AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (5) TMI 410
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....A) has erred in partly allowing the appeal of the assessee ignoring the fact that the assessee trust has itself declared that it I carrying on business through it, various business undertakings and in the process by way of trading and business, it had been receiving consideration on sale of medicines, publications, CD-VCDs etc. And therefore, in the light of amendment to clause 15 of Sec-2 of the I.T. Act, such activities of the Trust cannot be said to be charitable in' nature, as the trust is admittedly receiving considerate profit while carrying on its business activities which proves that the assessee is engaged in business activity which fall under the explanation of "advancement of any other object of general public utility. 3. The order of Ld. CIT (A) be cancelled and the order of the A.O. be restored" 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee trust being registered under section 12A(a) of the Income-tax Act, 1961 (for short 'the Act') claimed exemption in terms of sections 11, 12A and 12A(a) of the Act. AO held the activities of the assessee trust not covered u/s 2(15) of the Act and declined the exemption u/s 11 ....
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....al relief' or 'imparting education'. The legal position in this regard is well settled that when donor trust which itself is a charitable trusts, donates its income to another trust, the same constitutes application of income u/s 11(1)(a) of the Act. In this regard, he drew our attention to the instructions issued by CBDT vide Instruction No.1132 dated 05.01.1978 reproduced hereunder: "A question has been raised regarding the availability of exemption in the hands of charitable trusts of amounts aid as donation to other charitable trusts. The issue has been considered by the Board and it has been decided that as the law stands at present, the 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 lose exemption under section 11 of the I. T. Act, 1961, merely because the donee trust did not spend the donation during the year of receipt itself. The above position may kindly be brought to the notice of all officers working in your charge." 4.22 In support, the Ld. AR placed reliance on the following ....
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.... 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." 8. So, following the order passed by the coordinate Bench of the Tribunal for AY 2009-10, we are of the considered view that inter-trust donation by one charitable trust to another for utilization by the donee trust towards charitable objects is proper application of income for charitable purpose in the hands of donee trust and it will not affect the exemption claimed by the assessee u/s 11 of the Act in any manner whatsoever nor inter-trust donation can be termed as deviation from its objects as it is nowhere the case of the Department that the donee tr....
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.... 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 would ultimately provide medical relief to the society at large. It was submitted that in pursuance of the said objective the appellant trust has made intertrust donations to Patanjali Yog Peeth to support their endeavors of imparting yoga education by means of organizing yog shivirs/camps across the country on daily/weekly/monthly basis in a systemized/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. It was submitted that imparting of yoga training through well structured yoga shiviirs/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. During the course of hearing the appellant was directed to provide complete details of the Patanjali Bhartiya Ayurvigyan Avam Anusandhan Sansth....
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....g all forms of music and dance , western, Indian or any other and was run like any school or educational institution in a systemic manner with regular classes, the same therefore meet the requirement of an educational institution within the meaning of section 10(23C)(vi) of the Act. In the case of ITO vs. SRM Foundation of India (supra) the Delhi Bench of the Tribunal, where the assessee was engaged in spreading the system of transcendental meditation (TM) has held that irrespective of the fact that the assessee has its own prescribed syllabus, trained teachers, branches all over India to spread system of transcendental deep meditation among people in all walks of life, the same constituted imparting of education and the assessee was entitled to exemption u/s 10(22) of the Act. We thus come to the conclusion that any form of educational activity involving imparting of systematic training in order to develop the knowledge, skill, mind and character of students, is to be regarded 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 educat....
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....ste and also to distribute medicines, clothes and food articles in the tribal area. E. To furnish and equip the charitable hospital with modern medical facilities. F. To carry out conduct research on Yoga, Ayurveda and Vedic literature and also to organize scholarly seminars and competitions. G. To prepare and to sale and purchase of the Ayurvedic medicines for the charitable hospitals, hospital colleges, schools and for the social and Yogic activities of the trust. H. To make an arrangement for the study of Veds, the Geeta, the Philosophy and Upanishads, Grammer and Yogic scriptures for character building, moral cultural upliftment and imparting education for character building and upliftment of moral values. I. To prepare missionaries and facilitate them and sensitize people for uprooting jealously, hate, evils, injustice, Tyranny and heavenly this on earth by keeping above the communalism, 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 a....
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....le Supreme Court held in favour of the assessee by observing that clause I(g) referred by the lower authorities was not an object but was really in the nature of a power. The Hon'ble Court further held that the ancillary activity undertaken by the assessee was to afford relief to poor falling within scope of section 2(15) of the Act and was not an object of general public utility. It was further held that business being only a means of achieving the object of the trust, exemption could not be denied. 6.6.3. The contention of the Ld. CIT(DR) also remained that the predominant objective of the appellant trust is to prepare and sell medical formulations, which is apparent from the sheer magnitude of business, sales counters and volume of its promotion and publication house which is not incidental to the main objective of providing medical relief. 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 R....
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....from patients. She alleged that the appellant was unable to produce during the appellate proceedings any documentary evidence to support the charitable activities in the form of medical relief in the hospital run by the appellant. She alleged that the appellant was unable to produce the medical practicitioner during the assessment proceedings. The rejoinder of the Ld. AR remained that there is no legal impediments in one charitable trust giving donation to inter charitable trust. It was submitted that it is a well settled position that when a charitable donation amount out of its current income is donated to inter charitable trust, the same constitute application of income u/s 11(1)(9) of the Act. A copy of certificate of registration of the donee trust u/s 12A of the Act has been placed at page 856 of the supplementary paper book - (III). The CBDT instruction No. 1132 dated 5.1.1978, extract of which has been made available at page No. 857 of the supplementary paper book-III 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 ....
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....cal relief was provided in the hospital run by the appellant, Ld. AR submitted that as a matter of practice the prescriptions made by the medical practitioners in the OPD are never retained and are always given to the patients. Nonetheless the appellant maintains a record of the patients who have been treated in house which has nowhere been disputed by the department. Against the allegation of the department that appellant was unable to produce the medical practitioners for verification during the course of remand proceedings is erroneous. The Ld. AR submitted that the appellant has produced 15 out of 71 medical practitioners whose details and permanent residential addresses were made known to the revenue. It was submitted that in their statement recorded on oath , the medical practitioners who were in the employment with the hospital run by the 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 ....
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....cordance with the parameters of modern medical science, so that the rich and poor may avail its benefits in order to attain sound health; - To form a new integrated system of treatment, consisting mainly of the techniques of Yoga and Ayurveda, for Surgery and Emergency cases , Allopathy, Homoepathy, Unani and Acupressure to soothe patients suffering from unbearable pains and rid them of disease. - To evaluate methods of treatment of Physical Body, Etheric Body , Astral Body, Mental Body and Casual Body beyond the present incomplete system of treatment for cure of physical body alone; - Imparting Yoga and health education and to begin degree and diploma courses for students in disciplines of Yoga and 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 defin....