TMI Blog2019 (9) TMI 1598X X X X Extracts X X X X X X X X Extracts X X X X ..... regulated under the mechanism provided in clause(a),(b) and (c); the accumulation or setting apart would be required to be invested or deposited in the form or mode specified in sub clause 5. As far as scope and interpretation of sub-clause 5 is concerned both the parties are not disputing to the same. This clause provides a mechanism as to how the accumulated fund would be required to be invested - while construing the meaning and scope of section 13(1) (d) we have to bear in mind the complete scheme of the section. As per Circular No. 387, dt. 6th July, 1984 the relevant income is only required to be disallowed and not in respect of the income of the appellant trust. However, the exemption under section 11 or 12 of the Act is not permissible to be denied. In this aspect we have also carefully considered the judgement passed by the Learned Tribunal in the case of Gurdayal Berlia Charitable Trust [ 1990 (6) TMI 92 - ITAT BOMBAY-B ] where similar issue was discussed taking into considering that particular circular being No.387 containing explanatory notes on the Finance Act, 1994 wherein as pleased to hold that the breach of section 13(1)(d) and 13(2)(h) would lead to forfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 28 to 44 and denied to claim of separate loss on account of sale of assets and thus it should have been considered in the block of assets as observed by the AO - HELD THAT:- Since the assessee has already been declared as an eligible exempt entity by the CIT(A), the assessee has further been declared to be eligible to claim the loss or profit on account of sale of assets in its income and expenditure account and in that view of the matter the relief towards such claim as loss on the sale of assets has been allowed by the CIT(A) - we do not find any infirmity in the impugned order passed by the CIT(A) so as to warrant interference - the question is accordingly answered in the affirmative, i.e. in favour of the assessee and against the revenue. Consequently the appeal fails and is accordingly, dismissed. - I.T.A. Nos. 265, 805, 806 & 2344/Ahd/2018 - - - Dated:- 3-9-2019 - Shri Pramod Kumar, Vice President And Ms. Madhumita Roy, Judicial Member For the Appellant : Shri N. R. Soni, CIT-D.R. For the Respondent : Shri S. N. Soparkar, Sr. Advocate, Shri Parin Shah, Advocate. ORDER PER Ms. MADHUMITA ROY - JM: The bunch of four appeals at the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / or rescind all or any Grounds of Appeal on or before the final hearing, in necessity so arises. 3. The brief facts leading to this case is this that the assessee trust came into existence in the year 1996 registered under section 12A(a) of the Income Tax Act by and under the order issued by the Commissioner of Income Tax, Karnataka-II, Bangalore, being Memo No. Trust/718/10A/Vol.A-III, VITA 275/97/CIT-II dated 18.04.1997 w.e.f. 29.03.1996. The Trust is further registered u/s 80G(5)(vi) of the Act by and under the order dated 25.04.2006 issued under the signature of the Director of Income Tax (Exemption) being Memo No.DIT(E)/80G/42/W.2/2006-07. The assessee Trust is also registered under Section 35AC of the Act by and under the notification dated 23.10.2007. 4. On 22.09.2011 the assessee filed its return of income for A.Y. 2011-12 with the DDIT(E)- Circle 17(2), Bangalore declaring total income as Nil which was processed u/s 143(1) of the Act on 25.07.2012 resulting into a refund of ₹ 1,26,14,810/- inclusive of interest u/s 244A of ₹ 8,80,103/-. Subsequently, the matter was selected for scrutiny under CASS and notice dated 05.09.2012 u/s 143(2) was issued t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration, irrespective of the nature of use or application, or retention of the income from such activity. Such amendment has been made applicable w.e.f. 1st April, 2009 i.e. for A.Y. 2009-10 and subsequent assessment years. The Learned DR filed a general note on the issue before us. 6.1. In the said note the revenue has dealt with the positive effects of Sudarshan Kriya Yoga which is taught systematically to the public at large by the appellant trust in the entry level programmes conducted by it. The influence of Sudarshan Kriya staring from the physiological function travelling through endocrine system resulting in therapeutic implications, stimulating the antioxidant enzyme activities, including stress related medical disorders like chronic fatigue, chronic pain, fibromyalgia, neck and back pain, temporomandibular joint pain, cancer, diabetes, multiple sclerosis, and asthma exhaustively. It has also discussed the positive effect of Sudarshan Kriya Yoga on lipid profile, pulmonary function, hemoglobin concentration, cardiovascular and respiratory diseases. The note has concluded with the following remarks: The ancient yogic science of breath is the science that deals with b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pless and the distressed and disabled people, without any distinction of caste, creed or religion, during natural calamities or otherwise. k) To promote opportunities for the youth to organise physical, cultural, games, sport, travelling, excursion and adventure training camps. l) To protect and develop the intellectual values of students, sportsmen and all those who are rich in any cultural field and to encourage them suitably. m) To do all such other things as are incidental or conducive to the attainment of the above objectives or any them, in tune with the laws of the land. n) To form an All India Panel of illustrious men and women well versed in Vedic Sciences who would be invited to become visiting professors. o) To organise seminars and conferences on different aspects ancients literatures yoga and meditation. c; To establish training institutes as part of the training programme, where useful vocations depending on the aptitude of personalities, with special attention to the needs of poor women and children of all castes. q) To establish a library of old and valuable manuscripts on ancient sciences and other literature. r) To o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant in certain circumstances. The Learned Senior Counsel also drew our attention to the objects of Sudarshan Kriya which we would like to analysis at the relevant point. Apart from that the research finding from NIMHANS and AIIMS on the effect of the said Sudarshan Kriya on the participants had also been relied upon by him. 7.3. The Ld AR further relied upon the judgment passed by the Hon ble ITAT, Delhi Bench in the case of Divya Yog Mandir Trust-vs-JCIT, Hardwar wherein it has been held that imparting of Yoga training through well-structured yoga camps falls under category of imparting education which is one of the charitable objects defined under section 2(15) and hence the activity is not hit by the proviso to section 2(15) of the Act. It is the specific submission of the Learned AR that there is an aliment of fees or charges levied by the assessee Trust but in the absence of any profit motive, the said activity cannot be characterized as a trade, commerce or business. Therefore, according to the Learned AR, mere action of charging fee for services by itself would not justify invoking of proviso to section 2(15) of the Act unless it is established that the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is hit by the amended provision of section 2(15) by virtue of sub Section 8 of section 13, the provision of section 11 and 12 of the Act are not applicable in order to avail exemption of its income from tax. Once the activities carried on by the assessee which are in the nature of advancement of any other object of general public utility are considered as non-charitable purposes, the income generated from such activities shall not be treated as income derived from property held under the trust within the meaning of section 11(1)(a) of the Act. 7.8. The assessment was ultimately finalized by and under an order dated 28.03.2014 holding that the activities of the assessee does not fall under clause Education and medical relief but last limb of proviso to section 2(15) of the Act i.e. an advancement of general public utility . It was further held that Sudarshan Kriya as system falls in the residuary category of education and medial relief. Apart from that, the exemption enjoyed by the assessee u/s 11 12 of the Act has been denied holding that the assessee has violated the provisions of section 13(1)(d)(i) r.w.s. 11(5) of the Act by making investment in two companies namely Unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e last limb of section 2(15) of the Act being the residuary category of advancement of any other objects of the general public utility . In addressing the issue we need to be apprised on the objects of Sudarshan Kriya which has already been placed by the assessee before the authorities below: The Sudarshan Kriya incorporates specific natural rhythms of breath which harmonize the rhythms of the body and emotions and bring them in tune with the rhythms of nature. The breath connects the body and mind. Just as emotions affect our patterns of breathing, we can bring about changes in our mental and behavioral patterns by altering the rhythms of our breath. It flushes out anger, anxiety and worry; leaving the mind completely relaxed and energized. As per result of this the individuals who take refuge in substance abuse, (like alcohol, smoking drugs etc.) to reduce mental stress, and end up in loss of health and wealth, find a very effective way to put their mind at rest, thus freeing them from the dependence of substance abuse. A study conducted by NIMHANS, AIIMS and several Independent researchers have shown that the practice of Sudarshan Kriya along with other prayana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e referred here is Sudarshan Kriya, where the order of performance in defined in a specific manner to achieve results for the betterment of an individual. From the note submitted above, it can be seen that according to the appellant the unique the unique of Sudarshan Kriya developed by the appellant is closely related to breathing techniques, meditation and the various aspects of Ashtang Yog. According to the appellant the practice of Sudarshan Kriya as per various reports of medical institutions and research publication has helped the recipients of Sudarshan Kriya to reduce the stress level, increase immunity, reduce cholesterol etc. The methodology of imparting the training in Sudarshan Kriya is very well structured as it is apparent that the appellant is conducting various courses for different levels of participants progressing in the techniques of Sudarshan Kriya. 8.2 We have further gone through the analysis made by the Ld CITA on the effect of Sudarshan Kriya as also the note submitted by the assessee in this respect wherefrom it appears from the records that the prime content of the entry level programmes is the Sudarshan Kriya which admittedly reduces stress re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Yog Mandir Trust-vs-JCIT, Hardwar relied upon the observation made by the Hon ble Apex Court in the matter of Sole Trustee, Lok Shikshana Trust-vs-CIT, reported in [1975] 101 ITR 234 wherein in the context of section 2(15) of the Act, education has been explained as a process of training and developing the knowledge, skill, mind and character of students by schooling by way of systematic instruction, schooling or training. Therefore, any form of education activity involving imparting of systematic training in order to develop the knowledge, skill, mind and character of students, is to be regarded as education covered under the purview of section 2(15) of the Act. In that view of the matter, yoga training through well structured yoga shivir / camps has been characterized under the category of imparting education which is, one of the charitable objects defined u/s 2(15) of the Act. The plea of the Revenue that activities of the appellant therein are hit by the Proviso inserted in the definition of charitable purpose in section 2(15) as thereby negated by the Hon ble Tribunal, Delhi Bench. 8.4. Similarly, the Hon ble Delhi High Court in the matter of Commissioner of Income Tax ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso does not apply to trust/institutes engaged in the charitable objects of providing relief to the poor imparting education and providing medical relief . Since the predominant objects and activities of the trust in hand before us make it clear that such objects are to provide medical relief and imparting of education to the society at large, being charitable objects defined under section 2(15) of the Act, in our considered view proviso to section 2(15) is not applicable to the instant case of the assessee.Neither Sudarshan Kriya falls within the residuary category of education or medical relief . 8.6 It is also a fact that donations have been received which has shown as voluntary contribution including the contributions from the corporate who are benefited out of these programs for their own staff. The question arose when such contributions have been treated as course fees by such corporate and deducted TDS thereon, whether the same contributes any change in the status of the trust being charitable in nature. 8.7 During the course of appellate proceeding the assessee has provided a tabulation work with regard to the quantum of donation received and the percentag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8173% 7 3001-4000 15,96,18,534 45,288 12.67% 94.40% 8 4001-5000 2,15,47,954 4,563 1.28% 95.68% 9 5001-7000 6,07,52,130 10,521 2.94% 98.62% 10 7001-10000 2,84,72,399 3,261 0.91% 99.53% 11 10001-25000 1,64,93,278 1,079 0.30% 99.84% 12 25001 and above 8,88,07,958 588 0.16% 100.00% Grand Total 68,35,63,534 3,57,376 100.00% 8.8 It further appears that various courses conducted by the appellant trust specially part-1 and part-2 and the Apex course have a direct nexus and/or corel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to examine the object of the society and not quantum of surplus though such quantum may become relevant in certain circumstance. With the essence of inspiration from the ratio laid down by the Hon ble Apex Court in the aforesaid judgment conclusion can be drawn that the contribution on which TDS have been deducted amounting to ₹ 4.5 crores being 6.6% of the total contribution ₹ 68 crores, the appellant cannot be said to be a profit making organization when the pre-activity is entirely charitable in nature which has been rightly taken care of by the Learned CIT A and hence we confirm the same. In the result revenue s appeal is dismissed . 9. The revenue has further challenged allowing of exemption u/s 11 12 of the Act Ld CITA holding the assessee not violated the provisions of section 13(1)(d)(i) r.w.s. 11(5) of the Act in case of investment made with Shriram Transport Finance Co. 9.1. Heard the parties, perused the records. The brief facts leading to this case is this that while scrutinizing the financial statement and TDS certificate it came to the knowledge of the Learned AO that the assessee has made certain investments which was in violation of specific n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. However, the Learned CIT(A) considering the entire aspect of the matter excluded the interest income from M/s. Shriram Transport finance Co. Ltd. while granting relief to the assessee declaring it allowable u/s 11 of the Act. Hence the instant appeal before us. 9.3 During the appellate proceeding, the assessee submitted that in every branch of the assessee-trust across the country is taking care of to apply the provision of Income Tax Appeal Act but inadvertently without the notice of the assessee the certain amount got deposited with M/s Unitech Ltd and Shriram Transport Finance Co. Ltd. without there being any malafide intention for making such deposit. It was further submitted by the assessee that as soon as the assessee trust came to know about such deposit the same were immediately withdrawn and such fact of withdrawal of deposit were made known to the assessing officer by and under a letter dated 11.11.2015. It was reiterated by the assessee that alleged deposit with Shriram Transport Finance Co. Ltd. does fall within the mischief of either section 13(1)(d)(i) for the reason that said deposit was not made during the impugned previous year or section 13(1)(d)(ii) f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such purposes in India; and, where any such income 24 is 24 accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart 27 is not in excess of 28 [fifteen] per cent of the income from such property; (b) income derived from property held under trust in part 27 only for such purposes, the trust having been created before the commencement of this Act, to the extent to which such income 27 is applied to such purposes in India; and, where any such income is finally set apart for application to such purposes in India, to the extent to which the income so set apart is not in excess of 28 [fifteen] per cent of the income from such property; (c) income 29 [derived] from property held under trust- (i) created on or after the 1st day of April, 1952, for a charitable purpose which tends to promote international welfare in which India is interested, to the extent to which such income is applied to such purposes outside India, and (ii) for charitable or religious purposes, created before the 1st day of April, 1952, to the extent to which such income is applied to such purposes outside India: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (1),- (a) where a capital asset, being property held under trust wholly for charitable or religious purposes, is transferred and the whole or any part of the net consideration is utilised for acquiring another capital asset to be so held, then, the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purposes to the extent specified hereunder, namely:- (i) where the whole of the net consideration is utilised in acquiring the new capital asset, the whole of such capital gain; (ii) where only a part of the net consideration is utilised for acquiring the new capital asset, so much of such capital gain as is equal to the amount, if any, by which the amount so utilised exceeds the cost of the transferred asset; (b) where a capital asset, being property held under trust in part only for such purposes, is transferred and the whole or any part of the net consideration is utilised for acquiring another capital asset to be so held, then, the appropriate fraction of the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purposes to the extent specified hereunder, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rposes in India, such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of the income, provided the following conditions are complied with, namely:-] (a) such person specifies, by notice in writing given to the 42 [Assessing] Officer in the prescribed 43 manner 44 , the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed ten years; 45 [(b) the money so accumulated 46 or set apart is invested or deposited in the forms or modes specified in sub-section (5)]:] 47 [Provided that in computing the period of ten years referred to in clause (a), the period during which the income could not be applied for the purpose for which it is so accumulated or set apart, due to an order or injunction of any court, shall be excluded:] 48 [Provided further that in respect of any income accumulated or set apart on or after the 1st day of April, 2001, the provisions of this sub-section shall have effect as if for the words ten years at both the places where they occur, the words five years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest whereon are fully and unconditionally guaranteed by the Central Government or by a State Government; (vii) investment or deposit 64 in any 65 [public sector company]: 66 [Provided that where an investment or deposit in any public sector company has been made and such public sector company ceases to be a public sector company,- (A) such investment made in the shares of such company shall be deemed to be an investment made under this clause for a period of three years from the date on which such public sector company ceases to be a public sector company; (B) such other investment or deposit shall be deemed to be an investment or deposit made under this clause for the period up to the date on which such investment or deposit becomes repayable by such company;] (viii) deposits with or investment in any bonds issued by a financial corporation which is engaged in providing long-term finance for industrial development in India and 67 [which is eligible for deduction under clause (viii) of sub-section (1) of section 36]; (ix) deposits with or investment in any bonds issued by a public company formed and registered in India with the main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccumulated fund would be required to be invested. 9.7. Now we turn to section 13 of the Act. Sub class (a) of sub section (1) provides that any part of the income from the property held under the trust for private religious purposes which does not enure for the benefit of the public; thus it suggests only that part of the income to be excluded from the benefit of section 11 and 12 which does not enure for the benefit of the public. Similarly, sub clause (b) contemplates in the case of a trust for charitable purposes or a charitable institution created or established after the commencement of the Act, any income thereof in the trust institution is created or established for the benefit of any particular religious community or caste; meaning thereby that income would not be exempted under section 11 and 12 of the Act. Therefore, while construing the meaning and scope of section 13(1) (d) we have to bear in mind the complete scheme of the section. And the cost of repetition we would like to reproduce the relevant part of clause (d) : (d) 1 in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof, if for any p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business profits of such trusts which are otherwise chargeable to tax. In other words, where such a trust contravenes the provisions of section 13(1)(c) or (d) of the Act, the maximum marginal rate of income-tax will apply only to that part of the income which has forfeited exemption under the said provisions. 9.9 In view of the clarification made by the above circular the relevant income is only required to be disallowed and not in respect of the income of the appellant trust. However, the exemption under section 11 or 12 of the Act is not permissible to be denied. In this aspect we have also carefully considered the judgement passed by the Learned Tribunal in the case of Gurdayal Berlia Charitable Trust-vs-Fifth ITO reported in (1990) 34 ITD 489 (Bom) where similar issue was discussed taking into considering that particular circular being No.387 containing explanatory notes on the Finance Act, 1994, more particularly paragraph 28.6 as already reproduced hereinabove. Finally, the Hon ble Tribunal, Bombay Bench was pleased to hold that the breach of section 13(1)(d) and 13(2)(h) would lead to forfeiture of exemption of income derived from such investment and not the entir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the donations and contributions made in respect of accumulated income and not in respect of donations and contributions made from current income; since the amount in question which was donated from the current year income and not from the accumulated income the assessee was entitled to such deduction/exemption. The assessee on this aspect relied upon the judgement passed by the Hon ble Delhi High Court in the matter of the DIT (Exemption) vs. M/S. Bagri Foundation where the court observed as follows what follows is that the amount accumulated cannot be donated to another trust. However, the said explanation does not place a total embargo on donations by one trust to another. It does not prohibit the trust from donating its entire income in a relevant year to another trust , as is the law as noticed in the Division Bench in Shri Ram Memorial Foundation. The embargo is only on the income of the trust not applied in the relevant year but accumulated set apart being donated to another trust 10.1. The assessee further relied upon the judgement passed in the matter of Gagan Education Society-vs-ACIT, reported in (2011) 131 ITD 442 wherein the assessee society donated certa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t interference. Thus the appeal preferred by the revenue is found to be devoid of any merit and hence dismissed. 12. Ground No.6 : This ground relates to allowing the loss of sale of assets of ₹ 2,28,105/-. 12.1 Heard the respective parties, perused the relevant materials available on record. During the scrutiny, it was observed that the assessee has claimed a sum of ₹ 2,28,105/- as deduction being loss on sale/write off assets. It appears from the records that the Assessing officer considered the appellant as an AOP and assessed the income of the assessee under section 28 to 44of the Act. The assessee has been denied to claim of separate loss on account of sale of assets and thus it should have been considered in the block of assets as observed by the Learned AO. However, since the assessee has already been declared as an eligible exempt entity by the Learned CIT(A), the assessee has further been declared to be eligible to claim the loss or profit on account of sale of assets in its income and expenditure account and in that view of the matter the relief towards such claim of ₹ 2,28,105/- as loss on the sale of assets has been allowed by the Learned CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
