9911796707
TMI Blog2013 (10) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... ax (Appeals) erred on facts and in law in failing to appreciate that the Revenue authorities have, in the past years, consistently accepted that the objects of the appellant are in the nature of providing 'medical relief, inter alia, by treating patients through ayurveda, yoga. naturopathy- acupressure, etc. 3.1 That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that propagation of yoga does not qualify as providing "medical relief", on the ground that yoga unlike other medical systems is not a curative system for alleviating diseases, but is only a spiritual system having indirect salutary benefits on the health of an individual. 3.2 That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that yoga as a system falls in the residuary category of 'advancement of any other object of general public utility' contained in section 2(15) of the Act. 3.3 That the Commissioner of Income-tax (Appeals) erred on facts and in law in failing to appreciate that yoga is not only a traditional system of physical exercise and meditation for attaining physical wellbeing or spiritual upliftment, but is a 'recognized syste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income-tax (Appeals) erred on facts and in law in alleging that the appellant's activities are similar to private pharmaceutical companies in the market, who are working on commercial basis and earning profits. 6. That the Commissioner of Income-tax (Appeals) failed to appreciate the distinction between pursuing predominant charitable objectives of providing "medical relief and imparting "education" vis-a-vis carrying on of business incidental to the main objects of the trust referred to in section 11 (4A) of the Act. 6.1 That the Commissioner of Income-tax (Appeals) erred on facts and in law in alleging that the appellant's activities in relation to production and sale of ayurvedic preparations were not incidental to its main objective as the same are commercial in nature. 7. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that the appellant was not engaged in pursuing the objective of imparting education. 7.1 I That the Commissioner of Income-tax (Appeals) failed to appreciate that the appellant imparted yoga education and applied substantial amounts in setting up of ayurved college, which commenced operations w.e.f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w in not appreciating that in case the appellant was held to be non-charitable, then the donations received amounting to Rs. 3,99,14,400/- represented capital receipt, not liable to tax under the provisions of the Act. 14. Without prejudice, that the, Commissioner of Income-tax (Appeals) erred on facts and in law in not appreciating that in case the appellant was held to be non-charitable, then the appellant should have been allowed, deprecation on assets in accordance with the provisions of the Act. 15. That the Commissioner of Income-tax (Appeals) erred on facts and in law in confirming charging of interest under section 234A of the Act. 16. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not directing the assessing officer to delete interest charged under sections 234B, 234D and 244A of the Act " 2. We have heard and considered the arguments advanced by the parties, perused the orders of authorities below, material available on record and the decisions relied upon. 3. The brief facts of the case are that the appellant is a public charitable trust registered vide deed dated 05.01.1995. It is also registered u/s 12A of the I. T. Act, 1961 vide or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om primary set up in Haridwar, over 2,39,000 patients were treated during the relevant year, the hospital also has its presence in Ranchi & Patna where more than 60,000 and 75,000 patients respectively are treated every year. (ii) Patanjali Bhartiya Ayurvigyan Avam Anusandhan Sansthan: Ayurvedic College has been set up, which was under construction in the year under consideration and has since started operations w.e.f. 20.07.2009, for imparting education in the field of Ayurved. (iii) R&D Yoga and Ayurved: Engaged in continued research and development in the field of Yoga and Ayurved to further the cause of alleviating all kinds of diseases and provide medical relief. The R&D of the appellant trust is duly recognized by the Scientific and Industrial Research Organization (SIRO). In this regard, the Ld. A.R. referred to page 197-198 of the paper book. (iv) Patanjali Chikitsalaya's: Apart from the above, the appellant trust has also set up Patanjali Chikitslaya's all across the country for providing free medical consultations to patients suffering from various diseases. More than 1,000 vedyas are giving free consultation to over 50,000 patients of curable and incurable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. Applying the aforesaid proviso, the authorities below held the appellant's transaction to be in the nature of business and commerce, similar to private players in the market and denied exemption amounting to Rs. 103,32,76,024/- u/s 11/12 of the Act. He pointed out that the appellant, since its inception, in the year 1995, has been engaged in the activities of providing medical relief through Ayurved, Naturopathy, Yoga, Acupressure which has been consistently accepted by the revenue authorities in the assessment years 2004-05 to 2008-09 vide various assessments completed u/s 143(3) of the Act. In support, he referred to pages 207-244 of the paper book i.e. copies of these assessment orders for asstt. years 2004-05 to 2008-09. In all these assessment orders, the A.O. has consistently held that he appellant was engaged in providing medical relief, contended the Ld. A.R. Ld. A.R. pointed out further that in the assessment years 2004-05 to 2008-09, the A.O. has allowed exemption u/s 11/12 of the Act but the addition/disallowances were made (primarily relatable to compute the income of the business undertaking) while computing the taxable income. On appeal, the first appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ", that too, if such trust/institution carry out commercial activity in nature of business, trade or commerce. Thus, the aforesaid proviso does not apply to a trust/institution engaged in the charitable objects of providing relief to the poor, imparting education and providing medical relief, contended the Ld. A.R. 4.5 The Ld. A.R. submitted that the vision with which the appellant trust has been set up and which is being followed over the years are as under: To make a disease free world through a scientific approach to Yoga and Ayurved and to fulfill the resolution of making a new world free from disease and medicine; To establish 'xpran' as medicine for the treatment of all curable and incurable diseases by research of Pranayam/Yoga; To propagate Pranayam as a 'free' medicine for treatment of diseases round the globe, through in-depth research in accordance 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, Homeopathy, Uani and Acupr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e therapy in the US during 2007, with 6.1 percent of the population participating. The said study also sates that Yoga has been used as supplementary therapy for diverse conditions such as cancer, diabetes, asthma and AIDS and the scope of medical issues where yoga is used as a complementary therapy continues to grow. In support he referred pages 193-196 of the paper book, i.e. copy of relevant extract of the survey conducted in December 2008 by the US National Center for Complimentary and alternative medicines (NCCAM) which is also recognized. Ld. A.R. pointed out further that the Standing Committee of Human Resource Department (HRD) Ministry has recommended that Yoga be made compulsory for all school going children in the country. The said report further provides that yoga is one of the core components of Health and Physical Education. In support he referred page 181 of the paper book. Ld. A.R. pointed out that recently in Sep 2012, the Harward University of USA came forward to introduce Yoga and Ayurveda in their university in collaboration with Swami Ramdevji in the wake of dreadful diseases being cured by Samiji's Pranayam and his Ayurved medicines. In this regard he refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... They are :- Yama, Niyama, Asana, Pranayama, Pratyahara, Dharana, Dhyana 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." 4.9 The Ld. A.R. referred other informations downloaded from the aforesaid website, placed at pages 639 to 659 of the paper book, and submitted that these make it patently clear that 'Yoga' is one of the recognized system/method of providing medical relief. Yoga thus, as a system of medicine, has been successful in curing various dreadful diseases and providing relief to the sufferings of people. Thus, it undoubtedly qualifies as a form of medical relief as provided in section 2(15) of the Act. 4.10. Ld. A.R. submitted that the allegation of the A.O. at para 4.6 of the assessment order that the appellant has received substantial amount from organizing yoga shivirs/camps in the assessment year under consideration, is factually incorrect and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bom.) by the CIT(A) is misplaced as the said decision was rendered prior to introduction of. the proviso to Section 2(15), when there was no dispute insofar as classification of charitable objective was covered for the purpose of claiming exemption, u/s 11/12 of the Act. This decision was rendered in the context of classifying "meditation" as a charitable objective for the purpose of Section 2(15) of the Act. The Hon'ble High Court in the given case has adjudicated only on the issue of classification of "meditation" and '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. The Ld. A.R. submitted that it is pertinent to note that the Hon'ble Court in the aforesaid decision has observed that 'not only in India, medication and yoga are being accepted in the western countries also as a great source for physical and mental health' meaning thereby that yoga is a source for medical relief, as is in the case of the assessee. He pointed out that the M P Government has introduced vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder to provide medical relief to people who cannot afford modern medical method or have been subjected to ill effects of modern medicine. Such Yoga education was given in the shivirs/camps by Yoga Gurus (i.e. yoga teachers). Thus, imparting of yoga training through well structured yoga shivirs/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. 4.14 In support of ground No.5 that the actual medical relief not . judiciously considered, the Ld. A.R. submitted that the appellant has been providing medical relief to millions of people all across the country through Patanjali Hospital and Patanjali Chikitsalayas. He referred page 59 of the paper book to support his contention that on perusal of Schedule 31 of the income and expenditure account of the appellant being the net expenditure on development of medical science and facilities (DOMSF) in Patanjali Hospital, it will be apparent that the appellant's expenditure on providing medical reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... j.) (iv) Ananda Marga Pracharaka Sangha v. CIT 218 ITR 254 (Cal.) (v) ITO v. Mrs. Dwarika Prasad Trust 30 ITD 84 TM (Del.) (vi) ITO v. Trilok Tirath Vidyavati Chutani Charitable Trust 90 ITD 569 (Chd.) (vii) Gaur Brahmin Vidya Pracharini Sabha v. CIT 34 SOT 371 (del.) 4.16 The Ld. A.R. submitted that section 11 of the Act, provides exemption form tax for income derived from property held under trust for charitable or religious purposes. Section 11(4) lays down that "property held under trust" for the purpose of section 11 of the Act may include the business undertaking held by the trust. This section deals with cases where the business itself is still in trust for a charitable purpose. He submitted that sub-section (4A) of section 11 also exempts the income of a business carried on by the trust as long as the business carried on by it is; (a) incidental to the attainment of main objects; (b) feeds the charitable objects and (c) separate books of accounts are maintained in respect of the same, even on fulfilment of the aforesaid conditions, profit form such businesses are exempt under sections 11/12 of the Act. 4.17 Ld. A.R. submitted that in the case of the appellant, the act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT 125 ITR 55 (Raj.) etc.... 4.18 The Ld. A.R. contended that there is no bar in'the charitable trust/institution carrying on business, provided the conditions prescribed in the conditions prescribed in Section 11(4)/11(4A) of the Act are satisfied. The Hon'ble Supreme Court in the case of CIT v. P. Krishna Warriers 53 ITR 176 (SC), has been pleased to hold that where business is held in trust for charitable purposes, the condition prescribed in proviso (b) to section 4(3)(i) of 1922 Act is not applicable and the assessee was held to be eligible for exemption. The Ld. A.R, also placed reliance on the decision of Hon'ble Supreme Court in the case of DCIT v. Thathi Trust 247 ITR 785 (S.C.) and on Hon'ble Delhi High Court in the case of Hamdard Dawakhana (Wakf) 157 ITSR 639 (Del.)- The Ld. A.R. submitted that in furtherance of the charitable objective to provide medical relief through yoga and Ayurved, the need was felt to provide Ayurvedic medicines to the patients to attain optimum medical results as results of ayurvedic treatment are largely dependent upon the quality of medicines prepared. Hence, a small scale manufacturing unit of ayurvedic medicines was estab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate that medicines of Rs. 41,26,217/- were purchased by various departments of the hospital; run by the appellant. In support he referred contents of page 13 of the-first appellate order. Ld. A.R. submitted further that the assessee had applied substantial amount in setting up ayurvedic college in the name of Patanjali Bhartiya Ayurvigyan Avam Anusandhan Sansthan, which commenced operations w.e.f. 20.07.2009. The said college is affiliated with Uttarakhand Technical University and runs BAMS course. Highly qualified and experienced faculties have been appointed to provide quality education to the students. 4.21 In support of ground No.7 regarding inter-trusts donations, the Ld. A.R. submitted that the authorities below have wrongly held that the inter trust donations amounting to Rs. 38.35 crores made to Patanjali Yogpeeth, another charitable trust for the purpose of setting up of yoga gram and other yoga related activities, did not amount to application of income for the purpose of 'medical 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 tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication u/s 154 of the Act for rectification filed before the A.O. in this regard has now been disposed off vide order dated 03.06.2013 whereby he has rectified the assessment order and allowed deduction of revenue expenditure aggregating to Rs. 52,26,81,441/-. A copy of this order has been filed, thus the grounds No.9 & 10 have become infructuous and are rejected as such. 4.24 Ground No. 11 of the appeal is against the disallowance made u/s 40(a)(ia) read with section 194C of the Act. Ld. A.R. pointed out that apart from denial, of exemption u/s 11/12 of the Act, the A.O. has further disallowed a sum of Rs. 17,27,88,778/- on account of non-deduction of tax at source u/s 40(a)(ia) read with Section 194C of the Act. He submitted that the assessee had during the year made payment to various suppliers against the purchase of material like packing material, CD, VCD, magazines and books. Since the said transactions between the assessee and the suppliers did not involve any contractual relationship; and no raw materials were supplied by the appellant for undertaking any job work, the same constituted a 'contract of sale', not falling within the ambit of section 194C of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... works contract of contract for sale is whether title to the goods passes to the purchaser in time anterior to the manufacture and delivery of goods to the purchaser. If the answer to the aforesaid query is in the negative then, the contract is one of sale, where the vendor manufactures goods in his own right, as principal, and not as job worker. In support he placed reliance on the following decisions: (i) CIT v. Silver Oak Laboratories P. Ltd. SLP No. 18012/2009 (ii) CIT v. Dabur India Ltd. 283 ITR 297 (Del.) (iii) CIT v. Reebok India Co. 306 ITR 124 (Del.) (iv) CIT v. Glenmark Pharmaceuticals Ltd. 324 ITR 199 (Bom.) 4.26 The Ld. A.R. submitted further that section 194C amended by the Finance (2) Act of 2009 w.e.f. 01.10.2009 whereby the difference of 'work' was enlarged to include contract for manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased form such customer. The said amendment also provided that contract for carrying out work shall not include contract for manufacturing or supplying of product according to the requirement or specification of customer by using material purchased form a per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 113 ITR 570 (Mad) (iii) CIT v. Kotak Securities Ltd. 340 ITR 333 (Bom) 5. The contention of the Ld. CIT, D.R. who has basically placed reliance on the orders of authorities below, on the contrary remained that the very objectives are in the nature of general activities as 7 out of 15 objectives in the trust deed are devoted to yoga. vedic dharma. marina-cow sheds, etc. These objectives have been mentioned at page 7 of the assessment order. These are imparting practical training on various asanas as practiced by Rishies and Munies to receive calm state of mind and extreme happiness, construct buildings for yoga and meditation, organize yoga camps to propagate yoga training and vedic dharma, research on yoga, ayurveda and vedic literature, preparation and sale of medicines, arrangement of study of Veda, Geeta, Upnishads, prepare for uprooting zealousness, hate, evil etc., establish and run stables for cows and carry on agnihotras and yagnyas. She has also pointed out that a newly added clause in the objectives is related to the field of energy, air and water. Ld. CIT DR submitted that all these are objectives of general public utility and not to provide medical relief. She submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of charity is confined to India only due to legal restriction, the assessee is having a brisk sale of its products in India as well as abroad, explain the real intention of objectives of the assessee. Ld. CIT DR referred the contents of pages 106 and 107 of the paper book filed on behalf of the assessee. These are balance sheets of Divya Pharmacy as on 31.03.2009 with accounting policy and notes to the accounts. She submitted that the details of business ventures have been provided at pages 68 p 108 of the paper book i.e. copies of annual audited accounts for the financial year, return of income., computation for the financial year and tax audit report for the assessment year 2009-10. 5.2 Ld. CIT DR submitted that application of income on charitable objectives is minimal which is observed from the contents of pages 4 to 7 of the assessment order and those of pages 19 to 21 of the first appellate order as well as the remand report's pages 4 and 5. She pointed out that even the donation to the other trust is actually a conduct for transfer of its funds to its sister concern i.e. Patanjali Yogpeet trust. It is not donation to other concern but retention of funds within its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the appellate proceedings, the appellant could not produce the record and has admitted that the doctors prescribe the medicines manufactured by the assessee trust which are said to be of superior quality at cheaper rates. Ld. CIT DR submitted further that there is violation of the trust deed by the appellant trust. The trust received the amount of Rs. 132.50 lacs from foreign membership and Rs. 98.88 lacs from membership donations and Rs. 52 lacs through money orders which are not permitted by the trust deed. One Doctor Kuldeep Singh stated that he prescribes allopathic treatment to the patients. This is also not in accordance with the trust's objectives. In support, she referred page 22 of the paper book filed on behalf of the department i.e. the recorded statements of the said doctor. 5.4 Ld. CIT DR submitted that the alternative claim of education in yoga college does not pertain to this assessment year as the college was not constructed. The certificate from SIRO shown at this stage enclosed in the assessee's paper book was never produced before the authorities below to verify the correctness of the claim for exemption or deduction as confirmed by the A.O. More ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e objectivity of the appellant were in the nature of 'object of general public utility' as contained in the definition of charitable purpose u/s 2(15) of the Act? (c) As to whether Yoga as a system, falls in the residuary category of 'advancement of any other objects of the general public utility' contained in Section 2(15) of the Act?. (d) As to whether the donation of Rs. 38.356 crores made to Patanjali Yogpeeth for the purpose of setting up of Yoga Bhawan and other expenditure incurred for acquisition of capital assets as application of income for classified purposes. 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 educat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This is medical relief. Yoga in this case is used by the assessee in addition to medical 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed hospitals and has also set up an ayurvedic medical college (Patanjali 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 v. CIT (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culum Framework in School Education - 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 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raining 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "medical relief". The issue raised before 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 we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally placed 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 throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age 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' has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the appellant are as under :- A. "The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectives 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 v. ACIT (supra) before the Hon'ble Supreme Court, the main objects of the assessee trust were education, medical relief and relief to the poor. One of the objects contemplated the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder 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. Patanjali Yogpeeth Trust with the intention of retaining funds within its own control. It was alleged by her that the appellant was charging exhorbitant rates for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission 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 the appellant. Ld. AR submitted further that an amount of Rs. 2 .2 crores approximately has been charged from the patients who have been treated in the hospital run by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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 any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity; ..................." (emphasis supplied) Therefore, the aforesaid p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose 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 empowers the appellant trust to accept voluntary donations. Thus there was no bar on the appellant to receive voluntary donations in the form of membership fees and thus the objection raised by tjhe department does not survive. The Ld. AR submitted further that the predominant objective of the appellant trust is to provide medical rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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.gov.in/direct/siro06.pdf. Thus the certificate does not constitute additional evidence. It was submitted further that the R & D activities undertaken by the appellant was only ancillary and incidental to the predominant objective of providing medical relief being pursued by the appellant. Hence does not fall to the objects of general public utility as define ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce these are not helpful to the revenue. In the case of Samajbadi Society v. ACIT 79 ITD 112 (Cutt) 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 v. CIT 101 ITR 234 (SC) 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 v. CIT 46 SOT 125 (Chennai) assessee engaged in the singular activity of manufacturing and trading in ophthalimic and cardiovascular products and accessories, had not taken any charitable activity as provided in the trust deed. Even the sale price of the products sold by the assessee was higher than those available in the market. Taking into account these aspects the Tribunal held that since there was no elem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein the scheme of that Act is completely different from the applicable provisions of the Income Tax Act. In the case of CIT v. Jodhpur CAs Society 258 ITR 548 (Raj.) 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 permitted u/s 11(4)/11(4A) of the Act. 6.7.7 Considering the submission of trie parties on these issues we are of the view that it is a trite law that once registration u/s 12A of the Act has been granted by Ld. CIT, the AO could not question the charitable character of the institution during the course of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (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 the Act. Thus it is clear that the charitable trust can carry on business and utilize its profits therefrom for the charitable purposes but a charitable trust cannot have its purpose, an activity that involves the buying and selling of goods and making profits. The business undertaking of the appellant as discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down by the Supreme Court in the case of CIT v. Andhra Pradesh State Road Transport Corporation 159 ITR 1 (SC), Victoria Technical Institute v. CIT 188 ITR 57 (SC), Thiagarajar Charities v. ACIT 225 ITR 1010 (SC), Aditanar Educational Institution v. ACIT 224 ITR 310 (SC), CIT v. Bar Council of Maharashtra 130 ITR 28(SC), American Hotel Lodging Association Educaiton Institute v. CBDT 301 ITR 86 (SC), CIT v. Delhi Kannada Education Society 246 ITR 731 (Delhi), CIT v. Samaj Kalyan Parishad v. ITO 291 ITR (AT) 1 (Delhi)(SB) etc. 6.7.9 Thus we find that there is no bar in the charitable trust/institutioncarrying 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 CIT v. P. Krishna Warriers 53 ITR 176 (SC) 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 the trust, the conditions prescribed in section 4(3)(i) and fulfilled and the income is exempt from taxation. In that case before the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 v. ITO (supra) the objects of the assessee registered u/s 12A was inter alia propogation 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 officer mainly on the basis that the dominant object of the trust was to sell medicines and derive profi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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