AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 335
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....activities of imparting education and medical relief and atmost the same may be categorized as advancement of 'other object of general public utility'. (4) That the Ld. CIT(A) erred in not appreciating the fact and law that since the income of the trust during the year exceeds Rs. 10 lacs, therefore even the activities of the trust lose the character of being of the charitable nature as per the first and second proviso of sec.2(15) of IT Act. Accordingly the trust no longer remains entitled for deduction u/s. 11 of the IT Act. (5) Hence order of the Ld. CIT(A) be cancelled and the order of AO be restored. (6) Appellant craves leave to modify/amend or add any one or more grounds of appeal. 2. The brief facts of the case shows that assessee is a trust registered u/s 12 A of the Act as per order dated 27.03.1995. It is claiming exemption u/s 11 & 12 of the Income Tax Act. The assessee is carrying on various activities and the gross receipts of the assessee is approximately Rs. 200 crores the assessee filed its return of income on 31.03.2011 declaring nil income. It has also filed its audit report in Form No. 10B of the Act. The gross income of the assesse....
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....k declaring that the appellant trust was set up as charitable trust with the following predominant objectives: (1) Providing medical relief through yoga, naturopathy, acupressure and Ayurveda for the purpose of alienating all kinds of diseases; (2) Imparting education in the field of yoga, (3) Providing relief to the poor and (4) Undertaking research and development activities in the field of yoga, Ayurved, vedic literature to further the cause of alienating all kinds of diseases and provide medical relief to the public at large. 6.2 The first issue before us to be adjudicated upon is as to whether the appellant trust fall within the purview of providing "medical relief", "imparting education" or "relief to the poor" ? 6.3 In the previous paragraphs we have discussed the approach of the authorities below on the above issue as well as submissions of the parties in this regard. The contention of the appellant remained that they are providing medical "relief through yoga, naturopathy, acupressure and Ayurved for the purpose of alleviating all kinds of diseases ; they are imparting education in the field of yoga, providing relief to....
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....ities commonly known as Patanjali Hospitalrun by the appellant trust is having various departments including dental department, radiology department, surgical department, ophthalmology department etc. The claim of the appellant that in this hospital the appellant provide medical relief to over 2000 patients every day and from its primary set up in Haridwar where around 2,39,000 patients were treated during the year under consideration the hospital also has its presence in Ranchi and Patna where more than 60,000 and 75,000 patients respectively are treated every year, has not been disputed by the revenue. Patanjali Bhartiya Ayurvigyan Avam Anusandhan Sansthan i.e. an Ayurvedic College has been set up, which was under construction in the year under consideration and it has started operations w.e.f. 20.07.2009, for imparting education in the field of Ayurved. It has been set up at Haridwar and was approved and duly recognized by the Department of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy systems of medicines(AYUSH) vide notification dated 20.7.2009. It is pertinent to mention over here that for the purpose of recognition and granting permission for establi....
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.... the case of Radhasoami Satsang (supra) and others the revenue was not justified in refusing the claimed exemption u/s 11/12 of the Act during the year. The revenue 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. In view of these discussions we are in a definite position to hold that the appellant was entitled for the exemption u/s 11/12 of the Act on the basis that the appellant was engaged in the activity of providing 'medical relief' through ayurveda, naturopathy etc. during the year under consideration i.e. asstt. year 2009-10 and the authorities below were not justified in refusing the claimed exemption to the assessee in this regard. It is ordered accordingly. "Medical Relief" through yoga 6.4.1 While examining the issue as to whether medical relief can be given through yoga on the basis of above submissions made by the parties we find that in the Clinical Establishment (registration and regulation) Act 2010, the legislature has defined "recognized system of medicine" in Section 2 (h) of the said Act. As per this definition "(h) recognized syst....
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....which the art of healing any disease constitute a medical relief and the same need not be restricted to conventional method of treatment. Ld. CIT(A) at page 15 of the first appellant order has also selectively quoted from the website of department of Ayush (Ministry of Health and Family Welfare) to come this conclusion that yoga is a discipline appears to address more the issues of spiritual well being rather address the problems associated with the more worldly "medical relief" and exercises forming part of the yoga system would at the best have indirect salutary benefit on the health of an individual. He held that yoga is a spiritual system more than a curative system for alleviating or even curing various ailments. It is not seen as a specific remedy for physical ailment at par with medical system like allopathy or even ayurveda. In this regard the Ld. CIT(A) has placed reliance on the decisions in the cases of Kasyap Veda Research Foundation (supra) and Rajneesh Foundation (supra). A complete information on yoga available on the website of the Ayush i.e., 'Httpp://www.Indiamedicine.nic.in' has been made available by the assessee at page Nos. 639 to 655 of the supplement....
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.... 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 individual's resistance and ability to endure stressful situations. Even in the extracts of the information available on the website of Ayush reproduced by the Ld. CIT(A) at page 15 of the first appellate order in the definition of yoga it has been stated that yoga is a discipline to improve or develop one's inherent power in a balanced manner. It offers the means to attain complete self-realisation. As per literal meaning of Sanskrit word "yoke" it has been noted that the yoga can be defined as a means of uniting the individual spirit with the universal spirit of God and according to Maharishi Patanjali, yoga is the suppression of medications of the mind. The information given under the head "yoga as soul therapy" has also been extracted by the Ld. CIT(A) as per which all parts of yoga (japa, karma, bhakti) have healing potential to shelter out the effects of pains. It has been further noted therein that one especially needs proper guidance from an accomplished exponent, who has already treated ....
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....editation', 'preaching/propagation of philosophy as a charitable object falling under the category of general public utility but has nowhere explicitly dealt with yoga except for making passing references in respect of the same. In the said decision the Hon'ble High Court has however also been pleased to observe that not only in India but in the western countries also meditation and yoga are being accepted as a great source of physical and mental health. Meaning thereby that yoga is a source for medical relief. For a ready reference the relevant extract of the said decision is being reproduced hereunder :- "Admittedly, main thrust of the respondent is on meditation and nobody can dispute that in India meditation has been very important source for physical, mental and spiritual well-being of the human beings. Cognizance has to be taken that the meditation and Yoga I are becoming more and more popular among the Indians who are now becoming conscious about their physical, mental and spiritual health. Not only in India, meditation and Yoga are being accepted in the Western Countries also as a great source for physical and mental health and spiritual attainment. Whe....
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....we find no hesitation in coming to the conclusion that yoga can be safely accepted as a system fit into the definition of 'medical relief'. Yoga as a science is a well recognized system of medicine, which has therapeutic effects in treating various serious ailments. The predominant objective of the appellant trust as it is apparent from its objects, remained to provide medical relief through ayurveda and propagation of yoga for the purpose of treating/curing various diseases. 'Imparting Education' 6.5 The question now is as to whether the appellant trust falls within the purview of providing "imparting education". The grievance of the - appellant is that the authorities below have failed to appreciate that the propagation of yoga by way of conducting yoga classes on a regular basis and in a systemized manner also falls under the category of 'imparting of education' as provided u/s 2(15) of the Act. Reliance has been placed on several decisions, which we will discuss hereunder. The contention of the Ld. AR remained that the predominant object of the appellant trust are to provide practical and theoretical training in the field of yoga, which....
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....ns laid down in the IMCC Act for the grant of recognition is the existence of a medical hospital attached to the ayurvedic college with the prescribed bed strength alongwith outdoor patient department (OPD) and Indoor patient department (IPD) facilities. Ld. CIT(DR) on the other hand has placed reliance on the orders of the authorities below, as discussed above. 6.5.1 The expression 'education' has not been defined under the provisions of Income Tax Act. The Hon'ble Supreme Court in the case of Sole Trustee, Lok Shikshana Trust (supra), relied upon by the Ld. AR, has been pleased to explain the meaning of the word 'education' in the context of section 2(15) of the Act. As per this decision the education is the process of training and developing the knowledge, skill, mind and character of students by schooling by way of systematic instruction, schooling or training. The Hon'ble Delhi High Court in the case of Delhi Music Society (supra) has been pleased to hold that since the assessee society was teaching and promoting all forms of music and dance, western, Indian or any other and was run like any school or educational institution in a systemic manne....
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....een examined in scrutiny assessment by revenue department over so many years and have never been disputed. 6.6.1 The trust deed in clause J and N has provided the objective of appellant to impart education and provide relief to the poor. The contention of the Ld. CIT(DR) remained that 7 out of 15 objectives in the trust deed of the appellant are in a nature of general public utility. The objects of the appellant are as under :- A. "The main aim of the trust would be to impart the practical and functional training of astung yog, raj yog, hath yog, ashan and pranayam etc as received from the ancient tradition propounded by the Rishis and Munis to make an end of extreme sufferings to cure diseases and to receive a calm stage of mind and extreme happiness. B. To construct the building etc for boarding and lodging for those who are instructed III Yog and meditation. C. To organize Yoga camps in the country and abroad in order to propagate the yoga, training and Vedic Dharma. D. To open and establish charitable hospitals for the treatment of the helpless poor, out caste and also to distribute medicines, clothes and food articles in the tribal ....
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....nt/ancillary to the main objection which is to provide medical relief and impart education and do not in any way constitute/objectives of general public utility as contended by the Ld. CIT(DR). WE thus hold that the case of the appellant does not fall within the last limb of the definition of charitable purpose given u/s 1(15) of the Act. In the case of Thiagarajar Charities (supra) before the Hon'ble Supreme Court, the main objects of the assessee trust were education, medical relief and relief to the poor. One of the objects contemplated the trust to engage in carrying on, help, aid, assist and promote rural reconstruction work, cottage industry and all matters incidental thereto. The trustee carried on business by investing the corpus as per powers given under some clause of article of trust. The assessee claimed that the business carried on by it and from out of which it had derived income was held under trust and since the trust was for charitable purpose, the income was exempt from tax u/s 11. The AO rejected its claim. The Tribunal as well as Hon'ble High Court held that the object covered by clause 1(g) involved carrying on an activity for profit. On appeal the Hon&....
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....0 Patanjali Chikitsalays across the country. Further that acceptance of security deposit for setting up seva Kendras does not in any way impact the charitable nature of the activities undertaken by the appellant. 6.6.4 Further allegation of Ld. CIT(DR) remained that the appellant has applied minimum amount of income for charitable purpose and diverted substantial amount to its sister concern i.e. Patanjali Yogpeeth Trust with the intention of retaining funds within its own control. It was alleged by her that the appellant was charging exhorbitant rates for accommodation fee in the name of participation fee. In alleging so the Ld. CIT(DR) has placed reliance on the statement of one Shri Balwant Singh Minnas, wherein he has alleged to have paid amount of Rs. 49,000/- as participation fee for the yoga shivir purportedly conducted by the appellant in the assessment year under consideration. The Ld. CIT(DR) has further alleged that appellant has collected a sum of Rs. 68.45 lacs under this head during the year. She alleged further that the assessee has charged Rs. 290.79 lacs from patients during the assessment year through medical hospital which was in addition to the price of....
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....justice. It was submitted that an amount of Rs. 68.45 lacs represents the amount of room rent charges received by the appellant from the patients who have availed in house facilities in the hospital run by the appellant at Haridwar. The amount of room rent charges received by the appellant in the assessment year is minuscule as compared to the number of patients who have treated in the hospital run by the appellant. Ld. AR submitted further that an amount of Rs. 2 .2 crores approximately has been charged from the patients who have been treated in the hospital run by the appellant, room rent charges, diagnosis and surgical services provided by the appellant which has also been charged at nominal rates in order to meet the actual costs incurred without any element of profit imbibed therein. In this regard attention was drawn on the income and expenditure statement of appellant trust placed at page 379 of the paper book, wherein appellant has incurred an expenditure of Rs. 5.1 crores as against income of Rs. 2.2 crores thereby resulting in a deficit of Rs. 2.8 crores. Regarding the allegation that the appellant was unable to produce any record in the form of medical prescriptions to s....
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....he proviso inserted in section 2(15) of the Act by the Finance Act, 2008, with effect from 1.4.2009, reads as under:- ** ** **" Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity; ** ** "(Emphasis supplied) Therefore, the aforesaid proviso does net apply to a trust/institution engaged in the charitable object of providing relief to the poor, imparting education and providing medical relief. The vision with which the applicant 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 fulfil the resolution of making a new world free from disease and medicine; - To establish Pran as medicine for the treatment of all curable and incu....
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....ggregating to Rs. 283.38 lacs in the assessment year under consideration which is in violation of the trust deed. She has contended further that prescribing of allopathic medicines by one dentist Shri Kuldeep Singh in the medical hospital run by the appellant was also in violation of the objective of the trust. Rejoinder of the Ld. AR in this regard remained that clause 0 of the trust deed clearly empowers the appellant trust to accept voluntary donations. Thus there was no bar on the appellant to receive voluntary donations in the form of membership fees and thus the objection raised by tjhe department does not survive. The Ld. AR submitted further that the predominant objective of the appellant trust is to provide medical relief to the society at large. Hence there is no specific restriction stipulated in the trust deed to prevent the appellant from prescribing allopathic medicines. He referred clause A & D of the trust deed in support. He however submitted that though the appellant primarily adopts ayurved and yoga as techniques to cure diseases but there is no embargo in the trust deed to prevent the appellant from prescribing allopathic medicaines to cure the patients of disea....
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....further that comparative rate chart furnished by the appellant in the Paper Book was not filed before the authorities below hence the same constitutes additional evidence. Ld. AR has met out these contentions of the Ld. DR with this rejoinder that the notification granting recognition to the R & D Center of the appellant by the SIRO is available on the public domain and can be accessed at www.dsir.gov.in/direct/siro06.pdf. Thus the certificate does not constitute additional evidence. It was submitted further that the R & D activities undertaken by the appellant was only ancillary and incidental to the predominant objective of providing medical relief being pursued by the appellant. Hence does not fall to the objects of general public utility as defined u/s 2(15) of the Act. Regarding comparative rate chart furnished by the assesee before the Tribunal amounting to additional evidence, Ld. AR submitted that this fact was very much highlighted before the authorities below and reference of the contents of page No. 13 of the first appellate order has been made in support. It was submitted further that the chart filed is nothing but collation of the details of prices available in public ....
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....ertaken by the appellant were in the nature .of "general pubic utility" as defined u/s 2(15) of the Act and since there was no itota of evidence to substantiate the charitable activities undertaken by the assessee no exemption was granted in the given assessment year. In the case of Aurolab Trust (supra) assessee engaged in the singular activity of manufacturing and trading in ophthalimic and cardiovascular products and accessories, had not taken any charitable activity as provided in the trust deed. Even the sale price of the products sold by the assessee was higher than those available in the market. Taking into account these aspects the Tribunal held that since there was no element of chaity involved in the activities undertaken by the appellant the assessee was not entitled to claim exemption u/s 11/12 of the Act. In the case of ICAI Accounting Research Foundation (supra) the assessee was pre-dominantly engaged in undertaking R&D activities on behalf of Government and other institution and providing consultancy services. In view of the primary activity undertaken by the assessee it was held to be in the nature of providing 'general public utility' as defined u/s 2(15) o....
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....een objects and business u/s 11 (4) /(4A) 6.7.6 The authorities below held that the activities of the appellant were merely sub serving the business of Divya Pharmacy. The contention of the appellant to it remained that the business undertaking was run by the appellant as an activity in incidental to the attainment of the main objects of the appellant and to give charity which is permitted u/s 11(4)/11(4A) of the Act. 6.7.7 Considering the submission of trie parties on these issues we are of the view that it is a trite law that once registration u/s 12A of the Act has been granted by Ld. CIT, the AO could not question the charitable character of the institution during the course of assessment proceedings. It is not open to the AO in the assessment proceedings to hold that the objects of the assessee are not charitable in nature. The contention of Ld. AR remained tha the meaning of the expression 'not for purpose of profit' in the above provisions 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 a charitable ....
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....ose. Sub section (4A) of section 11 also exempts income tax of a business carried on by the trust so long as the business carried on by the trust is (a) incidental to the attainment of main objects (b) feeds the charitable objects (c) separate books of accounts are maintained in respect of the same, even on fulfillment of the aforesaid conditions profit from such business are exempt u/s 11/12 of the Act. Thus it is clear that the charitable trust can carry on business and utilize its profits therefrom for the charitable purposes but a charitable trust cannot have its purpose, an activity that involves the buying and selling of goods and making profits. The business undertaking of the appellant as discussed above are thus the means for effectuating a charity, but not a charitable object itself. We find that in the case of appellant before us the activity of manufacturing and sale of ayurvedic preparations has been undertaken only for the purpose of effectuating the charitable objective of providing 'medical relief to the society at large on a genuine need was felt to provide superior quality ayurvedic preparations at economical prices in order to attain effective medical results....
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.... prescribed in section 11(4)/11(4A) of the Act are satisfied. The Hon'ble Supreme Court in the case of P. Krishna Warriers (supra) has been pleased to hold with reference to income tax Act 1922 that if the trust carried on business and the business itself is held in trust and the income from such business is applied or accumulated for application for the charitable or religious purpose of the trust, the conditions prescribed in section 4(3)(i) and fulfilled and the income is exempt from taxation. In that case before the Hon'ble Supreme Court business of making and selling ayurvedic medicines was settled and held in trust and 60% of income from such business was applied for charitable purpose. The AO denied exemption on the ground that part of the income from business was not applied for charitable purposes, the Hon'ble Supreme Court held that where business is held for charitable purposes the conditions prescribed in proviso (b) to section 4(3) (i) of the Income Tax Act is not applicable and the assessee was held to be eligible for exemption. The decision of Delhi High Court in the case of Hamdard Dawakhana (Waqf) (supra) though rendered in the context of the pre amende....
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....ensaries and for carrying out the other objects of the trust. The assessee also levied 11% service charge on the price of medicines from non- members and claimed to have utilized the amount so collected for running the dispensaries. In the preceding assessment years, benefit of section 11 was given to the assessee. The assessee claimed the benefit u/s 10(22A) which was refused by the assessing officer mainly on the basis that the dominant object of the trust was to sell medicines and derive profit therefrom. The first appellate authority rejected the assessee's appeal. The Tribunal has however given relief with this finding that the mere fact that the assessee trust has objects other than medical relief was not a condition aliunde to which the exemption u/s 10(22A) could be denied to the assessee. The surplus derived from running the dispensaries was utlised for philanthropic purposes. CBDT circular No. 194/16-17-II(A-1) makes it clear that if a surplus is used for philanthropic purposes the income of the institution will be eligible for exemption u/s 10(22A). We are thus of the view that in the present case the authorities below have grossly erred in holding that the appellant....