TaxTMI 
TaxTMI 
1970 (11) TMI 29
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....he meaning of section 2(1) of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the assessee is entitled to exemption on the 25% of the profits devoted to the development of Arya Vaidya Sala ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in delelting the additions of the sums of Rs. 8,331 and Rs. 27,506 made in the assessment year 1962-63 and Rs. 7,678 and Rs. 36,224 made in the assessment year 1963-64 ? " This reference is a composite one and relates to income-tax of the income of an institution known as the Arya Vaidya Sala for the two assessment years 1962-63 and 1963-64. To understand the contentions urged on behalf of the revenue at whose instance....
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....ices of the Aryavaidyasamajam, Aryavaidyam is taught in accordance with the service of Ayurveda. I have been meeting the expenses of the said institutions, not covered by its income, from out of the profits of Arya Vaidya Sala. L. Out of the net profits of the Arya Vaidya Sala 25% to be devoted to the development of the Arya Vaidya Sala, 25% for meeting the expenses of the Arya Vaidya Hospital and 25% for division equally between the two Tavazhis (this only for 20 years), out of the remaining 25% a sum, not exceeding 10% may be, according to requirements, utilising for the purposes of the Arya Vaidya Pata Sala. The balance, if any, that may remain out of the 10% after disbursement to the Aryavaidya Pata Sala may be used for the Aryavaidy....
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....reme Court in the decision in Commissioner of Income-tax v. P. Krishna Warrier. This decision was rendered under the Indian Income-tax Act, 1922. The definition of " charitable purpose " has been altered by the Income-tax Act, 1961, and the present definition is contained in section 2(15) of that Act reading as follows : " 2. (15) 'Charitable purpose' includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility not involving the carrying on of any activity for profit." It will be seen from the definition that if any other object of general public utility involves the carrying on of an activity for profit, that object of general public utility will cease to be a charitable pu....
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....d objects of the Arya Vaidya Sala, clearly indicates that Shri Warrier was desirous of putting this system of medical treatment within the grasp of even the poorest among the people. His intention was evidently to afford a system of cheap and wholesome medicinal preparations to be made available to the public. The preparation of Ayurvedic medicines is only incidental to the treatment of patients and the carrying on of research into Arya Vaidyam. Preparation and sale of Ayurvedic medicines cannot be disassociated from the other objects and treated as a separate object by itself. Taken as a whole, the object was clearly medical relief coming within section 2(15) of the Incometax Act, 1961." The words in the definition "not involving an act....
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....63-64. During these years the amounts received by special treatment are respectively only Rs. 25,138 and Rs. 17,872. If these figures are any reflection of the extent of the respective activities and we think they are they clearly show that the treatment of patients referred to in item 3 is only a negligible activity. This can form only a very incidental object of the Arya Vaidya Sala, the predominant and the substantial object being the preparation and sale of Ayurvedic medicines. We must in this connection remember that the funds for the activities of the hospital and the carrying on of the Aryavaidya Pata Sala have to be supplied by the Arya Vaidya Sala not to mention the 25% and the 15% set apart for the two Tavazhis for whose benefit 4....