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TMI Blog2018 (5) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... the same may be categorized as advancement of 'other object of general public utility'. (4) That the Ld. CIT(A) erred in not appreciating the fact and law that since the income of the trust during the year exceeds Rs. 10 lacs, therefore even the activities of the trust lose the character of being of the charitable nature as per the first and second proviso of sec.2(15) of IT Act. Accordingly the trust no longer remains entitled for deduction u/s. 11 of the IT Act. (5) Hence order of the Ld. CIT(A) be cancelled and the order of AO be restored. (6) Appellant craves leave to modify/amend or add any one or more grounds of appeal. 2. The brief facts of the case shows that assessee is a trust registered u/s 12 A of the Act as per order dated 27.03.1995. It is claiming exemption u/s 11 & 12 of the Income Tax Act. The assessee is carrying on various activities and the gross receipts of the assessee is approximately Rs. 200 crores the assessee filed its return of income on 31.03.2011 declaring nil income. It has also filed its audit report in Form No. 10B of the Act. The gross income of the assessee of Rs. 103 crores was claimed as exempted u/s 11 of the Act. 3. The Ld. Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es: (1) Providing medical relief through yoga, naturopathy, acupressure and Ayurveda for the purpose of alienating all kinds of diseases; (2) Imparting education in the field of yoga, (3) Providing relief to the poor and (4) Undertaking research and development activities in the field of yoga, Ayurved, vedic literature to further the cause of alienating all kinds of diseases and provide medical relief to the public at large. 6.2 The first issue before us to be adjudicated upon is as to whether the appellant trust fall within the purview of providing "medical relief", "imparting education" or "relief to the poor" ? 6.3 In the previous paragraphs we have discussed the approach of the authorities below on the above issue as well as submissions of the parties in this regard. The contention of the appellant remained that they are providing medical "relief through yoga, naturopathy, acupressure and Ayurved for the purpose of alleviating all kinds of diseases ; they are imparting education in the field of yoga, providing relief to the poor and undertaking research and development activities in the field of yoga, ayurveda to all kinds of disease and provide medical relief. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al department, ophthalmology department etc. The claim of the appellant that in this hospital the appellant provide medical relief to over 2000 patients every day and from its primary set up in Haridwar where around 2,39,000 patients were treated during the year under consideration the hospital also has its presence in Ranchi and Patna where more than 60,000 and 75,000 patients respectively are treated every year, has not been disputed by the revenue. Patanjali Bhartiya Ayurvigyan Avam Anusandhan Sansthan i.e. an Ayurvedic College has been set up, which was under construction in the year under consideration and it has started operations w.e.f. 20.07.2009, for imparting education in the field of Ayurved. It has been set up at Haridwar and was approved and duly recognized by the Department of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy systems of medicines(AYUSH) vide notification dated 20.7.2009. It is pertinent to mention over here that for the purpose of recognition and granting permission for establishment of medical college, the Department of AYUSH a body set up by the Ministry of Health & Family Welfare, Govt, of India mandates fulfilment of certain minimum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. In view of these discussions we are in a definite position to hold that the appellant was entitled for the exemption u/s 11/12 of the Act on the basis that the appellant was engaged in the activity of providing 'medical relief' through ayurveda, naturopathy etc. during the year under consideration i.e. asstt. year 2009-10 and the authorities below were not justified in refusing the claimed exemption to the assessee in this regard. It is ordered accordingly. "Medical Relief" through yoga 6.4.1 While examining the issue as to whether medical relief can be given through yoga on the basis of above submissions made by the parties we find that in the Clinical Establishment (registration and regulation) Act 2010, the legislature has defined "recognized system of medicine" in Section 2 (h) of the said Act. As per this definition "(h) recognized system of medicine means allopathy, yoga, naturopathy, ayurved, homeopathy, siddha and unani system of medicines or any other system of medicine as may be recognized by the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted from the website of department of Ayush (Ministry of Health and Family Welfare) to come this conclusion that yoga is a discipline appears to address more the issues of spiritual well being rather address the problems associated with the more worldly "medical relief" and exercises forming part of the yoga system would at the best have indirect salutary benefit on the health of an individual. He held that yoga is a spiritual system more than a curative system for alleviating or even curing various ailments. It is not seen as a specific remedy for physical ailment at par with medical system like allopathy or even ayurveda. In this regard the Ld. CIT(A) has placed reliance on the decisions in the cases of Kasyap Veda Research Foundation (supra) and Rajneesh Foundation (supra). A complete information on yoga available on the website of the Ayush i.e., 'Httpp://www.Indiamedicine.nic.in' has been made available by the assessee at page Nos. 639 to 655 of the supplementary paper book No. 1 and at page No. 757 to 793 of the supplementary paper book No. 2 filed by the assessee. The Ld. AR has drawn our attention also on the following information on yoga available on the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situations. Even in the extracts of the information available on the website of Ayush reproduced by the Ld. CIT(A) at page 15 of the first appellate order in the definition of yoga it has been stated that yoga is a discipline to improve or develop one's inherent power in a balanced manner. It offers the means to attain complete self-realisation. As per literal meaning of Sanskrit word "yoke" it has been noted that the yoga can be defined as a means of uniting the individual spirit with the universal spirit of God and according to Maharishi Patanjali, yoga is the suppression of medications of the mind. The information given under the head "yoga as soul therapy" has also been extracted by the Ld. CIT(A) as per which all parts of yoga (japa, karma, bhakti) have healing potential to shelter out the effects of pains. It has been further noted therein that one especially needs proper guidance from an accomplished exponent, who has already treated the same track to reach the ultimate goal. If we read these informations available on the website of Ayush in its totality we find it difficult to concur with the view of Ld. CIT(A) that yoga as a system does not fit into the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said decision the Hon'ble High Court has however also been pleased to observe that not only in India but in the western countries also meditation and yoga are being accepted as a great source of physical and mental health. Meaning thereby that yoga is a source for medical relief. For a ready reference the relevant extract of the said decision is being 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 well-being of the human beings. Cognizance has to be taken that the meditation and Yoga I 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 attainment. When a large number of people feel that meditation is a great source for physical, mental and spiritual well-being, it must be held to be an activity for the advancement of general public utility" (Emphasis supplied) 6.4.5 Ld. AR has also referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The predominant objective of the appellant trust as it is apparent from its objects, remained to provide medical relief through ayurveda and propagation of yoga for the purpose of treating/curing various diseases. '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 systemized manner also falls under the category of 'imparting of education' as provided u/s 2(15) of the Act. Reliance has been placed on several decisions, which we will discuss hereunder. The contention of the Ld. AR remained that the predominant object of the appellant trust are to provide practical and theoretical training in the field of yoga, which would ultimately provide medical relief to the society at large. It was submitted that in pursuance of the said objective the appellant trust has made inter-trust donations to Patanjali Yog Peeth to support their endeavors of imparting yoga education by means of organizing yog shivirs/ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Sole Trustee, 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 or training. The Hon'ble Delhi High Court in the case of Delhi Music Society (supra) has been pleased to hold that since the assessee society was teaching and promoting all forms of music and dance, western, Indian or any other and was run like any school or educational institution in a systemic manner with regular classes, the same therefore meet the requirement of an educational institution within the meaning of section 10(23C)(vi) of the Act. In the case of SRM Foundation of India (supra) the Delhi Bench of the Tribunal, where the assessee was" engaged in spreading the system of transcend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the trust deed of the appellant are in a nature of general public utility. The objects of the appellant are as under :- A. "The main aim of the trust would be to impart the practical and functional training of astung yog, raj yog, hath yog, ashan and pranayam etc as received from the ancient tradition propounded by the Rishis and Munis to make an end of extreme sufferings to cure diseases and to receive a calm stage of mind and extreme happiness. B. To construct the building etc for boarding and lodging for those who are instructed III Yog and meditation. C. To organize Yoga camps in the country and abroad in order to propagate the yoga, training and Vedic Dharma. D. To open and establish charitable hospitals for the treatment of the helpless poor, out caste and also to distribute medicines, clothes and food articles in the tribal area. E. To furnish and equip the charitable hospital with modern medical facilities. F. To carry out conduct research on Yoga, Ayurveda and Vedic literature and also to organize scholarly seminars and competitions. G. To prepare and to sale and purchase of the Ayurvedic medicines for the charitable hospitals, hospital colleges, schools ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain objects of the assessee trust were education, medical relief and relief to the poor. One of the objects contemplated the trust to engage in carrying on, help, aid, assist and promote rural reconstruction work, cottage industry and all matters incidental thereto. The trustee carried on business by investing the corpus as per powers given under some clause of article of trust. The assessee claimed that the business carried on by it and from out of which it had derived income was held under trust and since the trust was for charitable purpose, the income was exempt from tax u/s 11. The AO rejected its claim. The Tribunal as well as Hon'ble High Court held that the object covered by clause 1(g) involved carrying on an activity for profit. On appeal the Hon'ble Supreme Court held in favour of the assessee by observing that clause 1(g) referred by the lower authorities was not an object but was really in the nature of a power. The Hon'ble Court further held that the ancillary activity undertaken by the assessee was to afford relief to poor falling within scope of section 2(15) of the Act and was not an object of general public utility. It was further held that business be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention of retaining funds within its own control. It was alleged by her that the appellant was charging exhorbitant rates for accommodation fee in the name of participation fee. In alleging so the Ld. CIT(DR) has placed reliance on the statement of one Shri Balwant Singh Minnas, wherein he has alleged to have paid amount of Rs. 49,000/- as participation fee for the yoga shivir purportedly conducted by the appellant in the assessment year under consideration. The Ld. CIT(DR) has further alleged that appellant has collected a sum of Rs. 68.45 lacs under this head during the year. She alleged further that the assessee has charged Rs. 290.79 lacs from patients during the assessment year through medical hospital which was in addition to the price of medicine charged from patients. She alleged that the appellant was unable to produce during the appellate proceedings any documentary evidence to support the charitable activities in the form of medical relief in the hospital run by the appellant. She alleged that the appellant was unable to produce the medical practicitioner during the assessment proceedings. The rejoinder of the Ld. AR remained that there is no legal impediments in one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an amount of Rs. 2 .2 crores approximately has been charged from the patients who have been treated in the hospital run by the appellant, room rent charges, diagnosis and surgical services provided by the appellant which has also been charged at nominal rates in order to meet the actual costs incurred without any element of profit imbibed therein. In this regard attention was drawn on the income and expenditure statement of appellant trust placed at page 379 of the paper book, wherein appellant has incurred an expenditure of Rs. 5.1 crores as against income of Rs. 2.2 crores thereby resulting in a deficit of Rs. 2.8 crores. Regarding the allegation that the appellant was unable to produce any record in the form of medical prescriptions to substantiate that medical relief was provided in the hospital run by the appellant, Ld. AR submitted that as a matter of practice the prescriptions made by the medical practitioners in the OPD are never retained and are always given to the patients. Nonetheless the appellant maintains a record of the patients who have been treated in house which has nowhere been disputed by the department. Against the allegation of the department that appellant wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f use or application, or retention, of the income from such activity; ** ** "(Emphasis supplied) Therefore, the aforesaid proviso does net apply to a trust/institution engaged in the charitable object of providing relief to the poor, imparting education and providing medical relief. The vision with which the applicant trust has been set up and which is being followed over the years are as under:- '- To make a disease free world through a scientific approach to Yoga and Ayurved and to fulfil the resolution of making a new world free from disease and medicine; - To establish Pran as medicine for the treatment of all curable and incurable diseases by research on Pranayam /Yoga. - 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; - To form a new integrated system of treatment, consisting mainly of the techniques of Yoga and Ayurveda, for Surgery and Emergency cases , Allopathy, Homoepathy, Unani and Acupressure to soothe patients suffering from unbearable pains and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he department does not survive. The Ld. AR submitted further that the predominant objective of the appellant trust is to provide medical relief to the society at large. Hence there is no specific restriction stipulated in the trust deed to prevent the appellant from prescribing allopathic medicines. He referred clause A & D of the trust deed in support. He however submitted that though the appellant primarily adopts ayurved and yoga as techniques to cure diseases but there is no embargo in the trust deed to prevent the appellant from prescribing allopathic medicaines to cure the patients of diseases. It was submitted further that this contention is also contrary to primary contention of the department that the appellant prescribed only medicines which are manufactured in house and made available in the sales counters managed by the appellant. We fully agree with the above submission that Ld. AR made in rejoinder that there is no substance in the allegations of Ld. CIT(DR) that there was violation of trust deed by the appellant in accepting membership fees and prescribing allopathic medicines to its patients. 6.7.1 In ground No. 10 of the appeal the appellant has taken alternative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt objective of providing medical relief being pursued by the appellant. Hence does not fall to the objects of general public utility as defined u/s 2(15) of the Act. Regarding comparative rate chart furnished by the assesee before the Tribunal amounting to additional evidence, Ld. AR submitted that this fact was very much highlighted before the authorities below and reference of the contents of page No. 13 of the first appellate order has been made in support. It was submitted further that the chart filed is nothing but collation of the details of prices available in public domain and has been filed merely in furtherance of the contention taken before! The authorities below. Considering the above Submission we find substance in the submission of the Ld. AR and the same is accepted as such. 6.7.4 Besides, above, it is pertinent to note here that the appellant since its inception in the year 1995 has been engaged in the activity of providing medical relief through Patanjali Bhartiya Ayurvigyan Avam Anusandhan Sansthan' at Haridwar which has been consistently accepted by the revenue in the assessment years 2004-05 to 2008- 09 vide various assessments framed u/s 143(3) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese aspects the Tribunal held that since there was no element of chaity involved in the activities undertaken by the appellant the assessee was not entitled to claim exemption u/s 11/12 of the Act. In the case of ICAI Accounting Research Foundation (supra) the assessee was pre-dominantly engaged in undertaking R&D activities on behalf of Government and other institution and providing consultancy services. In view of the primary activity undertaken by the assessee it was held to be in the nature of providing 'general public utility' as defined u/s 2(15) of the Act. However the case was ultimately decided in favour of the assesee and exemption was granted u/s 10(23C)(iv) of the Act. In the case of Queen's Educational Society, (supra) decision was rendered in the context of allowability of exemption u/s 10(23C) of the Act on the. facts of the case before the Hon'ble High Court. In this case profits of the assessee was considered without taking into consideration the capital expenditure incurred by the assessee for charitable purposes. This decision was subsequently been dissented from in several decisions including decision of Hon'ble Punjab & Haryana High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table character of the institution during the course of assessment proceedings. It is not open to the AO in the assessment proceedings to hold that the objects of the assessee are not charitable in nature. The contention of Ld. AR remained tha the meaning of the expression 'not for purpose of profit' in the above provisions is no longer res integra, the test being, what is the predominant object of the activity - whether it is to carry out a charitable purpose or to earn profit" If the predominant object is to carry out a charitable purpose and not earn profit, the organization would not loose its charitable character merely because some profit arises form the activity. Ld. AR has placed reliance in this regard on the following decisions including the decision of Hon'ble Supreme Court in the case of Surat Art Silk Manufacturers (supra) :- - CIT v. Andhra Pradesh State Road Transport Corpn. [1986] 159 ITR 1 (SC) - Victoria Technical Institute (supra) - Thiagarajar Charities (supra) - Aditanar Educational Institution (supra) - Bar Council of Maharashtra (supra) - American Hotel Lodging Association Education Institute (supra) - Delhi Kannada Education Society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a charitable object itself. We find that in the case of appellant before us the activity of manufacturing and sale of ayurvedic preparations has been undertaken only for the purpose of effectuating the charitable objective of providing 'medical relief to the society at large on a genuine need was felt to provide superior quality ayurvedic preparations at economical prices in order to attain effective medical results. Only because the activity carried on yielded" profits a negative inference cannot drawn that the activity was undertaken with the sole intention of earning profits. It is also pertinent to note that the total donations/voluntary contributions received by the appellant trust during the assessment year under consideration amounted to Rs. 3,89,14,100/- only. Whereas the total revenue expenditure incurred by the appellant trust in the assessment year under consideration for undertaking its charitable activities amounted to Rs. 48,54,93,383/- (excluding depreciation). Further it is apparent from page 26 of the paper book i.e. income and expenditure account for the year ending 31st March, 2009 that substantial capital expenditure has also been incurred by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness was not applied for charitable purposes, the Hon'ble Supreme Court held that where business is held for charitable purposes the conditions prescribed in proviso (b) to section 4(3) (i) of the Income Tax Act is not applicable and the assessee was held to be eligible for exemption. The decision of Delhi High Court in the case of Hamdard Dawakhana (Waqf) (supra) though rendered in the context of the pre amended law i.e. before insertion of section 11(4A) in the 1961 Act. But the Hon'ble Court held that it was immaterial how money which was obtained by running of an activity for profit did not make the objective non charitable. If that money was used for charitable purpose and not for the carrying on any business at a profit, then the object of the trust was charitable notwithstanding the source of the income. The Hon'ble Supreme Court again in the case of Thanthi Trust (supra) held that the trust was entitled to exemption when the business of the trust was incidental to the attainment of the objectives of the trust, namely the objectives of education and relief to the poor. Their lordships observed that after amendment of section 11(4A) in 1992, all that is required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be denied to the assessee. The surplus derived from running the dispensaries was utlised for philanthropic purposes. CBDT circular No. 194/16-17-II(A-1) makes it clear that if a surplus is used for philanthropic purposes the income of the institution will be eligible for exemption u/s 10(22A). We are thus of the view that in the present case the authorities below have grossly erred in holding that the appellant's activities in relation to production and sale of ayurvedic preparations are not incidental to its main objective as the same are commercial in nature. Likewise in the case of Baun Foundation Trust v. Chief CIT [2013] 33 taxmann.com 677, the Hon'ble Bombay High Court has been pleased to hold that activity of running chemist shop within the premises of the hospital was incidental or ancillary to the dominant object of running a hospital. We thus hold that in the present case the authorities below have failed to appreciate that the business set up and held by the appellant under trust is to sub serve the predominant charitable objects of providing medical relief education and relief to poor. Furthermore, since separate books of accounts were maintained and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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