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TMI Blog1970 (11) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the assessee is entitled to exemption on the 25% of the profits devoted to the development of Arya Vaidya Sala ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in delelting the additions of the sums of Rs. 8,331 and Rs. 27,506 made in the assessment year 1962-63 and Rs. 7,678 and Rs. 36,224 made in the assessment year 1963-64 ? " This reference is a composite one and relates to income-tax of the income of an institution known as the Arya Vaidya Sala for the two assessment years 1962-63 and 1963-64. To understand the contentions urged on behalf of the revenue at whose instance this reference has been made and those of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdance with the service of Ayurveda. I have been meeting the expenses of the said institutions, not covered by its income, from out of the profits of Arya Vaidya Sala. L. Out of the net profits of the Arya Vaidya Sala 25% to be devoted to the development of the Arya Vaidya Sala, 25% for meeting the expenses of the Arya Vaidya Hospital and 25% for division equally between the two Tavazhis (this only for 20 years), out of the remaining 25% a sum, not exceeding 10% may be, according to requirements, utilising for the purposes of the Arya Vaidya Pata Sala. The balance, if any, that may remain out of the 10% after disbursement to the Aryavaidya Pata Sala may be used for the Aryavaidya Sala itself The balance 15% are to be deposited by the trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na Warrier. This decision was rendered under the Indian Income-tax Act, 1922. The definition of " charitable purpose " has been altered by the Income-tax Act, 1961, and the present definition is contained in section 2(15) of that Act reading as follows : " 2. (15) 'Charitable purpose' includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility not involving the carrying on of any activity for profit." It will be seen from the definition that if any other object of general public utility involves the carrying on of an activity for profit, that object of general public utility will cease to be a charitable purpose as defined in that section. A fortiori the income derived from suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... desirous of putting this system of medical treatment within the grasp of even the poorest among the people. His intention was evidently to afford a system of cheap and wholesome medicinal preparations to be made available to the public. The preparation of Ayurvedic medicines is only incidental to the treatment of patients and the carrying on of research into Arya Vaidyam. Preparation and sale of Ayurvedic medicines cannot be disassociated from the other objects and treated as a separate object by itself. Taken as a whole, the object was clearly medical relief coming within section 2(15) of the Incometax Act, 1961." The words in the definition "not involving an activity for profit" qualify only the general public utility mentioned as the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectively only Rs. 25,138 and Rs. 17,872. If these figures are any reflection of the extent of the respective activities and we think they are they clearly show that the treatment of patients referred to in item 3 is only a negligible activity. This can form only a very incidental object of the Arya Vaidya Sala, the predominant and the substantial object being the preparation and sale of Ayurvedic medicines. We must in this connection remember that the funds for the activities of the hospital and the carrying on of the Aryavaidya Pata Sala have to be supplied by the Arya Vaidya Sala not to mention the 25% and the 15% set apart for the two Tavazhis for whose benefit 40% of the income of the Arya Vaidya Sala had been diverted. A reading of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r education or relief of the poor and can fall, if at all, only under the 4th category, and intrinsically mixed up with an activity for profit. It thus falls outside the ambit of the definition in section 2(15) of the Income-tax Act, 1961. The answer to questions Nos. 1 and 2 must therefore be in the negative, that is, in favour of the department and against the We answer them accordingly. It is admitted that the answer to the third question must depend upon the answers on the first two questions as the amounts mentioned in that question are the amounts coming out of the 10 per cent. earmarked for the Arya Vaidya Pata Sala which ware not utlised for the Arya Vaidya Pata Sala but utilised for Arya Vaidya Sala. We, therefore, answer question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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