2021 (10) TMI 607 - AT - Income Tax

Exemption u/s 11 - charitable activity u/s 2(15) - Whether activity of the trust falls under the clause education and medical relief and not the last limb of advancement of general public utility? - HELD THAT - As decided in own case 2019 (9) TMI 1598 - ITAT AHMEDABAD 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. Addition of donation as application of fund - HELD THAT - As decided in own case 2019 (9) TMI 1598 - ITAT AHMEDABAD 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 CITA 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 Ld. 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 - Decided against revenue. Corpus donation receipts - HELD THAT - As decided in own case 2019 (9) TMI 1598 - ITAT AHMEDABAD 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. - Decided against revenue.

Summary

Issues Involved:
1. Classification of the trust's activities under "education and medical relief" versus "advancement of general public utility."
2. Allowance of capital expenditure as application of income.
3. Allowance of donations as application of income.
4. Allowance of corpus donations.
5. Claim of accumulation under Section 11(2) of the Income Tax Act.
6. Claim of accumulation under Section 11(1)(a) of the Income Tax Act.

Detailed Analysis:

Issue 1: Classification of the Trust's Activities
The primary issue was whether the activities of the trust fall under "education and medical relief" or the "advancement of general public utility" as per Section 2(15) of the Income Tax Act. The trust argued that its activities, including the Sudarshan Kriya, provided medical relief and education, not merely general public utility. The Tribunal upheld the trust's position, noting that the Sudarshan Kriya reduces stress-related medical conditions and provides mental well-being, thus qualifying as medical relief and education. The Tribunal referenced prior judgments, including those of the Delhi High Court and the Supreme Court, which supported the classification of yoga and similar activities as educational and medical relief.

Issue 2: Allowance of Capital Expenditure
The Tribunal affirmed the CIT(A)'s decision to allow the claim of capital expenditure as application of income. The trust's activities were deemed charitable, and the capital expenditure was considered necessary for carrying out these activities. The Tribunal found no reason to deviate from this position, as the activities were consistent with the trust's objectives of providing education and medical relief.

Issue 3: Allowance of Donations as Application of Income
The Tribunal upheld the CIT(A)'s decision to allow donations as application of income. The trust provided evidence that the donations were used for charitable purposes, and the CIT(A) directed the AO to verify the charitable status of the recipient organizations. The Tribunal noted that donations made from current income, as opposed to accumulated income, are eligible for exemption, referencing the Delhi High Court's judgment in the case of DIT (Exemption) vs. M/s. Bagri Foundation.

Issue 4: Allowance of Corpus Donations
The Tribunal affirmed the CIT(A)'s decision to allow corpus donations, noting that the trust's activities were charitable and thus eligible for benefits under Sections 11 and 12 of the Act. The CIT(A) directed the AO to verify whether the donations were indeed corpus donations. The Tribunal found no reason to deviate from this position, referencing prior judgments that supported the allowance of corpus donations for charitable trusts.

Issue 5: Claim of Accumulation under Section 11(2)
The Tribunal upheld the CIT(A)'s decision to allow the claim of accumulation under Section 11(2). The trust's activities were deemed charitable, and the accumulation was considered necessary for future charitable activities. The Tribunal referenced prior judgments that supported the allowance of accumulation for charitable purposes.

Issue 6: Claim of Accumulation under Section 11(1)(a)
The Tribunal affirmed the CIT(A)'s decision to allow the claim of accumulation under Section 11(1)(a). The trust's activities were consistent with its charitable objectives, and the accumulation was necessary for ongoing and future activities. The Tribunal found no reason to deviate from this position, referencing prior judgments that supported the allowance of accumulation for charitable purposes.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on all grounds. The trust's activities were classified under "education and medical relief," and the claims for capital expenditure, donations, corpus donations, and accumulation under Sections 11(2) and 11(1)(a) were allowed. The Tribunal's decision was consistent with prior judgments and supported the trust's charitable status.