9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (9) TMI 1598 - AT - Income TaxExemption u/s 11 - imparting of Yoga training through well-structured yoga camps - activity of the assessee falls under the clause 'education' and 'medical relief OR the last limb of 'advancement of general public utility' - Proof of charitable activity - charitable objects defined u/s 2(15) - Whether providing training of Sudarshan Kriya as per the syllabus of Shri Pandit Ravi Shanker, a famous meditation Guru through his sponsored charitable trusts cannot be termed at per with Relief to the Poor , Education and Medical Relied , rather the same would fall under the last limb of the proviso of Section 2(15) of the Act i.e. the advancement of any other object of general utility ? - HELD THAT - A bear perusal of section 11(2) would indicate that if a charitable trust fails to apply income referred to in clause (a) or clause (b) of subsection 1 towards its object during the previous year but has accumulated or set apart either in whole or in part, for application of the object of the trust in future years then such accumulation is to be 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 forfeiture of exemption of income derived from such investment and not the entire income would be subjected to the maximum marginal rate of tax under section 164(2) of the Act. Ultimately it was held that exemption under section 11 is available to the assessee only on the income to the extent the same is derived in conformity of section 11 and applied during the year for such purpose of charitable trust. Donation as application of funds - Whether assesses activities are not in the nature of charity as hit by section 2(15)? - HELD THAT - If the donations have been made from the income of the previous year and not out of the accumulation under section 11(2) then the same be eligible to be considered as application of income as long as the recipients are charitable organizations. Having regard this particular aspect of the matter the AO has been further directed by the Learned CIT-A to verify as to whether these trust have the status of exemption under the Income Tax Act and also whether they are charitable organisation. Subject to such verification of the objects of the recipients the AO was directed to treat the application of income of the assessee, which in our considered view is just and proper and without any ambiguity so as to warrant interference. The order passed by the Learned CIT(A) is,thus, conformed. Resultantly the appeal preferred by the revenue is dismissed. Corpus donation addition since the assessee s activities is not in the nature of charity as hit by section 2(15) as alleged - CIT(A) observed that Section 2(15) r.w.r. 13(8) of the Act is not applicable to the case of the appellant and further that the appellant would eligible to claim benefit u/s 11 and 12 of the Act including the deduction u/s 11(1)(d) of the Act which has been confirmed by us in this appeal. The Learned CIT(A) has, therefore, directed the Learned Assessing Officer to verify whether the corpus donation were received or the voluntary donations have been received by the appellant with a specific direction taking into consideration the entire aspect of the matter, which in our considered opinion is just and proper without any infirmity so as to warrant interference. Thus the appeal preferred by the revenue is found to be devoid of any merit and hence dismissed. Loss of sale of assets - AO considered the appellant as an AOP and assessed the income of the assessee under 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.
Issues Involved:
1. Interpretation of Section 2(15) of the Income Tax Act. 2. Eligibility for exemption under Sections 11 and 12 of the Income Tax Act. 3. Treatment of donations as application of income. 4. Treatment of corpus donations. 5. Treatment of loss on sale of assets. Issue-wise Detailed Analysis: 1. Interpretation of Section 2(15) of the Income Tax Act: The primary issue was whether the activities of the assessee trust, particularly the teaching of Sudarshan Kriya, fell under the definition of "charitable purpose" as per Section 2(15) of the Act. The Assessing Officer (AO) contended that these activities were aimed at "advancement of general public utility" and involved trade, commerce, or business, thus not qualifying as charitable. However, the Commissioner of Income Tax (Appeals) (CIT(A)) and the Tribunal found that the activities fell under "education" and "medical relief," thus qualifying as charitable. The Tribunal relied on various judgments, including those from the Delhi High Court and the Supreme Court, which held that activities like teaching yoga and Sudarshan Kriya could be considered as imparting education and providing medical relief. 2. Eligibility for Exemption under Sections 11 and 12 of the Income Tax Act: The AO denied the exemption under Sections 11 and 12, claiming that the trust violated Section 13(1)(d)(i) by investing in non-specified modes. However, the CIT(A) and the Tribunal found that the investments were not made from accumulated income under Section 11(2) but from current income, thus not violating Section 13(1)(d)(i). The Tribunal also noted that the trust had withdrawn the non-compliant investments promptly upon realizing the mistake, showing no malafide intention. 3. Treatment of Donations as Application of Income: The AO allowed only 50% of the donations made to other charitable trusts, arguing that the donations were not allowable as they did not meet the criteria under Section 80G. The CIT(A) and the Tribunal, however, held that donations made from current income, as opposed to accumulated income, could be considered as application of income. The Tribunal directed the AO to verify the charitable status of the recipient trusts and allow the donations accordingly. 4. Treatment of Corpus Donations: The AO had denied the benefit of corpus donations under Section 11(1)(d), arguing that the trust's activities were not charitable. The CIT(A) and the Tribunal, however, found that the trust's activities were indeed charitable and directed the AO to verify whether the donations were received with a specific direction to form part of the corpus. The Tribunal upheld the CIT(A)'s decision, allowing the corpus donations. 5. Treatment of Loss on Sale of Assets: The AO denied the claim of loss on the sale of assets, arguing that the trust was not eligible for exemption under Sections 11 and 12. The CIT(A) and the Tribunal, however, held that since the trust was eligible for exemption, it could claim the loss on the sale of assets in its income and expenditure account. The Tribunal found no infirmity in the CIT(A)'s order and upheld the decision. Conclusion: The Tribunal dismissed all the appeals filed by the Revenue, upholding the CIT(A)'s decisions on all issues. The Tribunal confirmed that the assessee trust's activities fell under "education" and "medical relief," qualifying as charitable purposes under Section 2(15). The trust was found eligible for exemptions under Sections 11 and 12, and the donations, corpus donations, and loss on sale of assets were all treated favorably for the assessee.
|
