2017 (2) TMI 781 - ITAT DELHI

Denial of exemption under sections 11/12 - propagation of yoga - commercial activities by receiving certain contributions under the scheme for construction of cottages at Patanjali Yogpeeth–II known as “Vanprastha Ashram” - non-applicability of proviso to section 2(15) - allegation of anonymous donation - Alleged activities undertaken outside India - Absolute Denial of exemption - violation under section 13(1) -

Held that:- The activities undertaken by the appellant, being in the nature of providing medical relief through Pranayam and Yoga and also to impart education in the field of yoga, would fall under the category of providing ‘medical relief’ and ‘imparting education’ as provided under section 2(15) of the Act, meaning thereby that the proviso to section 2(15) of the Act would not apply. “

The assessee has applied substantial amount in setting up of “Patanjali University”, a Deemed University set up under the University of Patanjali Act, inter-alia, for having courses in M.A. {Yoga Science}, M.Sc. (Yoga Science), B.A. (Yoga Science) Post Graduate Diploma in Panchkarma, Post Graduate Diploma in Yoga Science and Post Graduate Diploma in Yoga Health and Cultural Tourism. It has also been informed that the university has become operational on September, 2009. The finding of the authorities below that propagation of Yoga by the assessee does not qualify as medical relief or imparting of education is thus held as not justified.

Vanprastha Ashram” at Patanjali Yogpeeth-II was proposed to be constructed by the assessee in furtherance of its charitable objectives of providing medical relief through Yoga and to impart Yoga training /education. It was submitted that assessee did not charge any fee / rent from the general public for uses of such cottages constructed under Vanprastha Ashram Scheme. The cottages are allotted to general public on the basis of availability i.e. on first come first served basis and no other conditions are stipulated for uses of such cottages. We also agree with the submission of the ld. AR that “business refers to real, substantial, organized course of activity for earning profits as “profit motive is essential requisite for conducting business. We have discussed the facts of the present case in the preceding paragraphs as well as the predominant objects of the assessee in detail supported with activities done by it from which no inference can be drawn that assessee is in trade, commerce and business.

Allegations of violation of provisions of section 13 of the Act made by the authorities below are erroneous and legally unsustainable. The allegations are based on incorrect appreciation of the facts of the case and the position of law. On the basis of those unsustainable allegations the action of the Assessing Officer in assessing the income of the assessee treating it to be a non-charitable is not tenable in law. We find that the ld. CIT (Appeals) has also summarily concluded that the assessee has violated the provisions of section 13 of the Act without judiciously disposing off the specific objections raised by the assessee meeting out the various allegations leveled by the Assessing Officer in the assessment order. In view of these observations, we conclude that the allegations leveled by the authorities below are not tenable and hence their action of denial of exemption on the basis of violation of the provisions laid down under section 13 of the Act is held as not justified

We concur with the contention of the ld. AR that in terms of section 2(24)(iia), voluntary donations received, inter alia, by a charitable trust/institution are by legal fiction treated as income and is thereafter, excluded from total income in accordance with the provisions of sections 11/12 of the Act. Such voluntary contributions are contributions other than for capital purposes i.e. contributions which do not form part of the corpus of the trust, whether or not such trust is eligible or not for exemption. We hold accordingly. In para No. 7.5(k) of the assessment order, the Assessing Officer has alleged that assessee had undertaken various activities outside India which was in violation of provisions of section 11(1)(c) of the Act. We, however, find that the Assessing Officer has not brought anything on record to substantiate the aforesaid allegation nor has he quantified the amount of expenditure incurred in relation to such activities undertaken outside India.

Assessee had furnished affidavits of organisors of ad-hoc committees through whom the assessee had organized Yoga camps made available at page Nos. 503 to 569 of the paper book, but the Assessing Officer did not bother himself to verify the same even on test-check basis. In absence of such efforts by the Assessing Officer, we are of the view that the authorities below were not justified in making and sustaining the treatment of receipt of ₹ 13.68 crores as annonymous donation. Undisputedly, in almost all donations name and address of the donors have been maintained and thus bonafide of the assessee cannot be doubted where such detail has remained to be maintained in some cases. Such donations worth ₹ 1,07,73,438/- has also not been alleged to spent on other than the objects of the assessee trust. We, thus, while setting aside orders of the authorities below in this regard, direct the Assessing Officer to accept the claimed receipt as donation.

We agree with the submission of the assessee that application of income in the form of acquisition of fixed assets and other capital expenditure incurred solely for the purpose of fulfillment of its charitable objectives during the year should be considered as application of income for charitable purposes. Besides, the explanation of the assessee to meet out the small irregularities shown in the books of account maintained by the assessee, which are based on special audit report, cannot be out-rightly ignored especially when it is not the case of the Revenue that the out-come of it was utilized somewhere else rather than on the objects of the assessee - Decided in favor of assessee