TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 1598
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....e CIT(A) has erred, in law and on facts in misplaced the provisions of section 2(15) of the Act and holding that the activity of the assessee falls under the clause 'education' and 'medical relief and not the last limb of 'advancement of general public utility'. 2. The CIT(A) has erred in law and on facts in holding that Sudarshan Kriya as a system falls in the residuary category of 'education' and 'medical relief. 3. The CIT(A) has erred in the law and on facts in allowing the exemption u/s11 & 12 of the Act holding that the assessee has not violated provisions of section 13(1)(d)(i) rws 11(5) of the Act in case of Sriram Transport Finance Co. Ltd. 4. The CIT(A) has erred in law and on facts in allowing donation of Rs. 1,53,22,500/-as application of income and not appreciating that the assessee's activities are not in the nature of charity as it is hit by the proviso to section 2(15) of the Act and no such donation is allowable expenditure/application of income thereof. 5. The CIT(A) has erred in the law and on facts in allowing corpus donation of Rs. 16,03,22,815/- without appreciating that the assessee's activities are not in the natur....
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.... the assessee's case has been selected for scrutiny in the current Assessment Year. The case of the assessee is this that the assessee's object would not fall under the 6th limb of Section 2(15) i.e. any other objects of general public utility. Further that the assessee is entitled to exemption under Section 11 and 12 of the Act. However, such contention of the assessee has not been accepted by the Learned Assessing Officer and relying upon the Circular No. 11 dated 19.12.2008 such claim has been denied to the assessee which has, in turn, been reversed by the First Appellate Authority. Hence the instant appeal before us. 6. The crux of the submission made by the Departmental Representative before us is this that providing training of Sudarshan Kriya as per the syllabus of Shri Pandit Ravi Shanker, a famous meditation Guru through his sponsored charitable trusts cannot be termed at per with "Relief to the Poor", "Education" and "Medical Relied", rather the same would fall under the last limb of the proviso of Section 2(15) of the Act i.e. "the advancement of any other object of general utility". According to him streamlining the definition of "charitable purpose" and to limiting th....
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....ellant trust placed on record running from pages 243 to 254 of the paper book: "a) To promote research and development on the impact of the Art of Living techniques on the physical and mental states of people as formulated by Yoga Shiromani Sri Sri Pandit Ravishankar in the realm of Yoga and Meditation. b) To promote a scientific study and research of ancient literature and Yoga. c) To afford adequate training facilities to scholars to develop scientific analysis of the scriptures of yoga and the interpretation of ancient practice. d) To organise and co-ordinate programme and activities which promote evolution of Ideal Men and Women and create on Ideal Society in line with Natural Law. e) To organise, establish and or maintain suitable research laboratories and or health centers or Yogic therapy, Naturopathy and/ or Ayurvedic and Siddha Systems of Medicine health products, asanas, exercise and/ or health resorts, and provide benefits thereof to all sections of people, and also promote other systems of Indian Medicine. f) To establish, Journals, periodicals and leaflets which may be necessary for the promotion of its objectives. g) To establish adult education centers f....
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....eed of the person who participates in those programmes. The donations, received by the Trust are voluntarily contribution and that they are not fees in nature. Even the general public who have participated have contributed to this organization; there have been corporate who have also been benefited out of these programmes for their own staff, such programs are conducted at their request wherein, the appellant Trust introduced itself as an organization, which is voluntary in nature; some contributor may have treated the same as course fees and have also deducted Taxes at source on these transactions. He vehemently argued that since some of these corporates though have treated them as course fee, the same does not change the status of the Trust being charitable in nature. Such contributions have been treated in the books of accounts as voluntary contributions only. 7.2. 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 arise from the activity as argued by the Ld AR and on this aspect he relied upon the judgment passed by the Hon'ble Supreme Court in the case of ....
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....mparison with the activities carried on during the previous year relevant to the A.Y. 2009-10 & 2010-11 as also in the earlier years and based on which the Registration Certificate under section 12A is continued and was affective for the year under appeal. 7.6. In the absence of any material changed, the revenue is not justified to take a different view of the matter as also submitted by the Learned AR. In this aspect he has relied upon a judgment passed by the Hon'ble Apex Court in the matter of Radhasoami Satsang-vs-CIT, reported in 193 ITR 321 (SC) as well as the judgment passed by the Hon'ble Apex Court in the matter of Parashuram Pottery Works Ltdvs- ITO, reported in (1977) 106 ITR 1(SC). 7.7 As we find that according to the Learned AO as per the amended provision not only direct activities in the nature of trade commerce or business would make the assessee's activities outside the purview of charitable purpose, but also the activity of rendering any services in relation to any trade, commerce or business would make the activities of the assessee non charitable. He has come to a finding that the objects and activities of the assessee do not fall under the first five limbs of....
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....eleted by the first appellate authority in the appeal preferred by the assessee. However, the addition of Rs. 3,36,416/- in respect of interest on Income Tax refund, the rejection of depreciation to the extent of Rs. 89,26,569/- and the interest levied of Rs. 5,63,40,61,719/- u/s 234B of the Act though was allowed finally, all for statistical purposes, has not been challenged before us by the Revenue. 7.9. In appeal, the Yoga or Sudarshan Kriya has been held to be covered under the clause "donation" and "medical relief" and not coming under the purview of the last limb of the 2(15) of the Act i.e. advancement of general public utility by the Learned CIT(A). It was further observed that the activities of the appellant are as per the objects of the appellant and the appellant trust has trained more number of persons than the doners in Sudharsan kriya / yoga without charging any fees. 8. We have heard the respective parties and perused the relevant materials available on record. The assessee has filed the entire set of documents which were placed before the authorities below. The Learned DR filed a note on behalf of the revenue in support of the grounds agitated in the appeal before....
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.... that Maharashi Patanjali the Father of Yoga compiled and defined Yoga in his book on Yoga sutras and advocated an eight fold Yoga popularly known as the Ashtanga Yoga and they are Yama, Niyama, Asana, Pranayama, Pratyahi Dharana, Dhyana and Samadhi. These components advocate certain restraints and observance 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. What is Sudarshan Kriya : The Sudarshan Kriya incorporates specific natural rhythms of breath which harmonize the rhythms of the body and emotions and bring them in tune with the rhythm nature. The breath connects the body and mind. Just as emotions affect our patterns of breath we can bring about changes in our mental and behavioral patterns by altering the rhythms of breath. It flushes out anger, anxiety and worry; leaving the mind completely relaxed energized. Sudarshan Kriya is a technique of yoga mentioned above, predominantly concentrating on the....
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....f to people who cannot afford modern medical method or have been subjected to ill effects of modern medicine. It is also an admitted fact that the assessee trust has created a very large number of general public population of this country without making discrimination on caste or creed of the participants in those programs. Propagation of yoga as pre-dominant objective in the case of the appellant trust very much falls within the definition of "charitable purpose" provided under section 2(15) of the Act as it is also "imparting of education". There is no dispute that the assessee has been continuously undertaking the following activities : (a) Providing medical relief to various sections of the society, including but not limited to providing free medicines and treatment by organizing various shivirs / camps on a regular basis under the leadership of yoga guru, other trained teachers and teams of doctors. (b) Conducting programmes and shivirs on a regular basis for propagating yoga and also to promote good health; (c) Conducting yoga classes on a regular basis and in systemized manner so as to provide medical relief and also to impart education in yoga through systematic instru....
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....370/12 taxmann.com286 (Cochin) and CIT v. Rajneesh Foundation [2006] 280 ITR 533/[2005] 148 Taxman 396 (Bom.) were relied upon. It was held that yoga was one of the six systems of Vedic philosophy developed by Maharishi Patanjali, who was characterized as "The Father of Yoga" and who had compiled and refined various aspects of the science/practice systematically in "Yoga Sutras". The Tribunal concluded upon analysis of the practice of yoga that it confers positive relief to certain ailments such as asthma, migraine, hypertension, stress, etc. and promotes wellness and well being generally. Having regard to the observations, the Court is of the opinion that the mere inclusion of yoga specifically w.e.f. 01.04.2016 did not per se imply that it came to be included as a specific charitable category on the same lines as education, medical relief, relief to the poor, etc but that dissemination of yoga or vedic philosophy or the practice of yoga or education with respect to yoga was well within the larger term "medical relief". This Court is of the opinion that no substantial question of law arises on this aspect." 8.5. It is relevant to mention that the provision to section 2(15) appli....
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..../- and above. These donations were received from the participants of the training programme of Sudarshan Kriya as the fact reveals from the records before us. During the appellate proceeding, the assessee trust submitted a further tabular sheet correlating the activities of the trust to the receipts thereof for the year ended 31.03.2011 which as follows: Sl. No. Range Total Donations No. of Donors % of Donors % Cumulative 1 1-200 42,08,273 26,552 7.43% 7.43% 2 201-500 2,08,71,143 56,127 15.71% 23.14% 3 501-1000 10,87,10,735 1,21,084 33.88% 57.02% 4 1001-1500 4,18,12,615 33,179 9.28% 66.30% 5 1501-2000 2,46,17,851 13,148 3.68% 69.98% 6 2001-3000 10,76,50,664 41,986 11.75% 8173% 7 3001-4000 15,96,18,534 45,288 12.67% 94.40% 8 4001-5000 2,15,47,954 4,563 1.28% 95.68% 9 5001-7000 6,07,52,130 10,521 2.94% 98.62% 10 7001-10000 2,84,72,399 3,261 0.91% 99.53% 11 10001-25000 1,64,93,278 1,079 0.30% 99.84% 12 25001 and above 8,88,07,958 588 0.16% 100.00% Grand Total 68,35,63,534 3,57,376 100.00% 8.8 It further appears that various courses conducted by the appellant trust specially part-....
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....it. Further to determine the predominant object, it is required to examine the object of the society and not quantum of surplus though such quantum may become relevant in certain circumstance. With the essence of inspiration from the ratio laid down by the Hon'ble Apex Court in the aforesaid judgment conclusion can be drawn that the contribution on which TDS have been deducted amounting to Rs. 4.5 crores being 6.6% of the total contribution Rs. 68 crores, the appellant cannot be said to be a profit making organization when the pre-activity is entirely charitable in nature which has been rightly taken care of by the Learned CIT A and hence we confirm the same. In the result revenue's appeal is dismissed . 9. The revenue has further challenged allowing of exemption u/s 11 & 12 of the Act Ld CITA holding the assessee not violated the provisions of section 13(1)(d)(i) r.w.s. 11(5) of the Act in case of investment made with Shriram Transport Finance Co. 9.1. Heard the parties, perused the records. The brief facts leading to this case is this that while scrutinizing the financial statement and TDS certificate it came to the knowledge of the Learned AO that the assessee has made certain....
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....r section 11 and 12 of the Act. However, the Learned CIT(A) considering the entire aspect of the matter excluded the interest income from M/s. Shriram Transport finance Co. Ltd. while granting relief to the assessee declaring it allowable u/s 11 of the Act. Hence the instant appeal before us. 9.3 During the appellate proceeding, the assessee submitted that in every branch of the assessee-trust across the country is taking care of to apply the provision of Income Tax Appeal Act but inadvertently without the notice of the assessee the certain amount got deposited with M/s Unitech Ltd and Shriram Transport Finance Co. Ltd. without there being any malafide intention for making such deposit. It was further submitted by the assessee that as soon as the assessee trust came to know about such deposit the same were immediately withdrawn and such fact of withdrawal of deposit were made known to the assessing officer by and under a letter dated 11.11.2015. It was reiterated by the assessee that alleged deposit with Shriram Transport Finance Co. Ltd. does fall within the mischief of either section 13(1)(d)(i) for the reason that said deposit was not made during the impugned previous year or s....
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....ses in India, to the extent to which the income so set apart is not in excess of 28[fifteen] per cent of the income from such property; (c) income 29[derived] from property held under trust- (i) created on or after the 1st day of April, 1952, for a charitable purpose which tends to promote international welfare in which India is interested, to the extent to which such income is applied to such purposes outside India, and (ii) for charitable or religious purposes, created before the 1st day of April, 1952, to the extent to which such income is applied to such purposes outside India: Provided that the Board, by general or special order, has directed in either case that it shall not be included in the total income of the person in receipt of such income; 30[(d) income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus31 of the trust or institution.] 32[Explanation.-For the purposes of clauses (a) and (b),- (1) in computing the 33[fifteen] per cent of the income which may be accumulated or set apart, any such voluntary contributions as are referred to in section 12 shall be deemed to be part of the income; (2) i....
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.... is equal to the amount, if any, by which the amount so utilised exceeds the cost of the transferred asset; (b) where a capital asset, being property held under trust in part only for such purposes, is transferred and the whole or any part of the net consideration is utilised for acquiring another capital asset to be so held, then, the appropriate fraction of the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purposes to the extent specified hereunder, namely:- (i) where the whole of the net consideration is utilised in acquiring the new capital asset, the whole of the appropriate fraction of such capital gain; (ii) in any other case, so much of the appropriate fraction of the capital gain as is equal to the amount, if any, by which the appropriate fraction of the amount utilised for acquiring the new asset exceeds the appropriate fraction of the cost of the transferred asset. Explanation.-In this sub-section,- (i) "appropriate fraction" means the fraction which represents the extent to which the income derived from the capital asset transferred was immediately before such transfer applicable to charitable or religio....
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....riod during which the income could not be applied for the purpose for which it is so accumulated or set apart, due to an order or injunction of any court, shall be excluded:] 48[Provided further that in respect of any income accumulated or set apart on or after the 1st day of April, 2001, the provisions of this sub-section shall have effect as if for the words "ten years" at both the places where they occur, the words "five years" had been substituted.] 49[Explanation.-Any amount credited or paid, out of income referred to in clause (a) or clause (b) of sub-section (1), read with the Explanation to that sub-section, which is not applied, but is accumulated or set apart, to any trust or institution registered under section 12AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or subclause (vi) or sub-clause (via) of clause (23C) of section 10, shall not be treated as application of income for charitable or religious purposes, either during the period of accumulation or thereafter.]" "61[62(5) The forms and modes of investing or depositing the m....
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....h or investment in any bonds issued by a financial corporation which is engaged in providing long-term finance for industrial development in India and 67[which is eligible for deduction under clause (viii) of sub-section (1) of section 36]; (ix) deposits with or investment in any bonds issued by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes and 67[which is eligible for deduction under clause (viii) of sub-section (1) of section 36]; 68[(ixa) deposits with or investment in any bonds issued by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for urban infrastructure in India..." Section 13(i)(d) "(d)1 in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof, if for any period during the previous year- (i) any funds of the trust or institution are invested or deposited after the 28th day of February, 1983 otherwise than in any one or more of the forms or modes specified in sub- secti....
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....d scope of section 13(1) (d) we have to bear in mind the complete scheme of the section. And the cost of repetition we would like to reproduce the relevant part of clause (d) : "(d)1 in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof, if for any period during the previous year ITA (i) any funds of the trust or institution are invested or deposited after the 28th day of February, 1983 otherwise than in any one or more of the forms or modes specified in sub- section (5) of section 11; or (ii) any funds of the trust or institution invested or deposited before the 1st day of March, 1983 otherwise than in any one or more of the forms or modes specified in sub- section (5) of section 11 continue to remain so invested or deposited after the 30th day of November, 1983 ; or" 9.8 A perusal of the above along with the finding of the Learned AO would indicate that the area of dispute between the assessee and the Learned AO relates to construction of expression "any income"implied as above. According to the Learned AO, if there is any investment of surplus fund accumulated or otherwise in violation of sub clause 5 then....
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....inance Act, 1994, more particularly paragraph 28.6 as already reproduced hereinabove. Finally, the Hon'ble Tribunal, Bombay Bench was pleased to hold that the breach of section 13(1)(d) and 13(2)(h) would lead to forfeiture of exemption of income derived from such investment and not the entire income would be subjected to the maximum marginal rate of tax under section 164(2) of the Act. Ultimately it was held that exemption under section 11 is available to the assessee only on the income to the extent the same is derived in conformity of section 11 and applied during the year for such purpose of charitable trust. 9.10. Taking into consideration the ratio laid down by the aforesaid judgement we find that there is a factual difference between the eligibility of exemption and withdrawal of the exemption/forfeiture of exemption for contravention of the provisions of law. These two concepts are different and they have different consequences. Having regard to this particular aspect of the matter we are of the considered opinion that the withdrawal of exemption by means of forfeiture of exemption in violation of section13(1)(d) of the Act does not render the assessee ineligible for remai....
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....ed in the relevant year but accumulated set apart being donated to another trust..." 10.1. The assessee further relied upon the judgement passed in the matter of Gagan Education Society-vs-ACIT, reported in (2011) 131 ITD 442 wherein the assessee society donated certain sum to another charitable society out of current year's income and claimed deduction. The Hon'ble ITAT observed that the restriction imposed by section 11(3)(d) applies to income under section 11(2) and not to current year's income or to accumulation under section 11(1) and thus assessee's claim was allowed. 10.2. Therefore, if the donations have been made from the income of the previous year and not out of the accumulation under section 11(2) then the same be eligible to be considered as application of income as long as the recipients are charitable organizations. Having regard this particular aspect of the matter the AO has been further directed by the Learned CITA to verify as to whether these trust have the status of exemption under the Income Tax Act and also whether they are charitable organisation. Subject to such verification of the objects of the recipients the Ld AO was directed to treat the application ....