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TMI Blog2017 (2) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... es undertaken by the appellant did not fall within the purview of 'medical relief', 'imparting education' or 'relief to the poor', but were purely in the nature of object of general public utility under section 2(15) of the Act. 4. That the Commissioner of Income-tax (Appeals) erred on facts and in law in failing to appreciate that the Revenue authorities had, in the past years consistently accepted the activities of the appellant as being in the nature of medical relief, education and relief to the poor. 5. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that the appellant's activities in relation to 'propagation of yoga' does not qualify as providing 'medical relief' or 'imparting education', but was purely in the nature of object of general public utility under section 2(15) of the Act. 6. That the Commissioner of Income-tax (Appeals) erred on facts and in law in relying upon erroneous findings given in the special audit report furnished under section 142(2A) of the Act, without judiciously appreciating the details/ explanation furnished by the appellant. 7. That the Commissioner of Income-tax (Appeals) erred on facts and in law in summaril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeth-II) Rs. 38,35,00,000 (b) Donations in relation to Disaster Relief Fund Rs. 4,36,23,766 (b) Donations in University of Patanjali Rs. 61,000 Total Rs. 42,71,84,766 10. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that the voluntary contribution received by the appellant, including donations received through Yoga Camps and Yoga Samitis were not eligible for exemption under sections 11/12 of the Act. 11. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that the appellant received anonymous donations aggregating to Rs. 13,68,99,745 covered under section 115-BBC of the Act. 12. That the Commissioner of Income-tax (Appeals) erred on facts and in law in upholding the addition of Rs. 6,52,493, being the value of Tata Sumo (vehicle) received as donation by the appellant. 13. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that construction of building on land not owned/ registered in the name of the appellant could not be regarded as application of income for charitable purposes. 14. That the Commissioner of Income-tax (Appeals) erred on facts and in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out that issues raised in the grounds of the present appeal are almost covered by the decision of Delhi Bench of the Tribunal in the case of Divya Yog Mandir Trust Vs. JCIT in ITA. No. 387/Del./2013. 5. Ground Nos. 1 to 6 : These grounds are on the issue of non-applicability of proviso to section 2(15) of the Act. 6. In support of the above grounds the ld. AR submitted that the predominant object of the assessee are to provide medical relief through Prayanam and Yoga and also to impart education in the field of yoga. He referred page Nos. 1 to 14 of the paper book i.e. copy of the trust deed dated 2.02.2005 wherein objects of the trust have been reduced in black and white to support his argument that the assessee was set up as a charitable trust with the following predominant objectives, which have been carried out over the years : (a) providing medical relief through Yoga/Prayanam; (b) imparting education in the field of Yoga; & (c ) providing relief to the poor. On the basis of these objects the assessee was granted registration under section 12A of the Act and was also approved under section 80G(5)(vi) of the Act, which the assessee was enjoying during the year und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons were also made by the assessee, in the assessment year under consideration. Further, to pursue the object of providing relief to the poor, the assessee undertook various relief activities, for assisting victims of the Bihar flood and Mumbai terrorist attacks in the assessment year under consideration. To sum up, the assessee was carrying out genuine charitable activities during the assessment year under consideration in the fields of medical relief, education and relief of the poor. Findings of the assessing officer/ CIT(A): The assessing officer/CIT(A), while accepting that the objects/activities of the assessee trust as being charitable in nature, in the same breadth held that it fell under the sixth limb of the definition of charitable purpose given under section 2(15) of the Act, i.e. 'advancement of any other object of general public utility' and was covered within the mischief of proviso to that section. Applying the aforesaid proviso, the assessing officer/CIT(A) held the assessee's transactions to be in the nature of business or commerce, similar to private players in the market. The primary contentions of the assessing officer/CIT(A) in denying exemption claimed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then, irrespective of the nature of use or application of income, the assessee shall not be regarded as existing for charitable purpose. Similarly, if any of the objects of an assessee involve carrying on of activity of rendering service in relation to trade, commerce or business for consideration then, too, the assessee shall cease to be regarded as carrying on any activity for charitable purpose. It is, however, pertinent to mention that proviso to section 2(15) of the Act applies only to trusts/ institution falling in the last limb of the definition of 'charitable purpose', that too, if such trust/ institution carry on commercial activities in the nature of business, trade or commerce. The legislative intent behind introduction of the aforesaid proviso in the definition of "charitable purpose" in section 2(15) of the Act can be gathered from the Central Board of Direct Taxes (CBDT) Circular No. 11 dated 19th December, 2008 reported in 221 CTR (St) 1, wherein the CBDT has elaborated on the scope of the said amendment, in the following words: "3.The newly amended section 2(15) will apply only to the entities whose purpose is 'advancement of any other object of general public u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hasis supplied) It would, thus, kindly be appreciated that the aforesaid proviso does not apply to a trust/ institution engaged in the charitable object of providing relief to the poor, imparting education and providing medical relief. It may also be pertinent to mention here that the vision with which the assessee trust has been set up and which is being followed over the years are as under: a) 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; b) To establish Pran as medicine for the treatment of all curable and incurable diseases by research on Pranayam / Yoga; c) 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; d) To form a new integrated system of treatment, consisting mainly of the techniques of Yoga and Ayurveda, for Surgery and Emergency cases, Allopathy, Homeopathy, Unani and Acupressure to soothe patients suffering from unbearable pains and rid them of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The primary object and the core activity of the assessee trust is to provide training in Yog so as to make the society and the world free from all diseased and preserve ancient knowledge about Yog, Ayurved etc. The various objects stated in para 2.2 (supra) can only be brought under the ambit of the sixth limb of the definition of charitable purpose as defined under Section 2(15) of the Act, i.e. advancement of any other object of general public utility." On perusal of the aforesaid, it will kindly be noticed that findings of assessing officer are contrary inasmuch as assessing officer having accepted that the assessee was regularly organizing yoga camps to provide medical relief and also setting up the university for imparting education, still concluded that the objects of the assessee fall in the last limb. By organizing yoga camps, the assessee, as explained supra, achieves the twin objective of providing medical relief and also imparting yoga education, which are "charitable purpose" as defined in section 2(15) of the Act. The assessing officer has, it is submitted, failed to specify how the objectives of the assessee falls in the last limb of definition of "charitable purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, given a categorical finding that the primary object of the assessee was to make the society and the world 'free from diseases'. The relevant extracts of the said observation is re-produced as under: "The primary object and the core activity of the assessee trust is to provide training in Yog so as to make the society and the world free from all diseases and preserve ancient knowledge about Yog, Ayurved etc. The various objects stated in para 2.2 (supra) can only be brought under the ambit of the sixth limb of the definition of charitable purpose as defined under Section 2(15) of the Act, i.e. advancement of any other object of general public utility" (emphasis supplied) Thus, when the predominant object of the assessee is to provide 'medical relief' by way of alleviating diseases through yog, which has also been consciously admitted by the assessing officer in more than one instance, a conclusion drawn, contrary to the admitted facts is, it is submitted, not justifiable and bad in law. On highlighting the aforesaid inconsistencies in the findings recorded by the assessing officer before the first appellate authority, the CIT(A), vide letter dated 28.02.2013 directed the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere be any material change in facts. The relevant observations at page 329 of the judgment are reproduced as under: "We are aware of the fact that, strictly speaking, res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year."(emphasis supplied) In the case of DIT (Exemptions) vs. Guru Nanak Vidya Bhandar Trust: 272 ITR 379, the Hon'ble Delhi High Court held that the department 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 and such objects when found permissible for exemption in the past, notwithstanding the fact that it has manifold objects some of which are vulnerable. Further in the case of CIT vs. Shri Agastyar Trust: 149 ITR 609, the Madras Court held that it is well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under sections 11/12 of the Act, which would, it is submitted, strictly apply even in the case of the assessee. Thus, even if it were to be held that the principle of consistency does not have general application, it would still have application in case of charitable trusts claiming exemption under sections 11/12 of the Act. It will also kindly be appreciated that the principle of consistently has been applied in various subsequent decisions referred supra, including jurisdictional Delhi High Court, which, too, are independently binding on the lower authorities. The CIT(A) totally misconstrued the aforesaid observation of the Supreme Court. In this regard, it is further respectfully submitted that it is trite law that once registration under section 12A of the Act has been granted by CIT, the assessing officer cannot question the charitable character of the institution during the course of assessment proceedings. It is not open to the assessing officer, in the assessment proceedings, to hold that the objects of the assessee are not charitable in nature. Reference, in this regard may be made to the following decisions: * ACIT V. Surat City Gymkhana: 300 ITR 214 (SC) (Refer pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay also be mentioned here that there are various publications which clearly highlight yoga as a means to cure several ailments/ diseases, including but not limited to the following: a) Yog for Cancer b) Yog for Migraine & Epilepsy c) Yog for Renal Diseases d) Yog for Psoriasis (Skin Diseases) e) Yog for Musculoskeletal Disorders f) Yog for Constipation and Piles g) Yog for Asthma h) Yog for Parkinsons & Paralysis Further, it is imperative to mention here that Yoga is now a 'recognized system of medicine', which is now well established by the legislation of the Clinical Establishments (Registration and Regulation) Act, 2010 (Bill was introduced in the year 2007 and legislated in the year 2010). (refer pages 132 to 138 of the paperbook). The aforesaid Act, it is pertinent to mention here has been enacted by the Central Government to provide for registration and regulation of all clinical establishments in the country with a view to prescribing the minimum standards of facilities and services provided by them. Section 2(h) of the said Act defines "recognized system of medicine" to include Yoga. The relevant extract of the said section is reproduced hereunder: "recognized s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atently clear that Yoga is one of the recognized system/ method of providing medical relief. (Refer pages 139 to 196 of the paperbook) It may further be pertinent to note that the US National Center for Complementary and Alternative Medicine (NCCAM) has recognized yoga as a Complementary and Alternative Medicine (CAM) to prevent and treat diseases. NCCAM defines CAM as a group of diverse medical and health care systems, practices, and products that are not generally considered part of conventional medicine (also called Western or allopathic medicine). A survey released in December 2008 by NCCAM found that yoga was the sixth most commonly used alternative therapy in the United States during 2007, with 6.1 percent of the population participating. The said study also states 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. (Refer pages 197 to 200 of the paperbook) It may also be pertinent to mention here that the Standing Committee of Human Resource Department (HRD) Ministry has recommended that Yoga be made compulsory fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly misplaced in placing reliance on the aforesaid judgment, which was rendered in 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 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 pertinent finding of the Court in this regard is reproduced hereunder: "Admittedly, main thrust of the respondent is on meditation and nobody can dispute that in India meditation has been very important source for physical, mental and spiritual wellbeing of the human beings. Cognizance has to be taken that the meditation and Yoga are becoming more and more popular among the Indians who are now becoming conscious about their physical, mental and spiritual health. Not only in India, meditation and Yoga are being accepted in the Western Countries also as a great source for physical and mental health and spiritual attainment. When a large number of people feel that me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o one of those objects. The communication sent by the Sole Trustee to the Income-tax Officer shows that the trust at present is carrying out only the last mentioned object of the trust, namely, supplying the Kannada speaking people with an organ or organs of educated public opinion. The concentration so far of the activities of the trust only on that object is in pursuance of clause 6 of the trust deed, according to which the original trustee shall have power and authority to spend and utilise the money and the property of the trust for any of the purposes of the trust in such manner as to him may appear proper. The sense in which the word "education" has been used in section 2(15) is the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. The word "education" has not been used in that wide and extended sense, according to which every acquisition of further knowledge constitutes education. According to this wide and extended sense, travelling is education, because as a result of travelling you acquire fresh knowledge. Likewise, if you read new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... system of transcendental meditation (TM) to people in all walks of life. In the relevant assessment year, the assessee had claimed deduction under section 10(22) of the Act. The assessing officer held that the assessee was neither a university nor other educational institution recognized by a University or any State or Central Government. It was further observed that the assessee charged fee for education and received donations from the donees (course participants) for incurring expenses though the assessee had claimed that donations were made towards corpus. Thus, the assessing officer disallowed the assessee's claim for exemption. On appeal, the Commissioner (Appeals) allowed the assessee's claim. On further appeal by the Revenue before the Tribunal, it was held that, irrespective of the fact that the assessee was not an educational institute recognized by any University/State Government/Central Government, since the assessee had its own prescribed syllabus, trained teachers, branches all over India to spread system of 'transcendental deep meditation' among people in all walks of life, the same constituted imparting of 'education' and the assessee was entitled to exemption under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also clear from the balance sheet and income and expenditure account. It was clear that the assessee-foundation duly established the requirements under section 10(22) and qualified for the grant of exemption under section 10(22). The order of the Commissioner (Appeals) was, therefore, justified." (emphasis supplied) Further, according to Halsbury's Laws of England (4th Edition, Volume 5, paragraph 522) the advancement and propagation of education and learning generally are charitable purposes, even in the absence of an element of poverty in the class of beneficiaries, but the trust must be for the benefit of a sufficient section of the community. Halsbury goes on to say further in paragraph 524 that the promotion of education in particular subjects, such as art, artistic taste, the appreciation of fine arts, music, commercial education, training for industrial employment, the art and science of Government, economic and sanitary science or psychological healing is charitable. In the case of the assessee, the predominant objects of the trust are to provide practical and theoretical training in the field of yoga, which would ultimately provide medical relief to the society at l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /shivirs, it is further submitted, reaches audiences all over the nation who get the benefit of yog teaching 'free of cost'. The parallel drawn by the CIT(A) between ticket for availing certain facilities and donation coupon is, thus, it is submitted, fallacious. It may also not be out of place to mention that the assessee has also applied substantial amounts in setting up of 'Patanjali University', a deemed university set up under The University of Patanjali Act, 2006, inter alia, for having courses in MA (Yoga Science), MSC (Yoga Science), BA (Yoga Science), Post Graduate Diploma in Panchkarma, Post Graduate Diploma in Yoga Science and Post Graduate Diploma in Yoga Health and Cultural Tourism. The University became operational on September, 2009. In this regard, it is further respectfully submitted that the reliance placed by the CIT(A) on the decision of the Chennai bench of the Tribunal in the case of Raja Sir Annalai Chetiar Foundation vs. DIT(E): ITA No. 1817/Mds/2010 [Refer pages 1175 to 1177 of the case law paper book] is highly misplaced and distinguishable on facts, as in the said case the assessee was denied registration under section 12AA of the Act on the ground tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer has nowhere in the impugned assessment order, highlighted any other instance/activity which goes to prove that the activities undertaken by the assessee were commercial in nature. Further, even the "Vanprasth Ashram" scheme undertaken by the assessee could not have been held to be a commercial activity for the reasons provided hereunder: No actual service/facility provided It is, at the outset, respectfully submitted, that the assessee had, in the assessment year under consideration, not undertaken any activities in relation to the construction of cottages nor provided any kind of service/facility under the "Vanprasth Ashram Scheme". The construction of cottages under the said scheme commenced only in assessment year 2010-11 and the cottages were inaugurated on 04.04.2011 i.e. in assessment year 2012-13. (Copy of inaugural invitation enclosed at pages 279 to 282 of the paperbook). Further, the assessee has, in the assessment year under consideration, not incurred any cost on the construction of such cottages. Thus, the assessee fails to appreciate how any services could possibly have been rendered to the contributors or any business/commercial activity undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... virs/camps for longer duration. In view of the aforesaid, in order to provide accommodation facility to persons who come to attend yoga shivirs/camps from far off places, the assessee proposed to construct cottages under the aforesaid "Vanprasth Ashram Scheme". The aforesaid cottages, it is respectfully submitted, was proposed to be constructed with a view to provide a unique, peaceful and homely atmosphere to the attendees, who come to attend yoga shivirs/ camps, for staying back at the Ashram itself. Further, it is also pertinent to note that constructed cottages at the "Vanaprasth Ashram" were to be allowed to be used only by attendees, i.e. people who participate in the yog shivirs/camps and were not for outsiders, i.e. tourists, etc. This in itself proves that the intention of the assessee for building the cottages at "Vanaprasth Ashram" was to propagate yoga and encourage people to participate in the yog shivirs/camps by providing lodging facilities and was not to exploit the cottages for the purpose of earning profits. If such was the case, then the assessee would not have placed restrictions on the usage of cottages by attendees only. In this regard, it is emphatically s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that out of 340 cottages only around 109 cottages have been allotted till date to donors/contributors, which constitutes only a minuscule portion i.e. around 30% and all the remaining cottages have been utilized by the trust for providing accommodation to the general public. Further, the keys to the cottages which have been allotted, remain in the custody of the trust only and these cottages are allowed to be used by the general public, when the same are vacant and not occupied by the donors. The status of allotment of cottages under the "Vanprasth Ashram Scheme" as on date is provided as under for your goodself's kind consideration: Particulars Total no. of cottages Number of Cottages constructed 340 Cottages Allotted to Donors (only during their lifetime) 109 Cottages allotted to volunteers/vanaprasthi's who are serving the trust (no contribution made) 4 Total Allotted Cottages 113 Total UnallottedCottages (Provided to general public for temporary lodging/stay) 227 On perusal of the above table, it is evident that majority of the cottages under the said scheme have been utilized by the general public, i.e. non-contributors who use the cottages for tempor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is essential requisite for conducting business. Following the above decision, the Special Bench of the Tribunal, in the case of BJP vs. DCIT : 258 ITR 1 (Del.) (AT), has held that an activity to be treated as 'business' should have a semblance of trade, an attribute of commercial activity and an expectation to earn income over a reasonable period. The Tribunal further held that the expressions 'trade' and 'commerce' are narrower in scope than the expression 'business'. The expressions 'trade' or 'commerce' signify economic/commercial activity with the motive of earning profit. The term "trade" has not been defined in the Act. Some of the dictionary meanings of 'trade' are as under: - As per Webster's New Twentieth Century Dictionary, (Second edition), is, amongst others, "A means of earning one's living, occupation or work". - In Black's Law Dictionary "trade" has been defined to mean a business which a person has learnt or he carried on for procuring subsistence or profit; occupation or employment, etc. - In Halsbury's Laws of England, third edition vol. 38 p. 8, the word `trade' is defined as (a) exchange of goods for goods or goods for money, (b) any business ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmark case of ACIT vs. Surat Art Silk Cloth Manufacturers Association: 121 ITR 1, wherein it was observed that where an activity was not pervaded by profit motive but was carried on primarily for serving the dominant charitable purposes, it would not be correct to describe it as an activity for profit. But where an activity was carried on with the predominant object of earning profit, it would be an activity for profits, though it may be carried on in the advancement of the charitable purpose of the Trust or the institution. In this regard, it is respectfully submitted that, it has been held in a plethora of cases that any transaction/activity which is incidental or ancillary towards fulfillment of object of other general public utility will not normally amount to business, trade or commerce, unless there is some intention to carry on business, trade or commerce on a permanent basis or with a reasonable continuity. Reliance in this regard is placed on the following decisions: - PHD Chamber of Commerce and Industry vs. DIT(E): 357 ITR 296 (Del HC) - Bureau of Indian Standard vs. DGIT(E) : 27 taxmann.com 127 (Del HC) (Refer page 1126 to 1132 of caselaw paperbook) - Institute of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de, commerce or business' undoubtedly mean that the proviso will hit only such cases where a charitable institution is carrying on business activities with a profit motive in the garb of charitable purpose. It will not, however, effect the cases of charitable institutions, which are genuinely carrying on the charitable activities. Accordingly, the proviso cannot be applied blindly to all cases where a charitable institution is recovering any money for rendering services. It has been correctly observed in the aforesaid cases that a charitable institution can carry on charitable activity with the donations received by it as well as with the help of the receipts from rendering services. Charging of fee to meet a part of the cost for rendering charitable services cannot make the services as business activities and, accordingly, the institution will continue to be as a charitable institution and it cannot be effected by the proviso to section 2(15) of the Act. It may also be pertinent to note that the assessing officer has not been able to demonstrate even a single instance of the assessee having earned any profit or of having undertaken any trading activity in the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd are reproduced as under: "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 through ayurveda and propagation of yoga for the purpose of treating/curing various diseases. ..................................... 6.5.1 The expression 'education' has not been defined under the provisions of Income Tax Act. The Hon'ble Supreme Court in the case of Lok Shikshana Trust (supra), relied upon by the Ld. AR, has been pleased to explain the meaning of the word 'education' in the context of section 2(15) of the Act. As per this decision the education is the process of trai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee it falls under the sixth limb of the definition of charitable purpose given under section 2(15) of the Act i.e. advancement of any other object of general public utility and was thus covered within the mischief to proviso of section 2(15) of the Act. The transactions indulged by the assessee are in the nature of business or commerce which are similar to private commercial concern in the market. The objectives of the assessee being propagation of Yoga does not qualified as "medical relief or imparting of education but falls in the recibery category of advancement of any other object of general public utility. It undertook commercial activities in relation to construction of cottages under the "Vanprastha Ashram Scheme". The assessee has also violated the provisions of section 13 of the Act by providing benefit to persons specified in sub-section (3) as it has provided benefits to trustees and elated persons. He submitted that assessee had received anonymous donations as defined in section 115BBC of the Act. The ld. CIT [DR] pointed out that as per details available on record, Swami Ramdev Ji is not assessed to Income Tax. Acharya Bal Krishna Ji is Director of / having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust which were all reduced to NIL on 31.03.2009 by treating the amount of Rs. 2.1 crores receivable from them as expenditure in contravention of accounting principle. The trust had used the logo of Divya Yog Mandir Trust as its logo, which is indicative of interdependence between the two trusts. On the donation coupons issued by the trust against non-residential camps, though number of the order under section 80G was mentioned, it was found to be without date, which indicate that the assessee's documentation is not proper. 7.3 The ld. CIT [DR] submitted that the trust deed contains no provisions for election and Swami Shankar Dev Ji on account of having non attended four consequentive meetings of the board of trustees, the said patron has been removed from the board of trustees. He also showed his doubts that the assessee was following the conditions laid down by the Government while giving registration under section 12A of the Act. From the approval granted to the assessee under section 12A of the Act it can be observed that no specific limb of section 2(15) has been mentioned by the competent authority. It is also observed from the objects of the assessee trust that many of them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of earlier year in the current year. (vii) Booking of the income of earlier year in the current year. (viii) Extra receipt found for which no entry in books of account found. (ix) Adequate evidences. mode and manner in which the accounts are finally presented confirm that books of account were not primarily and regularly maintained. (x) Instances were seen where income/donation was not found to have been recorded in book of account. (xi) Many evidences found where complete and correct accounting of receipts and expenses in the books of account were missing. (xii) Bank reconciliation statement could not be furnished by the assessee (xiii) Payments made to parties by cash through a single voucher, were broken into more than one payment made on different dates, resulting not only in alteration of entries in the books of account but also in delay of booking of the expense. (xiv) No details of fixed assets I .rxed assets Register were found maintained. (xv) The auditor in SAR - part A. page- 14 has pointed out that bank interest of Rs. 5.44. J 23/- was not recorded in the books of account. (xvi) The auditor in SAR - part B-Il, page- 384 as pointed out that receipts of Rs. 9, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the present assessee are different from those in the case of Divya Yog Mandir Trust, decided by the cornet bench of the Tribunal earlier. The recent amendment by insertion of "Yog" with effect from 1.04.2015 makes it clear that before 1.04.2015 "'yoga was not part of section 2(15) definition. He submitted that Yog, Auverdic college etc. are not coming under the definition of "medical relief". He submitted that charges are different for different types of people in Vanprastha Ashram accommodation. He pointed out that the land is owned by person defined under section 13(3) of the I. T. Act. The assessee had benefitted Acharya Bal Krishan Ji. In Dynamic Buildcon Pvt. Ltd., Acharya Bal Krishan Ji was holding 99% shares and the very object therefrom inferred that it was to benefit him. He submitted that bikes were purchased in the name of Acharya Bal Kishan Ji and it was transferred subsequently in assessee's name as an after-thought. 8. The ld. AR re-joined with these submissions that the insertion of proviso to section 2(15) with effect from 1.04.2009 does not affect the object of the assessee as held by the cornet bench of the Tribunal in the case of Divya Yog Mandir Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablished position of law, the Revenue is required to maintain consistency in its approach on an identical issue under similar facts of the case in the subsequent assessment years. 9.1 In earlier years under the similar set of facts the benefit of exemption under sections 11 and 12 of the Act has been undisputedly allowed to the assessee. During the year the Assessing Officer has took a different stand, as per the ld. CIT [DR] it was due to insertion of proviso to section 2(15) of the Act with effect from 1.04.2009, that the assessee is not eligible for the benefit of exemption available under sections 11/12 of the Act, since as per the Assessing Officer the ld. CIT (Appeals) the propagation of Yoga does not qualify as "medical relief" or "imparting of education", but falls in the residuary category of "enhancement of any other object of general public utility". The authorities below remained of the view that the assessee is not charitable since substantial powers have been conferred on the settler or the trust and also alleged that the appellant has violated the provisions of section 13 of the Act by providing benefit to persons specified under sub-section (3) thereto. 9.2 Now t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recommends that yoga be made compulsory for all school going children in the country. ACTIION TAKEN The National Curriculum 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 Ayu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . These components advocate certain restraints and observances, 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. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oga as a system does not clearly fit into the definition of "medical" which in turn leads to the term "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 in so far 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants in various yoga camps. As discussed above the Ld. CIT (DR) has basically 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 Harvard 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Divya Yog Mandir Trust Vs. JCIT (supra) the relevant para Nos. 6.5 and 6.5.1 are reproduced hereunder : 'Imparting Education' 6.5. The question now is as to whether the appellant trust falls within the purview of providing "imparting education". The grievance of the appellant is that the authorities below have failed to appreciate that the propagation of yoga by way of conducting yoga classes on a regular basis and in a systemized manner also falls under the category of 'imparting of education' as provided u/s 2(15) of the Act. Reliance has been placed on several decisions, which we will discuss hereunder. The contention of the Ld. AR remained that the predominant object of the appellant trust are to provide practical and theoretical training in the field of yoga, which would ultimately provide medical relief to the society at large. It was submitted that in pursuance of the said objective the appellant trust has made intertrust donations to Patanjali Yog Peeth to support their endeavors of imparting yoga education by means of organizing yog shivirs/camps across the country on daily/weekly/monthly basis in a systemized/organized manner in order to provide medical relief to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the provisions of Income Tax Act. The Hon'ble Supreme Court in the case of Lok Shikshana Trust (supra), relied upon by the Ld. AR, has been pleased to explain the meaning of the word 'education' in the context of section 2(15) of the Act. As per this decision the education is the process of training and developing the knowledge, skill, mind and character of students by schooling by way of systematic instruction, schooling or training. The Hon'ble Delhi High Court in the case of Delhi Music Society vs. DGIT (supra) has been pleased to hold that since the assessee society was teaching and promoting all forms of music and dance , western, Indian or any other and was run like any school or educational institution in a systemic manner with regular classes, the same therefore meet the requirement of an educational institution within the meaning of section 10(23C)(vi) of the Act. In the case of ITO vs. SRM Foundation of India (supra) the Delhi Bench of the Tribunal, where the assessee was engaged in spreading the system of transcendental meditation (TM) has held that irrespective of the fact that the assessee has its own prescribed syllabus, trained teachers, branches all over India t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... donation coupons without appreciating that Yoga Shivir/camp is open to all and not merely restricted to persons who volunteer to donate to the charitable cause of the assessee. It may also be pointed out that 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. 9.8 The other allegations on the basis of which the authorities below have denied exemption are that the assessee during the year had undertaken commercial activities by receiving certain contributions under the scheme for construction of cottages at Patanjali Yogpeeth-II known as "Vanprastha Ashram" which tantamount to providing "services to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties done by it from which no inference can be drawn that assessee is in trade, commerce and business. The Hon'ble Supreme Court in the case of ACIT Vs. Surat Art Silk Cloth Mfg. Association 121 ITR 1 (SC) has been pleased to hold that where an activity was not pervaded by profit motive, but was carried on primarily for serving the dominant charitable purposes, it would not be correct to describe it as an activity for profit. But where an activity was carried on with the predominant object of earning profit, it would be an activity for profits, though it may be carried on in the advancement of the charitable purpose of the trust or the institution. The above view expressed by us on the basis of the fact of the prevent case is thus fully supported by the ratio laid down in this decision of the Hon'ble Supreme Court. Charging of fee to meet a part of the cost for rendering charitable services cannot make the services as business activities and accordingly, the institution will continue to be a charitable institution and it cannot be affected by the proviso to section 2(15) of the Act as wrongly held by the authorities below in the present case. The decisions relied upon by the ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to M/s. Vedic Broadcasting Ltd., on account of giving interest free loan and advance to M/s. Dynamic Buildcon Pvt. Ltd., and on account of investment in modes other than specified in section 11(5). In support of the grounds the ld. AR has made following submissions: In addition to the aforesaid contentions, the assessing officer has, in the impugned assessment order, denied the exemption claimed by the assessee under sections 11/12 alleging that the assessee violated various conditions of section 13 of the Act. Such allegations have been levelled by the assessing officer on the basis of incorrect inferences drawn from factual details/ documents filed by the assessee during the course of assessment proceedings. Kind attention of your Honours in this regard is firstly invited to the relevant provisions of section 13 of the Act, which read as under: "13. Section 11 not to apply in certain cases. (1) Nothing contained in section 11 or section 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof- ........................... (c) in the case of a trust for charitable or religious purposes or a charitable or religious insti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apart from the aforesaid general prohibition, sub-section (2) of section 13 of the Act provides 8 specific instances by way of clauses (a) to (h) thereto, where income or property of the trust or the institution is deemed to be used/ applied for the direct or indirect benefit of any person referred to in sub-section (3). There can, it is submitted, be no dispute that the provisions of section 13(1)(c) and particularly the deeming fiction contained in section 13(2) of the Act, which contains a legal fiction, must be strictly construed. In the light of the aforesaid legal position, the specific instances of alleged violation of section 13 of the Act and its brief rebuttal are tabulated. 10.2 The ld. AR drew our attention on the above table placed at page Nos. 37 to 49 of the submission made by the assessee. The ld. AR contended that the ld. CIT (Appeals) has summarily concluded that the assessee has violated the provisions of section 13 of the Act without disposing off the specific objections raised by the assessee against the various allegations leveled by the Assessing Officer in the impugned assessment order. 10.3 Without prejudice to above, the ld. AR also made following subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is exempt under section 11) as if such part (or such part as so reduced) were the total income of an association of persons; and (b) the tax on that part of the relevant income which is applicable to purposes other than charitable or religious purposes, and which is either not specifically receivable on behalf or for the benefit of any one person or in respect of which the shares of the beneficiaries are indeterminate or unknown, at the maximum marginal rate ............................................." (emphasis supplied) Thus, the aforesaid sections provide that income of trust will be taxable at 'maximum marginal rate of tax': i. If any fund of the organization has been invested or deposited, for any part of the year, as per section 13(1)(d) read with section 11(5) of the Act; ii. If any part of income has been applied directly or indirectly for the benefit of any of the excluded persons under section 13(1)(c) r.w.s. 13(3) of the Act. However, the section categorically provides that tax shall be charged on the 'relevant income' or 'part of relevant income' which has forfeited exemption at the maximum marginal rate. Thus, on a conjoint reading of section 13(1) and sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax will apply only to that part of the income which has forfeited exemption under the said provisions." (emphasis supplied) In this regard, your Honours kind attention is invited to various judgments/decisions wherein it has been held that instances of violation of any provision of section 13 could not result in complete denial of exemption under sections 11/12 of the Act. The Delhi Bench of the Tribunal in the case of Span Foundation vs. ITO: 2008 TIOL 108- ITAT-Del. [refer pages 1141 to 1145 of the case law paper book] held that even in a case of alleged violation under section 13, benefit under section 11 would not be available only to the extent of application of income or property for the benefit of person referred to in section 13(3) of the Act. The same could not, however, the Tribunal further held, result in total denial of exemption under section 11 of the Act. The pertinent observations of the Tribunal read as under: "8. We have considered the rival submissions. Section 13 operates as an exception to section 11 of the Act. Section 13 treats only the difference between the adequate rent chargeable for the building and the actual rent charged by an assessee as attracti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing the order of the Tribunal and only a small amount was treated as unreasonable and was upheld in the case of Mr. Joseph John. Further, the A.O. had allowed the similar amount in the assessment year 2007-08 also. He, accordingly, deleted the entire addition. The Revenue preferred an appeal before the Tribunal. The Tribunal confirmed the order of the CIT(A) by holding as under: "11. A bare perusal of section 13(1)(c)(ii) would suggest that whatever has been stated in sections 11 and 12 providing certain benefits to the assessee would not be available on the amounts which have been extended directly or indirectly for the benefit of any person referred to in sub-section (3) of section 13 of the Act, meaning thereby, if an assessee has extended any undue benefit to the person mentioned in sub-clause (3) then those amounts would not be considered as application of income for the purpose of fulfillment of objects of the society and benefit of sections 11 and 12 would not be available to the assessee on those amounts. Thus, section 13(3)(1)(c)(ii) is analogous to section 40A(2)(a) and section 13(3) is an analogous to sub-clause (b) of section 40A(2) of the Act. Learned CIT (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shri Joseph John allowed to him by the ITAT in 2004-05, is being looked into with this angle also then sum of Rs. 55,000 would not be on a higher side. Considering all these aspects and the detailed order of the Learned CIT (Appeals), we do not find any reason to interfere in it and the appeal of revenue is dismissed. 13. In the result, the appeal of the revenue is dismissed." (emphasis supplied) Further, in the case of DCIT vs. Help Age India: 133 TTJ 590 (Del), the assessee-trust filed the return of income declaring total income of Rs. 49.96 lakhs. This income was claimed to be exempt under section 11(1)(a) of the Act. In the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee was holding shares and bonds of 25 species, some of which were in the demat-form. These holdings were not in conformity with the provisions of section 11(5) of the Act. Therefore, the Assessing Officer held that the assessee had infringed the provisions of section 13(1)(d )(iii), as substituted by the Finance Act, 2007, retrospectively with effect from 1-4-1999. Accordingly, the assessee was not allowed exemption under section 11(1)(a) of the Act in respect of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed more or less on the same conclusion by mentioning that infringement, if any, was technical, which should be ignored by applying the rule of purposive construction. We tend to agree with him on the facts of the case. In such circumstances, what can be done is that income derived from the shares, if taken into account in the books, may be brought to tax. However, we agree with the Ld. CIT(A) that there cannot be a complete denial of the exemption u/s 11(1)(a). Thus, ground Nos. 1 and 2 are dismissed" (emphasis supplied) Further in the case of Gurdayal Berlia Charitable Trust vs. ITO: 34 ITD 489 (Mum), the assessee was a public charitable trust, derived income by way of dividend, bank interest and donations. By virtue of the provisions of section 11(5), which came into effect from the assessment year 1984-85, it lost exemption under section 11 of the Act in respect of dividend income. However, relying on the provisions of section 164(2), it contended before the ITO that only the dividend income was liable to tax, while the other income would still be exempt under section 11 of the Act. In the assessment framed under section 143(3) in respect of the assessment year 1984-85, the ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer during course of assessment proceedings that income of charitable trust is applied directly or indirectly for benefit of persons referred to in section 13(3), then he has ample power to deny exemption to that extent under section 13(1)(c) of the Act. The pertinent findings of the Tribunal in this regard, are reproduced as under: "21.Reverting to section 12AA it can be seen that the Commissioner has to order registration of the trust where he is satisfied about the objects of the trust and the genuineness of its activities. So long as the objects of the trust are charitable and the activities are in advancement of such objects, the registration cannot be refused. Once registration is granted to trust or institution but later on it is found by the Assessing Officer during the course of assessment proceedings that the income of charitable trust is applied directly or indirectly for the benefit of persons referred to in section 13(3), then he has ample power to deny exemption to that extent under section 13(1)(c). 22.Coming back to the facts of the instant case it is seen that the trust deed adequately provides that, after the death of the settlor, the income from the tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting Ltd. as per para No.7.5(a) of the assessment order; on account of giving interest free in direct advances of Rs. 2,40,000/- to M/s. Dynamic Buildcon Pvt. Ltd., para No.7.5(b) of the assessment order; on account of investment of Rs. 12,00,000/- and Rs. 7,09,560/- made in modes other than specified in section 11(5) of the Act mentioned in para Nos. 7.5(c) and 7.5(d) of the assessment order. These allegations also include purchase of land from United Infracon, purchase of land from M/s. Sri Niramaya Properties and Mr. Pawan Sharma, construction on the land owned by Swami Muktanand Ji, construction of Patanjali Yogpeeth-II not owned by the assessee; payment to Divya Yog Mandir Trust, Motorcycle purchased was not registered in the name of the assessee trust and payment of advances etc. 12. After considering the submissions of the parties in view of the material available on record, we find that the assessee has tried its best to dislodge each and every allegation made by authorities below with specific explanation. For a ready reference a chart made in this regard by the assessee is being reproduced hereunder :- Paragraph Reference Issue Para 7.5 (a) Refer page 16 to 18 of AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold its business as a going concern to Vedic Broadcasting in December, 2007 along with all subsisting agreements/ arrangements/ licenses, etc. As a necessary consequence of Aastha Channel being taken over by Vedic Broadcasting, agreement that had been entered into by Aastha Broadcasting came to Vedic Broadcasting. In view of the aforesaid, it is respectfully submitted that the assessing officer failed to appreciate that agreement that had been entered into by DYMT with Astha Broadcasting stood transferred to Vedic Broadcasting as a necessary consequence of takeover of going concern/business of Astha Broadcasting by Vedic Broadcasting. The assessing officer further failed to appreciate that Aastha channel is engaged in broadcasting various social, religious and spiritual programs and charges fees for telecasting of the programs from everyone. Therefore, Aastha channel also charged from DYMT. It is all the more important to note that assessing officer erroneously proceeded to treat the aforesaid two agreements as similar without appreciating that: (a) Agreement with Aastha channel was entered into by DYMT and not assessee; (b) In Agreement with Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee to any person specified in section 13(3) of the Act. It may further be pertinent to note that no 'services' per se were rendered by the assessee, let alone any service to persons specified under section 13(3), in the assessment year under consideration, to attract the provisions of section 13(2)(d) of the Act. Services, if any, were only received by the assessee, by way of free broadcast of its yog shivirs/camps, which benefited the assessee in achieving its charitable objective of propagation of yoga for providing medical relief. Thus, there was no application of section 13(2)(d) of the Act in any case. It is further ironic to note that the assessing officer on the one hand has been alleging that the assessee trust is not undertaking charitable activities and is engaged in generating profit, which is in violation of provisions of section 2(15), and on the other hand contends that the assessee has not charged adequate remuneration, in violation of section 13(2)(d) of the Act. In this regard, the assessing officer has failed to appreciate that the primary objective of the assessee trust is to spread the science of Vedic yog and to propagate the positive effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llegation cast by the assessing officer that the land which was purchased by the assessee was already registered in the name of Dyanamic Buildcon, is very vague and not supported by any documentary evidence It is an admitted fact that land was registered in the name of the assessee (Trust) on 30th September, 2011, though advance was given in financial year 2006-07. (Refer pages 299 to 319 of the paperbook) There is not dispute that the aforesaid land has been acquired by the assessee for pursuing its charitable objects. Further, it is not even the case of the assessing officer that the assessee had paid excessive amount for purchase of the said land. Thus, the assessee fails to appreciate how the alleged advance of Rs. 20 lakhs paid by United Infracon to Dynamic Buildcon would at all tantamount to violation of provisions of section 13(1)(c) of the Act, when the assessee has not advanced any amount to any concern/ person specified in sub-section (3) of section 13 of the Act in the said transaction. In view of the aforesaid, the assessing officer erred in alleging that there is violation of section 13(1)(c) of the Act. Para 7.5 (c) Refer page 19 to 20 of AO o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be refunded with interest shortly. The provisions of section 13(1)(d) of the Act are thus, not violated at all. Para 7.5 (d) Refer page 20 of AO order Purchase of land from Mr. Pawan Sharma Case of the Assessing officer/CIT(A) The assessing officer has observed Rs. 59.13 lakhs were advanced in cash to Mr. Pawan Sharma in financial year 2005-06 for acquisition of land at Brijwasan, registry whereof has been made on 22nd February, 2012. Pawan Sharma, in turn, had given an unsecured loan of Rs. 2 crores to M/s Vedic Broadcasting. Thus, the trust has, thus, invested money in the mode other than specified in section 11(5) and has consequently, violated the provisions of section 13(1)(d) of the Act Rebuttal The assessing officer has, it is submitted, again mixed separate and independent transactions to come to erroneous conclusion. It is an admitted fact that land was registered in the name of the assessee (Trust) on 22nd February, 2012, though advance was given in financial year 2005-06. (Refer pages 334 to 339 of the paperbook) There is no dispute that the aforesaid land has been acquired for pursuing its charitable objects. There was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PYP-II") on parcels of the land belonging to the trustees, viz. Swami MuktanandJi and Acharya Balkrishnan and on part of the land received as donation from another trust, viz., DYMT. The assessing officer held that the Trust, by undertaking construction on land belonging to the trustees/ related trust, without legal ownership of the land, has indirectly benefited those persons. It is, thus, the case of the assessing officer that in view of provisions of section 13(2)(g) of the Act, benefit has been transferred to persons covered under sub-section (3) of that section. Rebuttal During assessment it was submitted by the assessee that the two trustees have allowed indefinite use of the land for the objects of the trust, without deriving any income/charges, which is duly supported by declaration given by the Trustees. Thus, no benefit was derived by the two trustees; on the contrary, benefit was actually derived by the assessee by usage of land belonging to the trustees. As regards the land of DYMT, it was pointed out during the course of assessment proceedings that the said land was received as donation from the said trust, which, too is a charitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars to be legally untenable. During the course of assessment proceedings, it was pointed out by the assessee that the advance of Rs. 14.25 lakhs was given for purchase of land to DYMT vide agreement dated 7th September, 2007. A copy of the said agreement was also filed before the assessing officer. (Refer pages 380 to 383 of the paperbook) The contention of the assessing officer that the assessee has violated the provisions of section 11(5) is, it is respectfully submitted, legally unsustainable inasmuch as submitted supra, the assessing officer failed to appreciate the distinction between the application of income for charitable purposes and investment/ deposit of funds under section 11(5) of the Act. The assessee has, it is reiterated, advanced money for purchase of land, which is application of income for charitable purpose and is not in the nature of any investment/ deposit as contemplated under section 11(5) of the Act. In view of the aforesaid, the contention of the assessing officer that the assessee violated provisions of section 13(1)(d) r.w.s.11(5) of the Act is erroneous. Para 7.5 (i) Refer page 23 of AO order Motor cycle not registered in the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of section 13 of the Act shall not apply. Para 7.5(j) Refer page 24 of AO order Payment of Advances Case of the Assessing officer/CIT(A) Advances of Rs. 3,98,00,261 were made to various parties which remained as such till the end of the relevant year. Since the assessee has not invested money in the mode specified in section 11(5), there is violation of section 13(1)(d) of the Act. Rebuttal It was stated before the assessing officer that advances were given for purchase of material for PYP-II and Yog Gram. Since bills were not received, such advances were not adjusted during the relevant year. It is respectfully submitted that the assessing officer has vaguely held that the assessee violated provision of section 13(1)(d) r.w.s.11(5) of the Act. The assessing officer failed to appreciate that all the advances were given in the normal course for construction of PYP-II and Yog Gram and not for making any investment/ deposit as contemplated in section 11(5) of the Act. Further, that the said advances were squared off/settled in subsequent years, details of which were filed before the CIT(A). (Refer pages 418 to 420 of the paperbook) The provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso constitutes 'income' of the trust and accordingly were not eligible for exemption under sections 11/12 of the Act. The break-up of such corpus donations received by the assessee during the assessment year under consideration is tabulated as under: S. No. Particulars Amount (Rs.) 1. Received from Divya Yog Mandir Trust (for construction of Patanjali Yogpeeth-II) 38,35,00,000 2. Donations in relation to Vanprasth Ashram 88,73,002 3. Donations in relation to Disaster Relief Fund 4,36,23,766 4. Donation in University of Patanjali 61,000 Total 43,60,57,768 Further, the assessee had also received corpus donations in the form of immovable property, which was recorded at nil value, in the books of the assessee. However, the assessing officer has, in the impugned assessment order, made addition on account of such immovable property, on the basis of its estimated market value, which aggregated to Rs. 64,43,500/-. The aforesaid donations were, it is submitted, received by the assessee with the explicit direction, to be utilized for a specific cause and was not for attaining/achieving the general objects of the assessee trust. The aforesaid don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to spend the money or expend the property as it liked in furtherance of its objects. But, in the instant cases, the donor trust attached specific conditions to the donation. These were: (i) that the donation did constitute the corpus of the donee trust or be held as an accretion to the corpus of the donee trust; (ii) that no part of the donation be utlizied by the donee trust for its objects ; (iii) that no part of the donation be sold without the prior permission of the donor trust ; and (iv) if such permission were granted, the sale proceeds be treated as part of the endowment fund or corpus of the donee trust. The donee trust accepted the donation subject to these conditions. In these circumstances, there was a material difference with regard to the gift in the instant cases, as compared to the normal gift of shares by one charitable trust to another. The words "such contributions" in sub-section (2) of section 12, refer to contributions which constitute income of the recipient trust. It would, therefore, appear that "any income" of a trust derived from voluntary contributions made to a trust by another trust or charitable institution or religious institution to which the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific direction that they would form part of corpus of donee-trust and accepted by donee-trust as such, are not voluntary contributions which constitute income within meaning of section 12(1) of the Act and such contributions are not within purview of sub-section (2). Therefore, such donations cannot by themselves be deemed to be income from property held under trust within meaning of section 11 of the Act. Further, in the case of CIT vs. Sthanakvasi Vardhman Vanik Jain Sangha: 260 ITR 366 (Guj), the assessee, a public charitable trust, received certain amount towards construction of wadi for the caste people. The assessing officer held that the amount in question represented income of the assessee and added the same to the assessee's total income. On appeal, the CIT(A) deleted the addition on the ground that the amount had been received by the assessee with a specific direction for construction of wadi and, hence, the same should form part of the corpus of the trust. The Tribunal confirmed the order of the CIT (A). On further appeal, the High Court held dismissing the departmental appeal as under: "All the three authorities below had found that the amount was received by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is respectfully submitted that even if exemption under sections 11/12 of the Act were to be denied to the assessee, still the contributions received by the assessee in the form of corpus donations, would in any case not be liable to tax, as the same constitutes capital receipt. Alleged activities undertaken outside India The assessing officer has, at para 7.5(k) of the impugned assessment order held that the assessee had undertaken various activities outside India which was in violation of provisions of section 11(1)(c) of the Act. Further, in affirming the aforesaid observation of the assessing officer, the CIT(A), has relied upon the decision of the Delhi High Court in the case of NASSCOM: 345 ITR 362. In this regard, it is at the outset respectfully submitted that, as a matter of fact, no activity was carried out by the assessee outside India and the events referred by assessing officer were organized by certain overseas trust. Further, the assessing officer has not brought anything on record to substantiate the aforesaid allegation. The aforesaid is further substantiated by the fact that the assessing officer has nowhere quantified the amount of expenditure incurred in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for the relevant assessment year. Thus, voluntary donations are income of the trust and have to be routed through income and expenditure account and not through balance sheet. If such year-marked donations are directly taken to the balance sheet, then the treatment is wrong. On the basis of assessment order, the ld. CIT [DR] submitted that corpus fund of Rs. 88.73 lakhs received under Vanprastha Ashram Scheme in return of certain facilities cannot be called to be voluntary donation. Corpus donation of Gurgaon land at Rs. 30,00,000/- of which full market value was not shown as income in the accounts. Similar treatment has been given to the corpus donation of land at Shantarshah at Rs. 34.43 lakhs as well as corpus donation of vehicle Tata Sumo of Rs. 6,52,493/- for which full market value was not shown as income in the accounts. He placed reliance on the following decisions: (i) Vidyawanti Labhoo Ram Foundation for Science Research & Social Welfare, 20 Taxman.com 793 (Jodhpur Trib.); (ii) Little Tradition Vs. DDIT (2009) 119 I.T.D. 127 (Del.) (iii) Trustees of Kilachand Dev Chand Foundation Vs. CIT (2009) 172 I.T.R. 382 (Bom..) (iv) R.B. Sri Ram Religious & Charitable Trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of CIT Vs. Sthanakavasi Vardhman Vanik Jain Sangh (supra) before the Hon'ble Gujarat High Court, the assessee, a public charitable trust received certain amounts towards construction towards a wardi for the caste people. The Assessing Officer held that the amount in question represented income of the assessee and added the same to the assessee's total income. On appeal the ld. CIT (Appeals) deleted the addition on the ground that the amount had been received by the assessee with a specific direction for construction of wardi and, hence, the same should form part of the corpus of the trust. The Tribunal confirmed the first appellate order. On further appeal, the Hon'ble High Court upheld the decision of the Tribunal with this finding that on a plain reading of section 12, it is obvious that any voluntary contribution which is made with a specific direction that it shall form part of the corpus of the trust or institution would not be deemed to be the income derived from the property held under trust wholly for charitable or religious purposes. Further in the case of DIT (Exemption) Vs. Jaipur Golden Charitable Clinical Laboratory Trust (supra) where the assessee trust, running a h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. The Hon'ble High Court of Delhi in the case of Nasscom (supra) relied upon by the ld. CIT (Appeals) while upholding the action of the Assessing Officer, held that amount spent outside India could not be allowed as application of income. In absence of establishing the allegation made and upheld by the authorities below, we are of the view that the Assessing Officer was not justified in denying the exemption on the basis that assessee had undertaken various activities outside India in violation of provisions of section 11(1)(c ) of the Act. We order accordingly. In view of above discussion, the denial of exemptions under sections 11/12 of the Act treating the voluntary contributions received towards corpus by the assessee as non-charitable, as the same in our view, could not be regarded as "income" and the same would constitute a capital receipt not liable to tax and the allegation that there was various activities undertaken by the assessee outside India in violation of provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions : As regards allegation of anonymous donations of Rs. 13,68,99,745 under section 115BBC of the Act, it is respectfully submitted that assessing officer failed to appreciate the methodology followed by the assessee. As stated above, assessee organizes yoga shivirs/ camps for providing medical relief through yoga and also imparting yoga education/ training. Such camps/ shivirs are, as stated above, organized through ad-hoc committees specifically set up by the assessee for organizing yoga camps/ shivirs and also through separate/ independent yoga samitis spread across the country under the overall guidance/ support of the assessee. Such yoga camps/ shivirs are attended by thousands of persons across various sections of the society. Two types of camps/ shivirs are normally organized, viz., residential camps and non-residential camps. During such camps, voluntary donations are received from various persons who attend the yoga shivirs/ camps. The detailed break-up of such donations received during the assessment year under consideration, and which has been treated as anonymous donations by the assessing officer in the impugned assessment order are as under: Sl. No. Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details, and has summarily concluded that the said donations were in the nature of anonymous donations as defined under section 115BBC of the Act. Further, it may also be noted that donations have also been received by the assessee through cheques, which can, by no stretch of argument, be held to be 'anonymous' in nature. In the aforesaid circumstances, it was submitted that the aforesaid donations could not be regarded as anonymous donations inasmuch as the identity of the donor is available. Without appreciating the aforesaid contentions of the assessee, assessing officer erroneously held that the assessee received total anonymous donation of Rs. 13.68 crores taxable under section 115BBC of the Act. It is respectfully submitted that sufficient details are available and/ or brought on record by the assessee to identify the donors and therefore, there was no reason to treat donations received as anonymous donations. 17. The ld. CIT [DR], on the other hand, placed reliance on the orders of the authorities below and referred contents of page Nos.42 and 43 of the assessment order. He submitted that Rs. 6.61 crores was received through sale of coupons from 22 Yoga camps. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that during such camps voluntary donations are received by various persons who attend the Yoga shivirs/camps. During the year Rs. 6,61,27,782/- was received from non-residential camps [received through Yog Samitees], Rs. 5,99,98,525/- was received from Yoga teacher camps and Rs. 1,07,73,438/- was received from others totaling to Rs. 13,68,99,745/- in question. It was further explained that in the Yoga camps organized by the assessee through ad-hoc committees, donation coupons in the denomination of Rs.NIL (i.e. free), Rs. 100/-, Rs. 500/-, Rs. 1100/- and Rs. 2100/- were issued to various voluntary dodnors who attended the camps. Such voluntary donors were duly supported by the affidavits of the presidents of various Yoga camps organizing committee, which were furnished before the Assessing Officer and a reference of page Nos. 503 to 569 of the paper book filed on behalf of the assessee was made in support. It was further explained that Yoga camps are organized publically and are telecasted from time to time by various TV channels and entire recordings of Yoga camps in the form of 4 DVDs were filed before the Assessing Officer. 18.1 We find that the only allegation of the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h were shown in the statement of utilization of income for charitable purposes, filed along with the return of income have also not been considered by the Assessing Officer. In this regard he referred page Nos. 50 to 52 of the paper book. He submitted that such expenditure was incurred by the assessee solely for the purpose of fulfillment of its charitable objectives during the year under consideration and should accordingly have been considered as application of income for charitable purposes. He placed reliance on the following decisions in support :- 1. S.RM.M.CT.N. Tiruppani Trust Vs. CIT 230 ITR 637 (SC); 2. St. Lowrance Educational Society (Regd.) Vs. CIT 197 Taxman 504 (Del.); 3. DIT (Exemption) Vs. Leelawati Kirti Lal Mehta Medical Trust; ITA(L) 2990 of 2009 (Bombay High Court); 4. Pinegrove International Charitable Trust Vs. UOI 327 ITR 73 (P & H); 5. Lissie Medical Institution Vs. CIT 348 ITR 344 (Ker.); 19.1 Without prejudice to the above submissions the ld. AR submitted that in case the assessee was held to be non-charitable, then the assessee appellant should have been allowed depreciation on assets in accordance with the provisions of the Act. 20. The ld. CIT [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered in the name of the appellant during the year under consideration could not be regarded as application of income. This is fundamentally erroneous, since capital expenditure was incurred by the appellant for construction of building actually used for pursuing charitable objects. Therefore, such expenditure is clearly allowable as application of income as has been held, inter alia, in the following cases: RM M.CT.M Tiruppani Trust vs. CIT: 230 ITR 637 (SC) St. Lawrence Educational Socieity (Regd.) v. CIT: 197 Taxman 504 (Del.) In view of the aforesaid, it is submitted that the assessing officer erred in holding that construction of building on land not owned/ registered in the name of the appellant could not be regarded as application of income. Para 8.2 Refer page 27 of AO order Ground No. 15: Disallowance of expenditure In this para, the assessing officer has alleged that the assessee incurred expenditure of Rs. 2,30,60,231 which is not supported by any bills/vouchers. In this regard, it is respectfully submitted that, the assessing officer has failed to appreciate that the aforesaid expenditure compri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or not. It is settled law that income of a charitable trust claiming exemption under sections 11/12 of the act has to be computed in accordance with the normal commercial principles and not under artificial head defined in section 14 of the Act. In order to compute income not required to be included in the total income under section 11 of the Act, a charitable trust/society is, it is submitted, required to consider the extent of application of income for charitable purpose. The expression 'income', it is settled, has been understood in the context of the aforesaid section 11 to mean income as understood in the popular or general sense and not the sense in which the income is arrived at for the purpose of assessment to tax on application of some artificial provisions. Your Honour's kind attention, in this regard, is invited to the decision of Rao Bahadur Calavala Cunnan Chetty Charities: 135 ITR 485 (Mad), wherein their Lordships observed as under: "............. Section 11 contemplates an application of the income for charitable purposes. The charity can accumulate 25 per cent of the income. The application as well as the accumulation has necessarily to be the income as acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1472;CIT v. Society of the Sisters of St. Anne: 146 ITR 28 (Kar) CIT v. Maharana of Mewar Charitable Foundation: 164 ITR 439 (Raj) CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal: 211 ITR 293 (Guj) CIT V. Programme for Community Organisation: 228 ITR 620 (Ker.) The aforesaid principle has also been affirmed by the Hon'ble Tribunal in the case of Divya Yog Mandir Trust (supra), wherein after holding that the activities undertaken by the assessee trust was charitable in nature and that it was entitled to claim exemption under sections 11/12 of the Act, the Tribunal, on the similar issue of disallowance under section 40(a)(ia) of the Act, held that the adjudication on the said issue was infructions after having held that the assessee trust is eligible for exemption under sections 11/12 of the Act. (Refer pages 1054 to 1055 of the case law paperbook). The aforesaid legal position, it is respectfully submitted, makes it patently clear that income of the assessee is assessable in accordance with the normal commercial principles and not under the head "business income" so as to apply the principle of section 40(a)(ia) of the act. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appreciate the facts in its correct perspective and has erred in considering the amount of interest amounting to Rs. 5,44,123/- as income of the assessee, which was already considered by the assessee, resulting in double addition of the same amount. Para 12 Refer page 40 to 41 of AO order Ground No.17: Purchase of medicines In this ground, the assessee has challenged the addition of Rs. 1,24,80,000, being medicines distributed to disaster relief victim as a consequence assessee being held to be not eligible for benefit to provision under sections 11/12 of the Act. In this regard, it is respectfully submitted that the assessee has placed on record copy of the certificate dated 10th August, 2012 received from Divya Pharmacy, confirming purchase of medicines amounting to Rs. 1,24,80,000. The said certificate is duly supported by the copies of the ledger account and bills raised on the assessee. The assessing officer, in the assessment order, has admitted that the assessee has actually undertaken the relief work. In fact, the assessing officer has observed that providing relief to Bihar flood victim is certainly an appreciable gesture on behalf of the assessee. Despite such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... need any independent adjudication. 23. Before parting with the order, we find it pertinent to mention over here that there may be small discrepancies here and there in the maintenance of the accounts in a proper way or other general allegations, but certainly and undisputedly, it is not the case of the Revenue that the amounts received have been spent or the donations have been used on other than the objects of the Trust. Besides, the Revenue is also required to maintain consistency in its approach on an issue on similar facts of the case in the following years. Undisputedly, in earlier years since the inception of the assessee, the Revenue has been accepting the claimed exemption, however, during the year under almost similar facts the Revenue has taken different stand by treating the assessee non-charitable, which cannot be justified. In its recent decision in the case of CIT Vs. Excel Industries Ltd. (2013) 358 ITR 295 (SC), the Hon'ble Supreme Court applying its earlier decisions in the cases of Radhasoami Satsang Vs. CIT (1992) 193 ITR 321 (SC); Godhra Electricity Company Vs. CIT (1997) 225 ITR 746 (SC) etc., has been pleased to hold that on consistent view taken in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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