TaxTMI 
TaxTMI 
2019 (7) TMI 1889
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....ssment proceedings, the Assessing Officer (AO) noted that the assessee trust was allegedly engaged in the business activities through the following business undertakings:- 1. M/s Divya Pharmacy - Manufacturing Ayurvedic medicines 2. M/s Yog Sandesh - Monthly magazine dedicated to Yog and Ayurved 3. M/s Divya Yog Sadhna - CDs and audio cassettes to teach Yog and Paranayam and Vedic and patriotic songs (Trading) 4. M/s Divyaprakashan - Books related to Yog and Ayurved (Trading) 5. M/s Divya Nursery - Goark, vermin compost and ayurvedic plants (Trading) 6. Patanjali Yogpeeth Aushdhalaya - Retail trading of medicines 2.1 The Assessing Officer observed that the gross receipts from these six undertaking amounted to Rs. 3,39,80,67,065/- and the consolidated profit of these undertakings amounted to Rs. 97,82,19,889/-. The Assessing Officer also observed that besides the above, the assessee had a gross receipt of Rs. 20,71,87,624/- from its main Trust and the assessee had further claimed inter-trust donations to the tune of Rs. 68,02,67,317/- to various entities, resulting in a negative net income of Rs. 71,22,53,478/- after incurring....
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....n assessment year 2009-10, the assessee was not covered by the 5th limb of section 2(15) and was, therefore, entitled to the benefit of exemption u/s 11 and 12 of the Act. The Assessing Officer was accordingly directed to extend the exemption u/s 11 and 12 to the assessee as per the observations of the ITAT in assessee's own case as aforementioned. 2.3 Aggrieved with this finding of the Ld. Commissioner of Income Tax (A), the revenue is now in appeal before this Tribunal and has raised the following grounds of appeal:- "1. Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in allowing the appeal of the assessee and deleting the addition made by the A.O. u/s 43B of Rs. 1,18,722/-. 2. Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in allowing the appeal of the assessee on the issue of interest on TDS of Rs. 15,584 /-. 3. Ld. Commissioner of Income Tax(appeals) has erred in law and on facts in allowing the appeal of the assessee regarding PF & EST contribution after due date of Rs. 3,70,331/-. 4. Ld. Commissioner of Income Tax (Appeals) has erred in Law and on facts in allowing the appeal of the assesse....
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....sessment years. We would like to make a reference to the Tribunal's order for assessment year 2009-10 wherein detailed findings have been recorded by the Tribunal. This order was upheld by the Hon'ble Uttarakhand High Court in ITA No. 05/2014 vide order dated 27th February, 2019. The relevant paragraphs of the Tribunal's order in assessment year 2009-10 reported in (2015) 153 ITR 368 (Delhi Tribunal) are reproduced here in under for a ready reference:- "6.1 We, therefore, prefer to adjudicate upon the first issue as to whether the objects and activities of the appellant trust did fall within the purview of providing 'medical relief', 'imparting education' or 'relief to the poor'. The objects of the appellant trust are available at page 1-7 of the paper book 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 developm....
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....al 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 research in rare medicinal plants /herbs and selling these plants);(2) Divya Pharmacy (Ayurvedic pharmaceutical unit engaged in manufacturing of ayurvedic medicines as per tradition of sages and modern science); and (3) Divya Prakashan, etc. (it deals with publication and distribution of different types of literature relating to yoga and ayurved) Department of Medical Science and Facilities 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 treate....
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....i 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 accepted by the revenue in the assessment years 2004-05 to 2008-09 as engaged in the activity of providing 'medical relief' in the assessment framed u/s 143(3) of the Act. Since there is no change in this object of the appellant trust, and the related facts during the year under consideration, we are of the view that ratio laid down by the Hon'ble Supreme Court in 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 appe....
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....on - 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 placed reliance on the determination of the term "medical" as provided in Major Law Laxicon by P Ramanatha Aiyar (2010 edition) as per which "pertaining to or having to do with the art of healing disease or the science of medicine containing medicine used in medicine". We find that the term "medical" has been defined very broadly in this definition as per 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....
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....n, 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) 6.4.4 In the above said information it has been observed that experts of various branches of medicine including modern medical sciences are realizing the role of these techniques in the prevention and mitigation of diseases and promotion of health. It has been further observed that 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 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 ....
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....efore 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), when there used to be no dispute insofar as classification of charitable objectives was concerned for the purpose of claiming exemption u/s 11/12 of the Act. The decision was referred in the context of classifying 'meditation' as a charitable objectives for the purpose of section 2(15) of the Act. The Hon'ble High Court has adjudicated only upon the issue of classification of 'meditation', '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 y....
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....aced 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 Swami Ramdevji in the wake of dreadful diseases being cured by Swamiji's Pranayam and his ayurved medicines. 6.4.6 In view of above discussions especially the recognition of yoga as a recognized system of medicine as per section 2 (h) of Clinical Establishment (Registration and Regulation) Act 2010 and the complete information made available by the ayush on its website 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 thro....
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....le 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, yoga and naturopathy, unani, siddha and homoeopathy systems of medicines. For the purpose of recognizing and granting permission for establishment of medical colleges, the department of AYUSH mandates fulfillment of certain minimum standard and requirements as prescribed under the Indian Medical Central Council Act 1970 (IMCC Act). One of the primary conditions 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'....
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....chi 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 provides free yogic and Ayurvedic consultancy to all its patients. It was pointed out that during the year the appellant has provided free medical services/treatment to more than 38 lacs patients through Patanjali Chikitsalaya spread all across the country. It was submitted that all records of such treatments and activities of the trust has been 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 th....
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.... 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 training of Astang yog, Raj yog, Dhyan Yog, Hath Yog, Ashan and Pranayam etc. as received from the ancient tradition pronounced by the rishies and munis. Thus to know the mission and reason of the appellant trust we have to read its objectives in totality. The various other objectives provided in the trust deed are merely independent/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'bl....
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.... 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 undertaking its business activities. It was submitted that the Chikitsalays were set up by the appellant all across the country for providing free medical consultations to patients suffering from various diseases. More than 1000 vaidays are giving free consultation to over 50,000 patients for curable and incurable disease in about 1000 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....
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....ere 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 conducting yoga shivir does not arise at all. The further contention of the Ld. AR remained that reliance has been placed on the ex parte statement of Shri Balwant Singh recorded behind the back of the appellant without affording opportunity to cross examine him, which itself is in violation of settled principles of natural 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 th....
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.... 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, purpose" includes relief of the poor, education, medical relief, preservation of environment (including watersheds, forests and wildlife and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility: ** ** ** The 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 a....
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....ellant 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 the first issue under the head medical relief or relief to the poor, following the same the fourth issue is also decided in favour of the appellant. Other objections of the revenue 6.7 Ld. CIT(DR) has also contended that the appellant has received membership fees aggregating 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 empowe....
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....nder 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 constituted additional evidence at the second stage of appeal proceedings. In this context the Ld. CIT(DR) has objected further that the R & D activities undertaken hy the appellant amounted to object of general public utility u/s 2(15) of the Act. She alleged 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.g....
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....t 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 (supra) the assessee was engaged in printing and publishing newspapers and periodicals on commercial lines and it claimed exemption on the ground that it was engaged in the charitable activity of "imparting education". The Tribunal by placing reliance on the decision of Hon'ble Supreme Court in the case of Sole Trustee, Lok Shikshana Trust (supra) held that the activities undertaken 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 c....
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....rved 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 (supra) 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 Jodhpur Chartered Accountants Society (supra) the assesee was engaged in organizing conference, seminars and workshops which was held to be in the nature of "general public utility" entitled to exemption u/s 11/12 of the Act. We thus find that these decisions relied upon by the Ld. CIT(DR) do not advance the case of the revenue and hence not helpful to the revenue. Distinction between 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 permit....
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....f 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) Sub-section (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 the business is incidental to the attainment of the objectives of the trust or, as the case may be, institution, and separate books of account are maintained by such trust or institution in respect of such business.' 6.7.8 We find that the section deals with cases where the business itself is settled to take care of interest for a charitable purpose. 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....
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....9; 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 Andhra Pradesh State Road Transport Corpn. (supra), Victoria Technical Institute (supra), Thiagarajar Charities (supra), Aditanar Educational Institution (supra), Bar Council of Maharashtra (supra), American Hotel Lodging Association Education Institute (supra), Delhi Kannada Education Society (supra), Samaj Kalyan Parishad (supra). 6.7.9 Thus we find that there is no bar in the charitable trust/institution carrying on business provided the conditions 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 t....
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....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 round. We find that in the case of Bombay Keraleeya Samaj (supra) the objects of the assessee registered u/s 12A was inter alia propagation of the Kerala system of Ayurveda and for this purpose the assessee ran five dispensaries rendering free consultation by Ayurved physicians. The assessee was obtaining ayurvedic medicines from an institution (A) at a discount of 11 % which was sold to the patients at the dispensaries as per the prescription of the doctors. The amount of discount _ which the assessee received from A was being used for running the dispensaries 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 o....