TMI Blog1970 (11) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ng questions for out decision : " 1. Whether, on the facts and in the circumstances of the case, the objects of the Arya Vaidya Sala constitute a charitable purpose within the 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitutions according to the intentions expressed above with such modifications as the circumstances may warrant. K. In the Aryavaidya Pata Sala run under the auspices 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 pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent years 1952-53, 1953-54, 1954-55, 1955-56 and 1956-57. This court held that the above 60% is not liable to be taxed and this view has been affirmed by the Supreme 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 ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rous of making that system more popular. Treatment of patients on receiving compensation from them according to their ability to pay which is one of the avowed 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to the sale of Ayurvedic medicines is in the region of lakhs of rupees : Rs. 11,33,669.10 for the year 1962-63 and Rs. 12,52,050.94 for the year 1963-64. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by the Supreme Court decision to attract the principle of res judicata. We have to answer that question and we have come to the conclusion from the discussion above that the object of the Arya Vaidya Sala is not medical relief or education or relief of the poor and can fall, if at all, only under the 4th category, and intrinsically mixed up with an activity for profit. It thus falls outside the ambit of the definition in section 2(15) of the Income-tax Act, 1961. The answer to questions Nos. 1 and 2 must therefore be in the negative, that is, in favour of the department and against the We answer them accordingly. It is admitted that the answer to the third question must depend upon the answers on the first two questions as the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X
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