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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 ..... 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. Vanprastha Ashram” at Patanjali Yogpeeth-II was proposed to be constructed by the assessee in furtherance of its charitable objectives of providing medical relief through Yoga and to impart Yoga training /education. It was submitted that assessee did not charge any fee / rent from the general public for uses of such cottages constructed under Vanprastha Ashram Scheme. The cottages are allotted to general public on the basis of availability i.e. on first come first served basis and no other conditions are stipulated for uses of such cottages. We also agree with the submission of the ld. AR that “business refers to real, substantial, organized course of activity for earning profits as “profit motive is essential requisite for conducting business. We have discussed the facts of the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer did not bother himself to verify the same even on test-check basis. In absence of such efforts by the Assessing Officer, we are of the view that the authorities below were not justified in making and sustaining the treatment of receipt of ₹ 13.68 crores as annonymous donation. Undisputedly, in almost all donations name and address of the donors have been maintained and thus bonafide of the assessee cannot be doubted where such detail has remained to be maintained in some cases. Such donations worth ₹ 1,07,73,438/- has also not been alleged to spent on other than the objects of the assessee trust. We, thus, while setting aside orders of the authorities below in this regard, direct the Assessing Officer to accept the claimed receipt as donation. We agree with the submission of the assessee that application of income in the form of acquisition of fixed assets and other capital expenditure incurred solely for the purpose of fulfillment of its charitable objectives during the year should be considered as application of income for charitable purposes. Besides, the explanation of the assessee to meet out the small irregularities shown in the books of account maintained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished by the appellant. 7. That the Commissioner of Income-tax (Appeals) erred on facts and in law in summarily concluding that the appellant violated the provisions of section 13 of the Act, without judiciously disposing off the specific objections raised by the appellant against the various allegations levelled by the assessing officer in the impugned assessment order. 7.1. Without prejudice to the above, that the Commissioner of Income-tax (Appeals) failed to appreciate that the alleged violation of provisions of section 13 of the Act, could not have resulted in complete denial of exemption under sections 11/12 of the Act. 7.2. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not deleting the following additions made by the assessing officer on account of alleged violation of provisions of section 13 of the Act: (a) on account of services being made available to M/s. Vedic Broadcasting Limited [para 7.5(a)] Rs.96.00,000 (b) on account of giving interest free indirect advance to M/s. Dynamic Buildcon Private Limited [para 7.5(b)] ₹ 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 ₹ 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 law in concluding, on the basis of the findings given in the special audit report, that there were certain irregularities in the books of accounts maintained by the appellant. 15. That the Commissioner of Income-tax (Appeals) erred on facts and in law in disallowing expenditure amounting to ₹ 2,30,60,231, without considering the additional documentary evidence furnished by the appellant during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds 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 under consideration as well. The ld. AR submitted that the assessee in accordance with the approved objectives has been consistently pursuing its charitable activities for the past four years including the assessment year under consideration and had always been allowed exemption under section 11/12, including in various assessments completed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 by the assessee under sections 11/12 of the Act are as follows: a) The predominant objective of the assessee, being propagation of Yoga, did not qualify as medical relief or imparting of education , but fell in the residuary category of advancement of any other object of general public utility ; b) The assessee un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee 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 utility i.e. the fourth limb of definition of charitable purpose contained in Section 2(15). Hence, such entities will not be eligible for exemption under Section 11 or under Section 10(23C) of the Act, if they carry on commercial activities. Whether such an entity is carrying on an activity in the nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 disease. e) To evaluate methods of treatment of Physical Body, Etheric Body, Astral Body, Mental Body and Causal Body beyond the present incomplete system of treatment for cure of physical body alone; f) Imparting Yoga and health education and to begin degree and dipl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts 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 given in section 2(15) of the Act. The aforesaid finding of the assessing officer is, it is further respectfully submitted, not only contrary to the findings given in para 3.2 of the assessment order, but is also contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessing officer to provide clarification on the same. However, the assessing officer vide remand report dated 12.03.2013, merely reproduced certain portions/paras of the impugned assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 established that a decision on the question whether certain trust is a charitable trust or not, which has nothing to do with the fluctuations in the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 page 1066-1067 of case law paperbook) Sonepat Hindu Educational and Charitable Society v. CIT.: 278 ITR 262 (P H) (R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 system of medicine means Allopathy, Yoga, Naturopath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 for all schoo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt. Further, the CIT(A) is totally 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 attainme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Kannada speaking people with an organ of educated public opinion was also 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Maharishi Mahesh Yogi and had prescribed syllabus, trained teachers, and branches all over India to spread the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 10(22) was also satisfied. That the assessee foundation did not exist for the purpose of profit was also clear from the objects clause. This 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 obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al relief to the society at large and there was no quid pro quo in the matter of collecting donation and providing the benefit of yog. Besides, the live telecast of these yog camps/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 117 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that, apart from the aforesaid allegation that the assessee received contributions for construction of cottages under the Vanprasth Ashram , which was held to be in the nature of business activity, the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derlying intent of providing medical relief and imparting yoga education. For effective medical treatment, it is, at times, important for the person who come to attend yoga shivirs/camp to stay back to regularly attend such shivirs/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 faciliti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grossly erred in holding that the cottages were not provided to the general public and were restricted for the use of the contributors/donors only. In this regard, it is respectfully submitted that the assessing officer has failed to appreciate 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/vanapra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee trust and was not a business/commercial activity with the motive of earning profits. In the above context, your Honour s kind attention is invited to the various legal precedents wherein the definition of business, trade and commerce has been explained. Construing the expression business , the Hon ble Supreme Court in the case of Distributers Baroda P. Ltd. (83 ITR 377) has held that business refers to real, substantial, organized course of activity for earning profits as profit motive 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 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has received contributions under the Vanprasth Ashram Scheme with the only underlying intent of constructing cottages for the purpose of providing accommodation facilities to the participants of the yog shivirs/camps and there was no profit motive involved. Further, the contributions were made with a specific direction to be utilized for construction of cottages and the same has been applied for such purposes only. Further reliance in this regard is also placed on the view expressed by the Hon'ble Supreme Court in the landmark 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 whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue in the garb of charitable purpose, but is not meant for those assessees who are really engaged in activities of charitable purpose. Accordingly the activities undertaken by the assesse were held to be in the nature of charitable activities and registration under section 80G(5) of the Act was allowed to be renewed. In view of the above, it is respectfully submitted that the proviso to section 2(15) of the Act in substance will not make a difference to the charitable character of the trust/institution. The terms used in the proviso 'in the nature of trade, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect to the issue of categorizing imparting of yoga training as a form of education , it has been held that any form of educational 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 section 2(15). Thereby, imparting of yoga training through well structured yoga shivir/camps was held to fall under the category of imparting education which is one of the charitable objects defined under section 2(15). The pertinent observations of the Tribunal in this regard 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appellant, it is most respectfully submitted that the activities undertaken by the appellant, being in the nature of providing medical relief through Pranayam and Yoga and also to impart education in the field of yoga, would fall under the category of providing medical relief and imparting education as provided under section 2(15) of the Act, meaning thereby that the proviso to section 2(15) of the Act would not apply. 7. The ld. CIT [DR], on the other hand, placed reliance on the orders of the authorities below with further submission that under the facts of the case of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the trust being India and the whole of the world and the trustees, in their discretion, having not been prohibited from applying income for charitable purpose either in India or abroad, question arises as to whether the trust is entitled to tax exemption even though income utilized outside India is not of a very significant amount. 7.2 As per the terms of clause 15(1)(i) of the trust deed annual general meeting is not convened atleast once in a year. He submitted that during the relevant year 618 accounts in the name of samitees at various places appeared in the books of accounts of the trust which were all reduced to NIL on 31.03.2009 by treating the amount of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained on Mercantile basis. The auditor on examination found that non maintenance of books of account strictly in accordance with declared mercantile method of accounting. The method of accounting has been done on Mixed basis and accounting is complex; (iv) During the course of Special Audit, alternation in books of accounts; (v) Accounting of interest of ₹ 1084 before the date of accrual. An amount of interest of ₹ 1084/- was credited on 16.09.2009 in account No. 003002000005555 with Indian Overseas Bank, was found to be recorded in books of account already closed on 31.03.2009; (vi) Booking of expenditure 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 accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... j Dharamshala Bhawan Trust Vs. CIT (2008) 302 ITR 321 (MP); (xiv) Radhasoami Satsang Vs. CIT (1992) 193 ITR 321 (SC); (xv) Distributors (Baroda) P. Ltd. Vs. Union of India Others (1985) 155 ITR 120 (SC). 7.7 The ld. CIT [DR] submitted that the principle of res judicata is not applicable in the provisions of Income Tax Act and hence acceptance of the returns of income for earlier two years in the case of assessee does not give any right of similar acceptance to the assessee for the year under consideration. He submitted that due to insertion of proviso to section 2(15) with effect from 1.04.2009 the Revenue has adopted new approach as per the said provision. He submitted further that facts in 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 Vanpras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case that (a) providing medical relief through Yoga / Pranayam; (b) imparting education in the field of Yoga; and (c) providing relief to the poor are pre-dominant objects of the assessee which the assessee had been carrying out over the years since it was set up in the year 2005. It is also an undisputed fact that the assessee was registered under section 12A vide order dated 14.03.2001 and approved under section 80G(5)(vi) of the Act vide order dated 27.08.2007 and during the year it was enjoying the registration and approval under the above provisions and still enjoying. Of course, principle of res judicata are not applicable in the cases under the provisions of Income Tax Act, 1961, but as per the established 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(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l going children in the country, has also been made wherein it has been provided that the yoga is one of the core components of health and physical education. Full copy of the report has been made available at page nos. 177 to 192 of the paper book and para No.9.8 at page No. 181 thereof is relevant for the purpose. It reads as under :- 9.8 The committee is of the opinion that yoga is one stream of education, which will make a permanent and positive impact on a students life. Yoga has been gaining immense popularity due to the short term as well as long term benefits that it provides. Yoga helps one to achieve all round development. Considering the immense potential of this ancient knowledge of India, the Committee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance in the last few decades. The science of Yoga and its techniques have now been reoriented to suit modern sociological needs and lifestyles. Experts of various branches of medicine including modern medical sciences are realising the role of these techniques in the prevention and mitigation of diseases and promotion of health. Yoga is one of the six systems of Vedic philosophy. Maharishi Patanjali, rightly called The Father of Yoga compiled and refined various aspects of Yoga systematically in his Yoga Sutras (aphorisms). He advocated the eight folds path of Yoga, popularly known as Ashtanga Yoga for all-round development of human beings. They are:- Yama, Niyama, Asana, Pranayama, Pratyahara, Dharana, Dhyana and Samadhi. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issues of spiritual well being. Thus he has not completely disagreed with the submission of the assessee that yoga as a discipline addresses medical relief also. So far as the decisions relied upon by the Ld. CIT(A) to arrive at a conclusion that yoga as a system does not fit into the definition of medical relief are concerned, we find that these are having distinguishable facts and issues hence are not helpful to the revenue. In the case of Kasyapa Veda Research Foundation vs. CIT (supra) it has been observed by the Cochin Bench that yoga is an ancient Indian science of meditation. There is no dispute on it. But only on the basis of such observations which is one of the aspects of the yoga it cannot be arrived at a conclusion that yoga 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a was the sixth most commonly used alternative therapy in the USA during 2007, with 6.1% of the population participating. The said study states yoga has been used as supplementary therapy for diverse conditions such as cancer, diabetes, asthama and AIDS and the scope of medical issues where yoga is used as a complementary therapy continues to grow. A reference of the publication yog in synergy with medical science: written by an ayurved acharya associated with the appellant, has also been made, relevant extracts of which ahs been made available at page Nos. 555 to 633 of the supplementary paper book (appellant). This publication has been documented on the basis of clinical tests conducted showing the clinical effect of yoga on the participants 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 subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the definition of charitable purpose. The authorities below were thus not right in denying claimed exemption under section 11/12 of the Act on the basis that propagation of yoga does not give medical relief and thus not fall under charitable purpose defined under section 2(15) of the Act and it falls in the residuary category of advancement of any other object of general public utility within the proviso to section 2(15) of the Act. 9.5 Now the question before us is as to whether propagation of yoga also falls under imparting of education to bring it eligible for the exemption under the definition of charitable purpose under section 2(15) of the Act. The coordinate bench of the Tribunal has also dealt with this issue in detail in the case 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thy, unani, siddha and homoeopathy systems of medicines. For the purpose of recognizing and granting permission for establishment of medical colleges, the department of AYUSH mandates fulfillment of certain minimum standard and requirements as prescribed under the Indian Medical Central Council Act 1970 (IMCC Act). One of the primary conditions laid down in the IMCC Act for the grant of recognition is the existence of a medical hospital attached to the ayurvedic college with the prescribed bed strength alongwith outdoor patient department (OPD) and Indoor patient department (IPD) facilities. Ld. CIT(DR) on the other hand has placed reliance on the orders of the authorities below, as discussed above. 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 training and developing the knowledge, skill, mind and character of students by schooling by way of systematic instruction, schooling o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classes on a regular basis and in systemized manner so as to provide medical relief and also to impart education in yoga through systematic instructions and training programmes. 9.7 Though we have discussed about the other submission of the ld. CIT [DR] on the issues raised specifically in the other grounds, which we will deal with in the succeeding paragraphs, but as per un-rebutted submission of the assessee, it is also pertinent to mention over here that the issuance of donation coupons in the domination of Rs.NIL (i.e. free), ₹ 100/-, ₹ 500/-, ₹ 1,100/- and ₹ 21,00/- to various voluntary donors who attend the yoga camps, which is nothing but small donations given by the voluntary donors, who attend the Shivir/camp. The ld. CIT (Appeals) has referred to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal in the case of BJP Vs. DCIT (supra) has held that an activity to be treated as business should have a symbolance of trade, an attribute of commercial activity and an expectation to earn income over a reasonable period. The Tribunal further held that the expression trade and commerce are narrower in scope than the expression business . The expression trade or commerce signify economic/commercial activity with the motive of earning profit. The three words viz. trade , commerce and business , connote and indicate a series of organized activities primarily undertaken on commercial lines for profit motive. We have discussed the facts of the present case in the preceding paragraphs as well as the predominant objects of the assessee in detail supported with activities 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar body running an educational institution solely for educational purposes and not for purpose of profit could be regarded as other educational institutions coming within section 10(22) of the Act. No such issue is involved in the present case before us. In view of above findings, the ground Nos. 1 to 6 are decided in favour of the assessee appellant and in turn these grounds are allowed. Ground Nos. 7, 7.1 and 7.2 : 10. In ground Nos. 7, 7.1 and 7.2, the assessee has questioned the validity of allegations made by the authorities below while denying the claimed exemptions under sections 11/12 of the Act. 10.1 The authorities below have alleged that the assessee had violated the provisions of section 13 of the Act on several accounts like on account of services being made available 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (1), the income or the property of the trust or institution or any part of such income or property shall, for the purposes of that clause, be deemed to have been used or applied for the benefit of a person referred to in sub-section (3),- .. (emphasis supplied) On perusal of the aforesaid provisions of section 13(1)(c) of the Act, it would kindly be appreciated that the said section bars: (a) the terms of the trust or the rules governing the institution to provide any income/part of income to enure for the direct or indirect benefit of any person referred to in subsection (3); or (b) any income or any property of the trust or the institution being actually used/ applied during the previous year for the direct or indirect benefit of any person referred to in sub-section (3). 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 provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the maximum marginal rate . (3) In a case where the relevant income is derived from property held under trust in part only for charitable or religious purposes or is of the nature referred to in sub-clause (iia) of clause (24) of section 2 or is of the nature referred to in sub-section (4A) of section 11, and either the relevant income applicable to purposes other than charitable or religious purposes (or any part thereof) is not specifically receivable on behalf or for the benefit of any one person or the individual shares of the beneficiaries in the income so applicable are indeterminate or unknown, the tax chargeable on the relevant income shall be the aggregate of- (a) the tax which would be chargeable on that part of the relevant income which is applicable to charitable or religious purposes (as reduced by the income, if any, which 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 bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gains of business. So far as the public charitable and religious trusts are concerned, their business profits are not exempt from tax, except in the cases falling under clause (a) or clause (b) of section 11(4A) of the Income-tax Act. As the maximum marginal rate of tax under the new proviso to section 164(2) applies to the whole or a part of the relevant income of a charitable or religious trust which forfeits exemption by virtue of the provisions of the Income-tax Act in regard to investment pattern or use of the trust property for the benefit of the settlor, etc., contained in section 13(1)(c) and (d) of that Act, the said rate will not apply to 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 . (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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sisted of 7 persons as mentioned in the order of the Tribunal. Out of this, 3 persons, namely, Mr. T.I. John, Mrs A. John Mr. Joseph John acted as managers of the society, discharging various functions as described therein. They were paid salaries from the F.Y. 2002-03 onwards. In the relevant current A.Y., i.e., A.Y. 2008-09, they were paid salary of ₹ 8,16,000, ₹ 7,20,000 ₹ 6,60,000 p.a. respectively. The assessing officer considered that payments made to these persons who were specified persons was excessive and, accordingly, disallowed a sum of ₹ 14,64,000 under section 40A(2)(b) of the Act as against the total expenditure of ₹ 21,96,000 claimed by the society for the three persons. On appeal, the CIT(A) considered that payment of identical amounts as salary was allowed to Mr. T.I . John Mrs. A. John during the assessment year 2003-04 to assessment year 2006-07 following 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 pref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has allowed the total salary paid to Mr. Joseph John and the salary was @ ₹ 55,000 per month. We further find that in this year, Assessing Officer has independently not brought any evidence which can show how much salary a person having qualification equivalent to Mr. Joseph John could fetch in the open market. What are the rates of salary paid by other institution to a person who is teaching as well as managing the school. We have noticed the duties performed by Shri Joseph John. Assessing Officer is harboring upon the evidence collected by the Assessing Officer in assessment year 2003-04. He has made reference to the salary of the staff in those years. With effect from 01.01.2006, Government of India has notified the 6th Pay Commission which resulted into a handsome enhancement in the salary of the employees including the government teaching staff and the salaries have almost enhanced by 30% to 40%. If the increase in the salary of Shri Joseph John allowed to him by the ITAT in 2004-05, is being looked into with this angle also then sum of ₹ 55,000 would not be on a higher side. Considering all these aspects and the detailed order of the Learned CIT (Appeals), we do n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed of immediately and, therefore, they continued to remain in possession of the assessee. Some of the securities were got transferred in the name of the assessee. That, however, does not mean that the assessee manifestly became owner of the shares. The shares and bonds belonged to the deceased intimates which normally would have gone to their legal heirs who were not traceable. This was the reason for non-entering the shares etc. in the books. The bonds and shares were also not saleable immediately. In these circumstances, the assessee could not be taken to be the de jure owner of the shares. Although, the word used is held , we are of the view that this word implies ownership of the assessee to the exclusion of all others, which is not the case here . In these circumstances, we are of the view that total denial of exemption u/s 11(1)(a) on the ground that the shares were held by the assessee will be against even the language of the provision. The Ld. CIT(A) has reached 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 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rought to tax at the maximum marginal rate which could not be treated as exempt by virtue of non-fulfilment of condition of investment in specified securities as prescribed by section 11(5) . There is nothing in section 11(5) which can be interpreted to mean that if a portion of the accumulated income of the trust is not invested in specified securities, the exemption under section 11 which had already been granted to the trust in earlier years would be withdrawn. Therefore, the assessee-trust could not be denied exemption under section 11 and only its income from dividend should be brought to tax at the prescribed rate because such income was not from specified securities. (emphasis supplied) Further reliance in this regard, is placed on the decision of the Third Member of the Tribunal in the case of Manockjee Cowasjee Petit Charities vs. DIT(E): 148 TTJ 181 (Mum.), wherein it was held that once registration is granted to trust or institution but later on it is found by Assessing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e were some instances of violation under section 13, though it is actually not so as elaborately discussed supra, still the same could not have, however, it is respectfully submitted, resulted in complete denial of exemption under sections 11/12 of the Act. The assessing officer, even in such a case, ought to have allowed exemption under sections 11/12 of the Act without considering the socalled alleged payments/benefits to the interested persons as application of income for charitable purposes. 11. The ld. CIT [DR], on the other hand, placed reliance on the orders of the authorities below. He submitted that there is apparent violation of provisions of section 13(1)(c ), 13(1)(d) and other provisions laid down under section 13 of the Act on the basis of which the authorities below were justified in denying the claimed exemption under section 11/12 of the I. T. Act to the assessee. These violations have been done by the assessee on account of services worth ₹ 96,00,000/- made available to M/s. Vedic Broadcasting Ltd. as per para No.7.5(a) of the assessment order; on account of giving interest free in direct advances of ₹ 2,40,000/- to M/s. Dynamic Buildcon Pvt. Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asting yoga shivirs/ camps from time to time. This agreement was entered into with the underlying intent to spread the science of Vedic yog and to propagate the positive effects of yoga in medical treatment for curing/ alleviating various diseases. The aforesaid agreement was not entered into by the assessee. Much later, the assessee entered into an agreement dated 12.10.2006 with M/s Media Content and Communications Services (India) Private Limited for telecasting/ broadcasting yoga camps/ shivirs. The said agreement, it is pertinent to mention here, was entered into by the assessee on being approached by the latter company to grant permission for telecasting the program. In terms of the aforesaid agreement, the latter company agreed to pay to the assessee ₹ 8 lacs per month for exclusive license to shoot and telecasting the programs. The said agreement was initially entered into for a period of one year, which was subsequently extended till 31st March, 2008 vide letter dated 22nd October, 2007. (Refer 289 to 294 of the paperbook) Subsequently, Aashta Broadcasting sold its business as a going concern to Vedic Broadcasting in December, 2007 along with all subsisting agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e DD National, Sahara Samay and other channels of Sahara, Zee TV Channels, India TV, ETV Network, etc. Therefore, Assessing officer erred in treating agreement with M/s. Media Content as the basis for alleging that the assessee benefited Vedic Broadcasting. In the aforesaid circumstances, it will kindly be appreciated that no benefit, whatsoever, actually flowed to Vedic Broadcasting; on the other hand, it was, in fact, the assessee, which benefited by propagation of its yoga shivirs/ camps through Aastha channel. In view of the aforesaid, there was, it is submitted, no violation of section 13 of the Act, inasmuch as no direct/ indirect benefit was provided by the assessee to any person specified in sub-section (3) of that section. The allegation of the assessing officer that as a result of the aforesaid arrangement, services of the assessee were made available to Vedic Broadcasting without adequate remuneration is, thus, absolutely erroneous. No service, it will kindly be noticed was made available by the 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 serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh account payee cheque no. 013604, dated 02.10.2006 to M/s United Infracon. Further, in pursuance of the said MOU, the possession of the land was handed over to the assessee on 30.11.2007. The aforesaid facts have been specifically mentioned in the said MOU and possession memo, which was produced before the assessing officer. (Refer pages 320 to 328 of the paperbook) However, the assessing officer has, without appreciating the facts in its entirety, erroneously concluded that an amount of ₹ 1.55 crores was advanced by the assessee to the M/s United Infracon, without any formal /documentary evidence to substantiate the advancement of money and has accordingly held that the said advance cannot be treated as investment made under the modes specified under section 11(5) of the Act. Further, the assessee has failed to appreciate the nexus drawn by the assessing officer between the advance paid by the assessee to M/s United Infracon and the alleged advance of ₹ 20 lakhs given by the said company to Dynamic Buildcon. Further, the allegation cast by the assessing officer that the land which was purchased by the assessee was already registered in the name of Dyanamic Buildc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (Exemption) vs. LilavatiKirtilal Mehta Medical Trust: Income Tax Appeal (L) No. 2990 of 2009 (Bom. HC) - Pinegrove International Charitable Trust vs. UOI: 327 ITR 73 (P H) - Lissie Medical Institutions v. CIT- 348 ITR 344(Ker) The assessing officer, it is respectfully submitted, failed to appreciate distinction between investment/ deposit of funds and application of income for charitable purposes while alleging that the petitioner invested money in the mode other than specified in section 11(5) of the Act. Advancing of money for acquisition of a capital asset for the sub-serving the charitable objects is, it is submitted, application of income and not investment/ deposit of funds. In this regard, it is further respectfully submitted that though the assessee had entered into agreement for purchase of land with M/s Shree Nirmaya Properties Private Ltd, subsequently substantial dispute arose, and the agreement to purchase has rescinded. Further, the amount of advance paid to M/s Shree Nirmaya Properties Private Ltd would 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 pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of building on the land on which trust has no legal right/ control. The assessee, thus, violated the provisions of section 13(2)(g) of the Act. Rebuttal The assessee has denied any construction on the land owned by Swami MuktanandJi, which is duly supported by a certificate of Advocate, Sh. SatinderSaini filed before the assessing officer. Further, copy of layout map of PYP-II, wherein the plot of land belonging to Swami MuktanandJi is clearly identifiable and reflected as a vacant land on which no construction has been undertaken was also filed before the CIT(A). (Refer pages 340 of the paperbook) The assessing officer has, it is submitted, merely proceeded on conjectures and surmises to hold that the assessee violated the provisions of section 13(2)(g) of the Act . Para 7.5 (f) (g) Refer page 21 to 22 of AO order Construction of PYP-II on the land not owned by the assessee Case of the Assessing officer/CIT(A) The assessing officer has observed that the Trust has constructed part of the building called Patanjali Yog Peth Ashram ( PYP-II ) on parcels of the land belonging to the trustees, viz. Swami MuktanandJi and Achar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, was not only occupied but also used by the assessee for furthering its charitable objects. There has been no diversion of any income or property of the assessee in favour of any person specified in section 13(3), leave aside there being any such diversion during the relevant previous year, which is the condition precedent for applying section 13(2)(g) of the Act. In view of the aforesaid, it is respectfully submitted that the assessing officer grossly erred in holding that the assessee violated the conditions specified in section 13(2)(g) of the Act. Para 7.5(h) Refer page 22 to 23 of AO order Payment of Advance to DYMT Case of the Assessing officer/CIT(A) The assessing officer has observed that ₹ 14.25 lakhs is appearing as opening balance of advance payment to DYMT for purchase of land. 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 The conclusion of the assessing officer that there has been violation of section 11(5) appears to be legally untenable. During the course of assessment proceedings, it was pointed out by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Your Honours kind attention in this regard, is invited to the decision of Hyderabad Bench of the Tribunal in the case of DDIT (Exemption)-2, Hyderabad vs. Society for the poor and Oppressed: 125 ITD 190 , wherein the president of the society had purchased a vehicle in his personal name. On this account, the assessing officer denied exemption under sections 11/12 of the Act, holding the same to be a clear cut violation under section 13 of the Act. However, the society had subsequently amended the original registration certification and registered the vehicle in the name of the society. Thus, the Tribunal held that since the original registration certification was legally amended, therefore, the ownership shall be construed in the name of the society from the date of purchase and application of section 13 of the Act shall not apply In view of the aforesaid, since the original registration certification is legally amended, and the motorcycles now stand registered in the name of the assessee trust, the ownership shall be construed in the name of the society from the date of purchase and application of section 13 of the Act shall not apply. Para 7.5(j) Refer p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... os.7, 7.1 and 7.2 are allowed. 13. Ground Nos. 8 to 10: In ground No. 8, the assessee has questioned the validity of finding of the ld. CIT (Appeals) that the assessee had undertaken activities outside India in violation of provisions of section 11(1)(a) of the Act. In ground Nos. 9, 9.1 and 9.2, the assessee has questioned the validity of additions of ₹ 44,25,01,268/- made on account of corpus donations received by the assessee. In ground No. 10, the finding of the ld. CIT (Appeals) that the voluntary contribution received by the assessee, including donations received through yoga camps and yoga samities were not eligible for exemption has been questioned. 13.1 In support of the above grounds, the ld. AR has furnished following submissions : Without prejudice to the primary contention that the assessee is eligible to claim exemption under sections 11/12 of the Act, it is further submitted that, in the impugned order, the assessing officer has made addition aggregating to ₹ 44,25,01,268/- on account of corpus donations received by the assessee in the assessment year under consideration, by holding that corpus donations also constitutes income of the trust and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of corpus/ capital of the receiving trust are, it is submitted, per se, a capital receipt and therefore, irrespective of the fact that the receiving trust is eligible for exemption or nor, in the absence of any statutory mandate, such contributions could not be regarded as income liable to tax under the provisions of the Act. As a necessary corollary to the aforesaid, voluntary contributions received towards corpus by a trust, which is denied exemption under sections 11/12 of the Act and is treated as non-charitable, could not be regarded as income , per se, and the same would constitute a capital receipt, not liable to tax. Your Honours kind attention in this regard is invited to the case of CIT vs. Eternal Science of Man s Society: 128 ITR 456 (Del) , wherein it was held that any receipt of capital nature could not be treated as income and, hence, it was outside the purview of section 12 of the Act. In this particular case, the Hon ble Delhi High Court held that a donation of shares made by one charitable organization to another, with a specific direction that these shares would constitute the corpus of the donee organization, could not be deemed to be income in ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the recipient trust. Therefore, such capital contributions can be retained by the donee trust as corpus without attracting any income-tax liability. Therefore, the voluntary contributions to the capital assets were to be excluded from the taxable income of the assessee-society . (emphasis supplied) In the case of Trustees of Kilachand Devchand Foundation vs. CIT: 172 ITR 382 , the Bombay High Court held that the provisions of sub-section (2) of section 12 of the Act applied to such contributions as were referred to in sub-section (1) thereof. Sub-section (1) referred to contributions which were voluntary contributions and applicable solely to charitable or religious purposes. It was held that Donations of a capital nature might be voluntary, but could not, however, be applied to charitable or religious purposes. It is the income thereof that must be so applied. A contribution made expressly to the capital or corpus of a trust, though voluntary, does not, therefore, fall within the purview of section 12(2) of the Act. Accordingly such contributions could not be deemed to be income derived from property for the purposes of section 11 of the Act, and the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied) In the case DIT vs. Sri Ramakrishna Seva Ashrama: 18 taxmann.com 37 (Kar) , it was held that donation for specific project shall be treated as corpus donation, and such income falls under section 11(1)(d) of the Act and is not liable to tax. Further, in the case of DIT (Exemptions) vs. Jaipur Golden Charitable Clinical Laboratory Trust: 311 ITR 365, where the assessee-trust, running a hospital, received donations from consulting doctors working at hospital which donations were voluntary and towards corpus of fund, it was held that such donations could not be treated as income of assessee trust. You Honours kind attention in this regard is invited to the decision of the Bangalore Tribunal in the case of St. Ann s Home for the Aged v. ITO: 13 TTJ (Bang.) 185 , wherein it was held that voluntary contributions expressly received for construction of a building were corpus donations, since they were received and utilized for a capital purpose. In the case of Mehrangarh Museum Trust vs. ACIT: 156 TTJ 425 (Jd.), it has been held that if donation is received with the specific direction of the donor to treat the donation as towards corpus or for specific use , it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ried to justify the orders of the authorities below. He submitted that under the provisions of section 11(1), income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust is excluded from the total income of the assessee. But the Income Tax Act does not define as to what constitute a corpus or as to under what circumstances a contribution can be termed as corpus contribution . In simple words, corpus contribution is a contribution made with a specific direction from donor that a particular donation shall form part of corpus and that shall form part of the capital and income therefrom is used in accordance with directions. He submitted that as per the provisions of the Income Tax Act, no assessee trust or institution can claim application in respect of any corpus fund withdrawn by it. As per the scheme of section 11 an income derived from property hailed under trust is exempt when it is applied or accumulated as per the provisions of the Act. Therefore, the application has to be out of current income because provisions of section 11 to 13 only provide for exempting the current income if it is applied or accumula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the corpus of the donee organization, could not be deemed to be income in the hands of receipient society. In the case of Trustees of Kali Chand Dev Chand Foundation Vs. CIT (supra) the Hon ble Bombay High Court held that the provisions of section 12(2) of the Act are applied to such contributions as were referred to in subsection (1) to section 12 of the Act. Sub section (1) referred to contributions which were voluntary contributions and applicable solely to charitable or religious purposes. It was held that donations of a capital nature might be voluntary, but could not, however, be applied to charitable or religious purpose. It is the income thereof that must be so applied. A contribution made expressly to the capital or corpus of a trust, though voluntarily, does not, therefore, fall within the purview of section 12(2) of the Act. Accordingly, such contributions could not be deemed to be income derived from property for the purpose of section 11 of the Act and provisions of the said section would not apply. Again the Hon ble Allahabad High Court in the case of Dwarka Dheesh Charitable Trust Vs. ITO (supra) has held that voluntary contributions made with a specific direction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gpeeth-II, in relation to Vanaprastha Ashram, disaster relief fund and in the University of Patanjali. 15.1 Besides, the assessee had also received corpus donation in the form of immovable property which was recorded at NIL value in the books of the assessee. The Assessing Officer, however, added the amount of ₹ 64,43,500/- on account of such immovable property on the basis of its estimated market value. There is no dispute that the aforesaid donations were received by the assessee with the specific direction, to be utilized for a specific cause and was not for attaining/achieving the general object of the assessee trust. The donations in question formed part of the corpus of the trust and thus, such donations are per se capital receipt not liable to tax irrespective of the fact that whether the receiving trust is eligible for exemption or not. We concur with the contention of the ld. AR that in terms of section 2(24)(iia), voluntary donations received, inter alia, by a charitable trust/institution are by legal fiction treated as income and is thereafter, excluded from total income in accordance with the provisions of sections 11/12 of the Act. Such voluntary contributions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or claiming exemption. In the case of Little Tradition Vs. DCIT(E) (supra) it has been held that income can be applied by way of donations to other charitable institutions having similar objects. In the case of R.B. Sri Ram Religious Charitable Trust Vs. CIT (supra) it has been held that voluntary contribution not applied for charitable purposes is not entitled to exemption under section 12 of the Act. In the case of Kanhaiya Lal Punj Charitable Trust Vs. Director of Income-tax (E) (supra) it has been held that according to sections 11 and 12 of the Act, the voluntary contribution made with specific direction that they shall form part of the corpus of the trust or institution, shall not be included in the total income of the previous year of the trust. In the case of DIT (E) Vs. Charanjeev Charitable Trust (supra) the view of the Assessing Officer that real motive of assessee was to advance its surplus moneys to APIL without charging any interest and since APIL was a prohibitive person within meaning of section 13(3), provisions of section 13(1) (ii) were attracted with result that assessee could not be allowed exemption under section 11. As discussed above, the facts of the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation of Rs. Nil (i.e. free), ₹ 100, ₹ 500, ₹ 1100 and ₹ 2100 are issued to the various voluntary donors who attend the camps. Such voluntary donations are duly supported by affidavits of the presidents of various yoga science camps organizing committee, which were duly filed before assessing officer (Refer pages 503 to 569 of the paperbook). It was also pointed out that the yoga camps are organized publicly and are telecast from time to time by various TV channels. The entire recording of the yoga camps in the form of 4 DVDs were also filed before assessing officer. It was thus submitted that the complete identity of the donor of yoga science camps is known inasmuch as the donor can easily be identified from the affidavit and also the DVDs submitted before assessing officer. Such donations aggregated to ₹ 6,61,27,782, which was received from 22 yoga camps organized during the relevant year. It was further submitted that voluntary donations were received in small denominations and therefore, the same cannot be regarded as anonymous donation in terms of section 115 BBC of the Act. Apart from the aforesaid, it was further pointed out that volunt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was required to maintain the record consisting of name and address of the donors which assessee has failed to do. Similar discrepancies were there with regards to the remaining donation The Assessing Officer was, thus justified in treating donation amounting to ₹ 13.68 crores as annoynimous donation and by virtue of provision of section 13(7), provisions of section 11 and 12 will not apply to annoynimous donation. He submitted that identity of donors was also not verifiable. The assessee failed to furnish serial wise details of identity shown in receipts mentioned by the auditors in the report. 18. Having gone through the orders of the authorities below in view of the above submissions, we find that ₹ 13,68,99,745/-received was alleged as annoynimous donation under section 115BBC of the Act. It was alleged that the assessee had not maintained record consisting of name and address of the donors. The Assessing Officer observed that ₹ 6.61 crores was received through sale of coupons from 22 Yoga camps, which was organized publically as well as telecasted on TV channels. Assessing Officer further observed that ₹ 5.99 crores were received during the relevant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the donors. The Assessing Officer held these details maintained by the assessee are not verifiable. There is no doubt that these Yoga camps are attended by the persons in thousands still the assessee has maintained names and address communicated by the donors, but without verifying the same the Assessing Officer has summarily concluded that the said donations were in the nature of anonymous donations as defined under section 115BBC of the Act. The assessee had also furnished affidavits of organisors of ad-hoc committees through whom the assessee had organized Yoga camps made available at page Nos. 503 to 569 of the paper book, but the Assessing Officer did not bother himself to verify the same even on test-check basis. In absence of such efforts by the Assessing Officer, we are of the view that the authorities below were not justified in making and sustaining the treatment of receipt of ₹ 13.68 crores as annonymous donation. Undisputedly, in almost all donations name and address of the donors have been maintained and thus bonafide of the assessee cannot be doubted where such detail has remained to be maintained in some cases. Such donations worth ₹ 1,07,73,438/- has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est and purchase of medicines, the ld. CIT [DR] has tried to justify the action of the authorities below in this regard. 21. Having gone through the submissions of the parties on the issues raised in ground Nos. 12 to 18 of the appeal, we find that the assessee has tried his best and has successfully met out each and every allegation made and upheld by the authorities below with the assistance of the following tebular chart : Paragraph Reference Issue Para 13 Refer page 41 of AO order Ground No. 12: Donation of vehicles In this para the assessing officer has added an amount of ₹ 6,52,493/- to the income of the assessee, being the monetary value of the tata sumo vehicle received as donation in the assessment year under consideration, which was considered at a nominal value of ₹ 1/- by the assessee. In making the aforesaid addition the assessing officer has observed that since the assessee was not eligible to claim exemption under sections 11/12 of the Act, the actual value and not the nominal value of the vehicle is to be considered. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ills/vouchers. In this regard, it is respectfully submitted that, the assessing officer has failed to appreciate that the aforesaid expenditure comprises of the following: a) Donation and assistance given to Samitis aggregating to ₹ 2,10,55,444; b) Miscellaneous expenditure incurred for day to day charitable activities of the assessee. Insofar as assistance/donation to Samitis is concerned, the assessee pointed out before the assessing officer that various samitis set up across the country are engaged in propagating yog by way of imparting yoga training/education in order to fulfill the predominant object of the assessee, i.e. to provide medical relief and education. Accordingly, out of the total donation collected by the samitis from various volunteers, part of the donation is allowed to be retained by the samitis for incurring various day to day expenditures. The aforesaid amount of donation/assistance aggregating to ₹ 2,15,36,134 was nothing but such assistance/donation, allowed to be retained by the samitis for incurring various expenditure. In support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 accounted for in the accounts, and not as computed under the I.T. Act, subject of course to what is provided in sub-s. (4) of s. 11 . Applying the same reasoning, the expression income has to be understood in the popular or general sense and not in the sense in which the income is arrived at for purpose of assessment to tax by the application of some artificial provisions either giving or denying deduction. That income cannot be understood in the sense of what is arrived at for the purpose of incometax would be clear if we pay some attention to s. 10. For instance, s. 10(1) exempts agricultural income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding 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 view of the aforesaid, it is respectfully submitted that the allegation of the assessing officer that there were irregularities in the books of account maintained by the assessee is erroneous and legally unsustainable. Being so, various additions made by the assessing officer called for being dropped. Para 8.1 Refer page 27 of AO order Ground No. 16(b): Alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, 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 ₹ 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 ₹ 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 categorical findings/ observations, the assessing officer proceeded to make additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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