- represented capital receipt, not liable to tax under the provisions of the Act. 14. Without prejudice, that the, Commissioner of Income-tax (Appeals) erred on facts and in law in not appreciating that in case the appellant was held to be non-charitable, then the appellant should have been allowed, deprecation on assets in accordance with the provisions of the Act. 15. That the Commissioner of Income-tax (Appeals) erred on facts and in law in confirming charging of interest under section 234A of the Act. 16. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not directing the assessing officer to delete interest charged under sections 234B, 234D and 244A of the Act " 2. We have heard and considered the arguments advanced by the parties, perused the orders of authorit....
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.... Hospital. He submitted that the hospital is run by the appellant trust having various departments including Dental Department, Radiology Department, Surgical Department, Ophthalmology Department etc. providing medical relief to over 2000 patients every day. Apart from primary set up in Haridwar, over 2,39,000 patients were treated during the relevant year, the hospital also has its presence in Ranchi & Patna where more than 60,000 and 75,000 patients respectively are treated every year. (ii) Patanjali Bhartiya Ayurvigyan Avam Anusandhan Sansthan: Ayurvedic College has been set up, which was under construction in the year under consideration and has since started operations w.e.f. 20.07.2009, for imparting education in the field of Ayurved. (iii) R&D Yoga and Ayurved: Engaged in continued research and development in the field of Yoga and Ayurved to further the cause of alleviating all kinds of diseases and provide medical relief. The R&D of the appellant trust is duly recognized by the Scientific and Industrial Research Organization (SIRO). In this regard, the Ld. A.R. referred to page 197-198 of the paper book. (iv) Patanjali Chikitsalaya's: Apart fr....
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....at the objects/activities of the appellant trust as being charitable in nature, in the same breadth held that it fell under the sixth limb of the definition of charitable purpose given u/s 2(15) of the Act, i.e. advancement of any other object of general public utility. It was covered under the mischief of proviso to that section. Applying the aforesaid proviso, the authorities below held the appellant's transaction to be in the nature of business and commerce, similar to private players in the market and denied exemption amounting to Rs. 103,32,76,024/- u/s 11/12 of the Act. He pointed out that the appellant, since its inception, in the year 1995, has been engaged in the activities of providing medical relief through Ayurved, Naturopathy, Yoga, Acupressure which has been consistently accepted by the revenue authorities in the assessment years 2004-05 to 2008-09 vide various assessments completed u/s 143(3) of the Act. In support, he referred to pages 207-244 of the paper book i.e. copies of these assessment orders for asstt. years 2004-05 to 2008-09. In all these assessment orders, the A.O. has consistently held that he appellant was engaged in providing medical relief, conten....
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....trade, commerce or business for consideration therein, then too the assessee shall seize to be regarded as carrying out any activity for charitable purpose. It is however pertinent to mention that the proviso to Section 2(15) of the Act applies only to the trusts/institutions falling in the last limb of the definition "charitable purpose", that too, if such trust/institution carry out commercial activity in nature of business, trade or commerce. Thus, the aforesaid proviso does not apply to a trust/institution engaged in the charitable objects of providing relief to the poor, imparting education and providing medical relief, contended the Ld. A.R. 4.5 The Ld. A.R. submitted that the vision with which the appellant trust has been set up and which is being followed over the years are as under: To make a disease free world through a scientific approach to Yoga and Ayurved and to fulfill the resolution of making a new world free from disease and medicine; To establish 'xpran' as medicine for the treatment of all curable and incurable diseases by research of Pranayam/Yoga; To propagate Pranayam as a 'free' medicine for treatment of diseases ....
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....alternative medicine (CAM) to prevent and treat diseases. NCCAM defines CAM as a group of diverse medicaland health care systems, practices, and products that are not generally considered at par of conventional medicine (also called Western or allopathic medicine). He submitted that a survey released in December 2008 by NCCAM found that yoga was the sixth most commonly used alternative therapy in the US during 2007, with 6.1 percent of the population participating. The said study also sates that Yoga has been used as supplementary therapy for diverse conditions such as cancer, diabetes, asthma and AIDS and the scope of medical issues where yoga is used as a complementary therapy continues to grow. In support he referred pages 193-196 of the paper book, i.e. copy of relevant extract of the survey conducted in December 2008 by the US National Center for Complimentary and alternative medicines (NCCAM) which is also recognized. Ld. A.R. pointed out further that the Standing Committee of Human Resource Department (HRD) Ministry has recommended that Yoga be made compulsory for all school going children in the country. The said report further provides that yoga is one of the core componen....
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....hniques in the prevention and mitigation of diseases and promotion of health. Yoga is one of the six systems of vedic philosophy, maharishi Patanjali, rightly called "the father of yoga" compiled and refined various aspects of yoga systematically in his "Yoga Sutras" (aphorisms). He advocated the eight folds path of Yoga, popularly known as "Ashtanga Yoga" for all round development of human beings. They are :- Yama, Niyama, Asana, Pranayama, Pratyahara, Dharana, Dhyana and Samadhi. These steps are believed to have a potential for improvement of physical health by enhancing circulation of oxygenated blood in the body, retraining the sense organs thereby inducing tranquility and serenity of mind. The practice of Yoga prevents psychosomatic disorders and improves an individuals resistance and ability to endure stressful situations." 4.9 The Ld. A.R. referred other informations downloaded from the aforesaid website, placed at pages 639 to 659 of the paper book, and submitted that these make it patently clear that 'Yoga' is one of the recognized system/method of providing medical relief. Yoga thus, as a system of medicine, has been successful in curing various dreadf....
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....wing :- (a) Yog for Cancer (b) Yog for Migraine & Epilapsy (c) Yog for Renal Diseases (d) Yog for Psonasis (skin diseases) (e) Yog for Musculosketal Disorder (f) Yog for constipation and piles (g) Yog for Asthama (h) Yog for parkinsons and paralysis 4.11 Ld. A.R. submitted that reliance placed on the decision of Hon'ble Bombay High Court in the case of CIT v. Rajnish Foundations 280 ITR 553 (Bom.) by the CIT(A) is misplaced as the said decision was rendered prior to introduction of. the proviso to Section 2(15), when there was no dispute insofar as classification of charitable objective was covered for the purpose of claiming exemption, u/s 11/12 of the Act. This decision was rendered in the context of classifying "meditation" as a charitable objective for the purpose of Section 2(15) of the Act. The Hon'ble High Court in the given case has adjudicated only on the issue of classification of "meditation" and 'preaching/propagation of philosophy' as a charitable object falling under the category of 'general public utility', but has nowhere explicitly dealt with 'yoga', except fo....
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....ppellant the predominant objects of the trust are to provide practical and theoretical training in the field of yoga, which could ultimately provide medical relief to the society at large. In pursuance of the said objective, the appellant trust has made inter-trust donations to Patanjali Yog Peeth to support their endeavors of imparting yoga education by means of organizing yoga shivirs/camps across the country on daily/weekly/monthly basis in a systematized/organized manner in order to provide medical relief to people who cannot afford modern medical method or have been subjected to ill effects of modern medicine. Such Yoga education was given in the shivirs/camps by Yoga Gurus (i.e. yoga teachers). Thus, imparting of yoga training through well structured yoga shivirs/camps also falls under the category of imparting 'education', one of the charitable objects defined u/s 2(15) of the Act and accordingly the appellant's activities are not hit by the proviso inserted in the definition of 'charitable purpose' as contained in the said section. 4.14 In support of ground No.5 that the actual medical relief not . judiciously considered, the Ld. A.R. submitted that t....
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....could not question the charitable character of the institution during the course of assessment proceedings. It is not open to the A.O., in the assessment proceedings, to hold that the objects of the assessee are not charitable in nature. In this regard, reliance has been placed on the following decisions: (i) ACIT v. Surat City Gymkhana: 300 ITR 214 (S.C.) (ii) Sonepat Hindu Educational and Charitable Society v. CIT 278 ITR 262 (P & H) (iii) Hiralal Bhagwati v. CIT 246 ITR 188 (Guj.) (iv) Ananda Marga Pracharaka Sangha v. CIT 218 ITR 254 (Cal.) (v) ITO v. Mrs. Dwarika Prasad Trust 30 ITD 84 TM (Del.) (vi) ITO v. Trilok Tirath Vidyavati Chutani Charitable Trust 90 ITD 569 (Chd.) (vii) Gaur Brahmin Vidya Pracharini Sabha v. CIT 34 SOT 371 (del.) 4.16 The Ld. A.R. submitted that section 11 of the Act, provides exemption form tax for income derived from property held under trust for charitable or religious purposes. Section 11(4) lays down that "property held under trust" for the purpose of section 11 of the Act may include the business undertaking held by the trust. This section deals with cases where the business itself is still in trust for a charitable purpo....
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....IT 188 ITR 57 (SC) (iv) Thiagarajar Charities v. Addl. CIT 225 ITR 1010, 1026 (SC) (v) Aditanar Educational Institution v. ACIT 224 ITR 310 (SC) (vi) CIT v. Bar Council of Maharashtra 130 ITR 28 (S.C.) (vii) American Hotel Lodging Association Education Institute v. CBDT 301 ITR 86 (SC) (viii) CIT v. Delhi Kannada Education Society 246 ITR 73 (Del.) (ix) ACIT v. ALN Rao Charitable Trust 102 ITR 474 (Kar) (x) CIT v. Pullikal Medical Foundation (P.) Ltd. 210 ITR 299 (Ker.) (xi) Umaid Charitable Trust v. CIT 125 ITR 55 (Raj.) etc.... 4.18 The Ld. A.R. contended that there is no bar in'the charitable trust/institution carrying on business, provided the conditions prescribed in the conditions prescribed in Section 11(4)/11(4A) of the Act are satisfied. The Hon'ble Supreme Court in the case of CIT v. P. Krishna Warriers 53 ITR 176 (SC), has been pleased to hold that where business is held in trust for charitable purposes, the condition prescribed in proviso (b) to section 4(3)(i) of 1922 Act is not applicable and the assessee was held to be eligible for exemption. The Ld. A.R, also placed reliance on the decision of Hon'ble Supreme Court in the case ....
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....t to purchase the medicines from the appellant only. The authorities below have totally failed to appreciate that out of the total sale of Rs. 168.12 crores by Divya Pharmacy, medicines of Rs. 4.2 crores only were sold from the hospital sale counter. Even otherwise there is no bar in selling medicines from the hospital counter. The allegation of the authorities below that the assessee did not sell any medicines other than products of Divya Pharmacy is legally and factually unsustainable. The authorities below have further failed to appreciate that medicines of Rs. 41,26,217/- were purchased by various departments of the hospital; run by the appellant. In support he referred contents of page 13 of the-first appellate order. Ld. A.R. submitted further that the assessee had applied substantial amount in setting up ayurvedic college in the name of Patanjali Bhartiya Ayurvigyan Avam Anusandhan Sansthan, which commenced operations w.e.f. 20.07.2009. The said college is affiliated with Uttarakhand Technical University and runs BAMS course. Highly qualified and experienced faculties have been appointed to provide quality education to the students. 4.21 In support of ground No.7 regardin....
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....ing its charitable activities. While denying exemption u/s 11/12 of the Act on the gross income of the assessee, the authorities below have failed to appreciate that addition/disallowance if any, could have only been restricted to the net amount/profit on which exemption was claimed under the said section and not on the entire gross income of the assessee. The appellant had incurred various revenue expenditure amounting to Rs. 52,26,81,441/- in pursuing its charitable activities, for which no allowance has been given by the A.O. It has been subsequently intimated that the application u/s 154 of the Act for rectification filed before the A.O. in this regard has now been disposed off vide order dated 03.06.2013 whereby he has rectified the assessment order and allowed deduction of revenue expenditure aggregating to Rs. 52,26,81,441/-. A copy of this order has been filed, thus the grounds No.9 & 10 have become infructuous and are rejected as such. 4.24 Ground No. 11 of the appeal is against the disallowance made u/s 40(a)(ia) read with section 194C of the Act. Ld. A.R. pointed out that apart from denial, of exemption u/s 11/12 of the Act, the A.O. has further disallowed a sum of Rs....
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....are manufactured according to specifications of the buyer is not relevant in determining whether the contract is a contract of sale or works contract. What is relevant to determine is passing of property/title in the goods from the vendor to the buyer. Where title to the goods passes to the buyer at the time goods, are manufactured and transported, the contract would be one for sale of goods, notwithstanding that the goods are manufactured according to the specifications of the buyer. The Ld. A.R. submitted that the principal test to be applied to determine whether the contract is works contract of contract for sale is whether title to the goods passes to the purchaser in time anterior to the manufacture and delivery of goods to the purchaser. If the answer to the aforesaid query is in the negative then, the contract is one of sale, where the vendor manufactures goods in his own right, as principal, and not as job worker. In support he placed reliance on the following decisions: (i) CIT v. Silver Oak Laboratories P. Ltd. SLP No. 18012/2009 (ii) CIT v. Dabur India Ltd. 283 ITR 297 (Del.) (iii) CIT v. Reebok India Co. 306 ITR 124 (Del.) (iv) CIT v. Glenmark Pharmaceutical....
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.... that it is settled law that income of a charitable trust claiming exemption u/s 11/12 of the Act has to be computed in accordance with the normal commercial principles and not under artificial head defined in Section 14 of the Act. In order to compute income not required to be included in the total income u/s 11 of the Act, a charitable trust/society is, required to consider the extent of application of income for charitable purpose. He placed reliance on the following decisions: (i) Rao Bahadur Calavala Cunnan Chetty Charities 135 ITR 485 (Mad) (ii) CIT v. Ishmian India Maritime P. Ltd. 113 ITR 570 (Mad) (iii) CIT v. Kotak Securities Ltd. 340 ITR 333 (Bom) 5. The contention of the Ld. CIT, D.R. who has basically placed reliance on the orders of authorities below, on the contrary remained that the very objectives are in the nature of general activities as 7 out of 15 objectives in the trust deed are devoted to yoga. vedic dharma. marina-cow sheds, etc. These objectives have been mentioned at page 7 of the assessment order. These are imparting practical training on various asanas as practiced by Rishies and Munies to receive calm state of mind and extreme happiness, con....
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....s products all over India under the name of 'Patanjali Divya Yoga Trust' which is sold through Seva Kendras for which security deposits has been taken by the assessee and collected Rs. 6.21 crores from these seva kendras as security deposits. In support, she referred the contents of pages 4 to 7 of the assessment order and page No.17 to 22 of the first appellate order and pages 17 to 19 of the paper book filed on behalf of the department. 5.1 Ld. CIT DR submitted further that the assessee is also engaged in export of its products, the volume of net export being Rs. 5,15,64,050/- while the claim of charity is confined to India only due to legal restriction, the assessee is having a brisk sale of its products in India as well as abroad, explain the real intention of objectives of the assessee. Ld. CIT DR referred the contents of pages 106 and 107 of the paper book filed on behalf of the assessee. These are balance sheets of Divya Pharmacy as on 31.03.2009 with accounting policy and notes to the accounts. She submitted that the details of business ventures have been provided at pages 68 p 108 of the paper book i.e. copies of annual audited accounts for the financial year, r....
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....alf of the department. Ld. CIT D.R. pointed out that all the 11 doctors produced stated that patients have to pay for all services except consultation in which they suggest medicines, both classical and patent and advised patients to get admitted in assessee's hospital when required. The A.O. says in its remand report that the doctors being paid emplovees are very useful to boost the sale of the products made by their employer trust. In support she referred page nos. 15 to 17 of the paper book filed by the department and contents of page Nos. 18 and 19 of the first appellate order. She submitted that during the appellate proceedings, the appellant could not produce the record and has admitted that the doctors prescribe the medicines manufactured by the assessee trust which are said to be of superior quality at cheaper rates. Ld. CIT DR submitted further that there is violation of the trust deed by the appellant trust. The trust received the amount of Rs. 132.50 lacs from foreign membership and Rs. 98.88 lacs from membership donations and Rs. 52 lacs through money orders which are not permitted by the trust deed. One Doctor Kuldeep Singh stated that he prescribes allopathic trea....
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....tailed rejoinder has also been furnished by the Ld. AR, which we will discuss in our decision in the following paragraphs. 6. We find that grounds No.1-9 involve the issue as to whether the appellant is entitled to claim the exemption u/s 11/12 of the I. T. Act, 1961 for adjudication upon this issue, we will have to decide the other connected issues. These issues are as under: (a) As to whether the appellant trust did fall within the purview of providing 'medical relief', 'imparting education' or 'relief to the poor'. (b) If the above issue is decided in negative then the issue will arise as to whether the objectivity of the appellant were in the nature of 'object of general public utility' as contained in the definition of charitable purpose u/s 2(15) of the Act? (c) As to whether Yoga as a system, falls in the residuary category of 'advancement of any other objects of the general public utility' contained in Section 2(15) of the Act?. (d) As to whether the donation of Rs. 38.356 crores made to Patanjali Yogpeeth for the purpose of setting up of Yoga Bhawan and other expenditure incurred for acquisition....
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....ide any "medical relief" which remained the main objection of the revenue, we would like to point out over here that there is no dispute on this material fact that the appellant since its inception in the year 1995 has been engaged in the activity of providing 'medical relief' through ayurveda under the organization "Patanjali Bhartiya Ayurvigyan Avam Anusandhan Sansthan at Haridwar. This fact has been consistently accepted by the revenue in the assessment years 2004-05 to 2008-09 vide various assessments framed u/s 143(3). There is also no change in the facts of this aspect of the matter. The revenue authorities are not disputing the fact that ayurvedic treatment is given by the assessee. This is medical relief. Yoga in this case is used by the assessee in addition to medical relief through naturopath and ayurveda. We find that there is also no dispute that the appellant has established (a) department of medical science and facilities known as Patanjali Hospital, (2) Patanjali Bhartiya Ayurvigyan Avam Anusandhan Sansthan (3) Patanjali Chikitsalay and (4) R & D yoga and ayurveda. (The appellant has also set up (1) Divya Nursery (dealing in cultivation, restoration and resea....
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....quirements the ayurvedic medical college set up by the appellant has been duly recognized by the AYUSH. It is also imperative to state here that the Central Council of Indian Medicine under AYUSH conducts regular inspection of the ayurvedic colleges to verify that the prescribed minimum standards are complied with by such colleges and if the prescribed standards are not complied with by the medical colleges, the permission/recognition is either rejected or revoked by the AYUSH. All these material and undisputed facts lead us to a definite conclusion that it has been undisputed that appellant has been providing 'medical relief through ayurveda and naturopathy system of medicine in its above stated hospitals and has also set up an ayurvedic medical college (Patanjali Bhartiya Ayurvigyan Avam Anusandhan Sansthan) affiliated by Uttarakhand Technical University and recognized by AYUSH to impart education in the field of ayurveda and naturopathy etc. As discussed above it is also remained an undisputed fact that since its inception in the year 1995 the 'medical relief provided through Patanjali Bhartiya Ayurvigyan Avam Anusandhan Sansthan' at Haridwar, has been consistently a....
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....nd physical education. Full copy of the report has been made available at page nos. 177 to 192 of the paper book and para No.9.8 at page No. 181 thereof is relevant for the purpose. It reads as under :- "9.8 The committee is of the opinion that yoga is one stream of education, which will make a permanent and positive impact on a students life. Yoga has been gaining immense popularity due to the short term as well as long term benefits that it provides. Yoga helps one to achieve all round development. Considering the immense potential of this ancient knowledge of India, the Committee recommends that yoga be made compulsory for all school going children in the country. ACTION TAKEN The National Curriculum Framework in School Education - 2005 prepared by the National Council of Education Research and Training provides for Health and Physical Education as a compulsory subject from primary to secondary stage as an optional subject at higher secondary stage. Yoga is one of the core components of Health and Physical Education. 6.4.3 On the contrary the Ld. CIT(A) for the purpose of determining whether yoga can be classified as a form of medical relief has pla....
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....modern sociological needs and lifestyles. Experts of various branches of medicine including modern medical sciences are realising the role of these techniques in the prevention and mitigation of diseases and promotion of health. Yoga is one of the six systems of Vedic philosophy. Maharishi Patanjali, rightly called 'The Father of Yoga" compiled and refined various aspects of Yoga systematically in his "Yoga Sutras" (aphorisms). He advocated the eight folds path of Yoga, popularly known as "Ashtanga Yoga" for all-round development of human beings. They are:- Yama, Niyama, Asana, Pranayama, Pratyahara, Dharana, Dhyana and Samadhi. These components advocate certain restraints and observances, physical discipline, breath regulations, restraining the sense organs, contemplation, meditation and samadhi. These steps are believed to have a potential for improvement of physical health by enhancing circulation of oxygenated blood in the body, retraining the sense organs thereby inducing tranquility and serenity of mind. The practice of Yoga prevents psychosomatic disorders and improves an individuals resistance and ability to endure stressful situations." (emphasis supplied) ....
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....sion of the assessee that yoga as a discipline addresses medical relief also. So far as the decisions relied upon by the Ld. CIT(A) to arrive at a conclusion that yoga as a system does not fit into the definition of medical relief are concerned, we find that these are having distinguishable facts and issues hence are not helpful to the revenue. In the case of Kasyapa Veda Research Foundation v. CIT (supra) it has been observed by the Cochin Bench that yoga is an ancient Indian science of meditation. There is no dispute on it. But only on the basis of such observations which is one of the aspects of the yoga it cannot be arrived at a conclusion that yoga as a system does not clearly fit into the definition of "medical" which in turn leads to the term "medical relief". The issue raised before the Cochin bench of the Tribunal in this case was as to whether assessee trust forms for propagating of Vedas was entitled to registration u/s 12A in the status of a religious and charitable trust. Likewise the decision of Hon'ble Bombay High Court in the case of Rajneesh Foundation (supra) is not relevant as the said decision was rendered prior to introduction of proviso to section 2 (15), ....
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.... in the USA during 2007, with 6.1% of the population participating. The said study states yoga has been used as supplementary therapy for diverse conditions such as cancer, diabetes, asthma and AIDS and the scope of medical issues where yoga is used as a complementary therapy continues to grow. A reference of the publication "yog in synergy with medical science: written by an ayurved acharya associated with the appellant, has also been made, relevant extracts of which has been made available at page Nos. 555 to 633 of the supplementary paper book (appellant). This publication has been documented on the basis of clinical tests conducted showing the clinical effect of yoga on the participants in various yoga camps. As discussed above the Ld. CIT (DR) has basically placed reliance on the orders of the authorities below asserting that yoga is a way of meditation rather than a way of medication to qualify for 'medical relief. A reference of contents of page No. 638 of the paper book has also been made to support his submission that in September, 2012. the Hariward University of USA came forward to introduce yoga and ayurved subject in their university in collaboration with Swa....
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....itable purpose as contained in the said section. During the course of hearing the appellant was directed to provide complete details of the Patanjali Bhartiya Ayurvigyan Avam Anusandhan Sansthan at Haridwar for imparting education in the field of ayurveda which started operations w.e.f. 20.7.2009. In compliance the Ld. AR submitted that during the year the appellant had applied substantial amount on construction of the ayurveda medical college which is affiliated to the Uttarakhand Technical University. It was submitted that ayurveda medical college set up by the appellant was approved and duly recognized by the Department of Ayurveda, yoga & naturopathy, unani, siddha and homoeopathy (AYUSH) vide notification dated 20.7.2009, a copy thereof has been made available at page No. 805 and 806 of the supplementary paper book -II. Department of Ayush is a body set up by the Ministry of Health & Family Welfare, Govt. of India with the primary objective of regulating and upgrading the educational standards, quality control and standardization of drugs, improving the availability of medicinal plant material, research and development and awareness generation about the efficacy of ayurveda, y....
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....rded as 'education' covered u/s 2(15) of the Act. In view of these decisions we hold that imparting of yoga training through well structured yoga shivir/camps also falls under the category of imparting education which is one of the charitable objects defined u/s 2(15) of the Act. The appellant's activities are thus not hit by the proviso inserted in the definition of charitable purpose in section 2(15) of the Act. Relief to the poor 6.6 So far as question of providing 'relief to the poor' by the appellant trust to bring it within the purview of the same is concerned, we find that the contention of the assessee remained that the appellant through its hospital, Patanjali hospital and Patanjali Chikitsalaya at Haridwar, Ranchi and Patna has served more than 2.25 lacs, 0.60 lacs and 0.75 lacs patients during the relevant year. The hospitals have team of doctors, nurses and paramedical staff working round the clock. It was submitted that the hospital at Haridwar is well equipped with ultra modern diagnostic facilities like OPD and IPD, pathology lab, cardiology lab, panchkarma clinic, yoga and shatkarma clinic, surgical, dental and ophthalmological clinic and p....
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....mmunalism, castes and the feeling of sex and creed. J. To run the free educational centers and to facilitate the worthy poor helpless orphans, students by providing clothes, food, study material and lodging. K. To establish and run stables for the poor cows to save them from victimization and killings. L. To carry out researches or agni hotra and perform scientific yajnas in order to solve the serious problems of environmental pollution of modern age. M. To give award and certificates to the trainees who undertake weekly, fortnightly, monthly, quarterly and annually Yog and Acupressure training. N. To help and co-operate the relief activities related to flood, earthquakes, epidemic, drought etc. O. To co-operate other such institutions and organizations which match or aims and objectives, and order to fulfill these aims and objectives to accept the donating of money, land etc." (emphasis supplied) 6.6.2 we find that the predominant objective of the appellant trust has been set out in clause A of the Trust deed as per which the object is to alleviate extreme sufferings and cure diseases by providing practical and functional tr....
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....lief. She has further alleged that appellant has established a chain of retail outlets (seva Kendra) for selling its products all over India and has also collected security deposit of Rs. 6.21 crores from these seva kendras. She alleged further that the assessee is also engaged in export of its products and quantum of such exports aggregates to Rs. 5,15,64,050/- during the assessment year under consideration, which portrays that the appellant is pre dominantly engaged in undertaking commercial activities. In the rejoionder the submission of the Ld. AR remained that business undertakings were run by the appellant as an activity incidental to attainment of the main objects of the appellant and to feed charity, which is permitted u/s 11(4)/11(4A) of the Act. It was submitted that the ayurvedic preparations/medicines have been exported by the appellant at the request of the patients, in order to fulfill its predominant objective of making the world disease free. It was submitted that the said exports were made by the business undertaking held under the trust and there is no embargo under the provisions of the Act to restrict business undertaking from making exports in the course of und....
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....CBDT instruction No. 1132 dated 5.1.1978, extract of which has been made available at page No. 857 of the supplementary paper book-Ill has made it clear that payment of a sum by one charitable trust to another for utilization by the donee trust towards its charitable objects is proper application of income for charitable purpose in the hands of the donee trust and the donor trust will not loose exemption u/s 11 of the Income Tax Act 1961. We thus do not find substance in the contention of the Ld. CIT(DR) that the-appellant has donated an amount to the donee trust to deviate from its objectives. Since it is not the case of the department that Patanjali Yog Trust, the donee has not applied such sums for charitable purposes, there is no substance in the allegation that the appellant has deviated the funds. 6.6.5 Against the allegation of charging exorbitant rates for accommodation fee submission of the Ld. AR in rejoinder remained that the allegation is based on the statement of one Shri Balwant Singh Minhas without appreciating that the appellant did not conduct any yog shivir/camps in the assessment year under consideration, thus the question of charging exorbitant fees for condu....
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....appellant have categorically admitted to the fact that there is no compulsion on the patients to buy medicines prepared/manufactured by the appellant only and that they also prescribed medicine manufactured by other pharmaceutical companies. These submissions of the Ld. AR have not been rebutted. 6.6.6 Considering above submissions in totality we hold that the appellant trust falls within the purview of providing 'relief to the poor'. 6.6.7 The first issue as to whether the appellant trust did fall within the purview of providing of 'medical relief 'imparting education' or 'relief to the poor' is thus decided in favour of the appellant. In view of the above finding on first issue the second and third issue have become infructuous. In these issues the questions are as to whether the activity of the appellant were in the nature of providing general public utility or of advancement of any other object of general public utility as contained in section 2(15) of the Act. Relevant provisions u/s 2(15) are reproduced as under :- "Section 2 (15) of the Act defines "charitable purpose" as under:- "** ** ** (15), "charitable, purpos....
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....d Ayurveda. As discussed above the proviso to section 2(15) of the Act applies only to trusts/institution falling in the last limb of the definition of charitable purpose ; that too, if such trust/institution carry on commercial activities in the nature of business, trade or commerce. The said proviso does not apply to trust/institution engaged in the charitable object of providing relief to the poor, imparting education and providing medical relief. The last limb of the definition of charitable purpose u/s 2 (15) talks about the advancement of any other object of general public utility. The aforesaid predominant objects and the vision make it clear that the objects of the appellant are to provide 'medical relief 'impart education' to the society at large and 'relief to the poor' hence the proviso to section 2 (15) does not apply in the case of the assessee/appellant. The forth issue as to whether donation of Rs. 38.35 crores made to Patanjali Yog Peeth for the purpose of setting up Yog Bhawan and other yoga related activities these amounts to application of money for the purpose of medical relief has also been discussed and decided while adjudicating upon th....
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....the Act has rectified the assessment order and allowed the deduction of revenue expenditure aggregating to Rs. 52,26,88,442/-. This ground is accordingly rejected. 6.7.2 The other contention of the Ld. CIT(DR) during the course of hearing of the appeal have also been met out by the Ld. AR in his rejoinder. On the issue of imparting of education the contention of the Ld. DR remained that ayurvedic medical college in the name of Patanjali Bhartiya Ayurvigyan Avam Anusandhan Sansthan at Haridwar was not in operation during the year. The submission of the Ld. AR remained that though the aforesaid medical (college was not in operation in the assessment year under consideration but the appellant had applied substantial amount in setting up the ayurvedic college which amounts to application of income for the purpose of imparting education in the field of ayurveda. In the absence of rebuttal of this fact we do not find substance in the allegation of the Ld. CIT(DR). 6.7.3 The further contention of the Ld. CIT(DR) remained that the certificate of recognition granted by the Medical and Industrial Research Organization (SIRO) was never filed before the lower authorities which constitute....
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....ble Supreme Court, in the case of Radha Soami Satsang v. CIT (supra) has been pleased to hold that where a fundamental aspect permitting through the different assessment years is accepted one way or the other a different view in the matter is not warranted, unless there is any material change in facts. In the case of DIT (Exemptions) v. Guru Nanak Vidya Bhandar Trust (supra) the Hon'ble Delhi High Court has been pleased to hold that the department is expected to be consistent with its own stand which has been taken in earlier years, when there is no change in the objects of the trust during the year and such objects when found permissible for exemption in the past notwithstanding the fact that it had many fold objects some of which are vulnerable. Similar view has been expressed by the other decisions relied upon by the Ld. AR. 6.7.5 We have also gone through the decisions relied upon by the Ld. CIT(DR) and find that the facts of those cases are distinguishable from the case of the assesee, hence these are not helpful to the revenue. In the case of Samajbadi Society v. ACIT 79 ITD 112 (Cutt) the assessee was engaged in printing and publishing newspapers and periodicals on co....
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....emption) v. Lilavati Kirtilal Mehta Medical Trust ITA(L) No. 2990/2009 (Bom) etc. in the case of Sanjeevamma Hanumantha Gowda Charitable v. DIT(E) 9 SOT 293 (Bombay) the predominant activity undertaken by the assessee was letting out of marriage halls on purely commercial basis and not in furtherance of the charitable objectivities. Further the assessee had not undertaken any charitable activity in pursuance of the charitable objects provided in the trust deed. The assessee was therefore denied registration u/s 12A of the Act. In the case of Daulatram Public Trust v. CIT 244 ITR 514 (Delhi) there was no dominant charitable objective in the trust deed which the ancillary objects sub served. It was also observed that no amount was utilized for charitable purposes and the assessee was predominantly engaged in undertaking commercial activities for the purpose of generating profits. In the case of Jacob Thasildar, 176 ITR 243 (Kerala) decision was given in the context of the Kerala Building Tax Act 1975 wherein the scheme of that Act is completely different from the applicable provisions of the Income Tax Act. In the case of CIT v. Jodhpur CAs Society 258 ITR 548 (Raj.) the assesee was ....
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....undation (P.) Ltd: 210 ITR 299 (Ker) - Umaid Charitable Trust v. CIT: 125 ITR 55 (Raj) - CIT v. Sivakasi Hindu Nadars: 217 ITR 118 (Mad) - CIT v. Janakiamma Ayyanadar Charitable Trust: ITA No. 1566 & 1567 of 2005 (Mad) - Samaj Kalyan Parishad v. ITO: 291 ITR(AT) 1 (Delhi) The relevant provisions u/s 11 (4)/11(4A) of the Act are being reproduced for a ready reference :- (4) For the purposes of this section "property held under trust" includes business undertaking so held, and where a claim is made that the income of any such undertaking shall not be included in the total income of the persons in receipt thereof, the Assessing Officer shall have power to determine the income of such undertaking in accordance with the provisions of this Act relating to assessment; and where any income so determined is in excess of the income as shown in the accounts of the undertaking, such excess shall be deemed to be applied to purposes other than charitable or religious purposes. (4A) Subsection (1) or sub-section (2) or sub-section (3) or sub-section (3A) shall not apply in relation to any income of a trust or an institution, being profits gains of business, unless....
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....ons/contributions received by the appellant trust constituted only a minuscule portion of the heavy outlay of expenditure incurred in pursuing the charitable activities. The meaning of expression not for purpose of profit is no longer res integra the test being what is the predominant object of the activity whether it is to carry out a charitable purpose or to earn profit ? If the predominant object is to carry out as charitable purpose and not to earn profit the organization would not lose its charitable character merely because some profits arises from the activity. The Hon'ble Supreme Court in the case of ACIT v. Surat Art Silk Cloth Manufacturers 121 ITR 124 (SC) has been pleased to observe that the expression 'for the purpose of 'profit' implies that the predominant object should be to earn profit. Further to determine the predominant object, what is required to be examined is the objects of the society and not the quantum of surplus though such quantum may become relevant in certain circumstances. The same ratio has been laid down by the Supreme Court in the case of CIT v. Andhra Pradesh State Road Transport Corporation 159 ITR 1 (SC), Victoria Technical Insti....
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....ectives of education and relief to the poor. Their lordships observed that after amendment of section 11(4A) in 1992, all that is required for the business income of the trust or institution to be exempt from tax is that the business should be incidental to the attainment of the objects of the trust or institution. The Hon'ble Court further held that if business whose income is utilized by the trust or the institution for the purposes of achieving its objectives is a business which is incidental to the attainment of the objectives of the trust or institution. Respectfully following the ratio laid down in the above cited decisions we come to the conclusion that the authorities below have failed to appreciate that incomes from business undertaken by the appellant fulfills the aforesaid conditions in as much as (a) all the business, including the business of Divya Pharmacy, were incidental to the attainment of main objects: (b) profits from business are applied for charitable objects ; and (c) separate books of accounts are maintained. They were thus not justified in holding that the charitable objects was sub-serving the business, whereas as a matter of fact it was the other way ....