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IN THE INCOME TAX APPELLATE TRIBUNAL( DELHI BENCH “F” NEW DELHI )

BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBERAND

SHRI L. P. SAHU, ACCOUNTANT MEMBER

I.T.A. No. 2267/Del./2013Assessment Year : 2009–10

Patanjali Yogpeeth (Nyas) ADIT [Exemptions]D–13, Pushpanjali Enclave, Vs. Range : II,Pitampura, DELHI. New Delhi.

PAN : AABTP 0560 H

(Appellant) (Respondent)

Appellant by : Shri Ajay Vohra, Sr. Adv.; &Shri Rohit Jain, Adv.;

Respondent by : Shri N. C. Swain, CIT [DR];

Date of Hearing : 19.01.2017

Date of Pronouncement : 09.02.2017.

O R D E R

PER I. C. SUDHIR, J. M. :

The assessee has questioned first appellate order on the followinggrounds :

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1. That the Commissioner of Income-tax (Appeals) erred on facts and in law in upholding

the action of the assessing officer in denying exemption under sections 11/12 of the

Income Tax Act, 1961 (‘the Act’).

2. That the Commissioner of Income-tax (Appeals) erred on facts and in law in passing a

cryptic and non-speaking order, by merely reiterating the findings of the assessing

officer, without judiciously considering/ dealing with the submissions of the appellant.

3. That the Commissioner of Income-tax (Appeals) erred on facts and in law in disregarding

the objectives contained in the trust deed of the appellant and holding that the activities

undertaken by the appellant did not fall within the purview of ‘medical relief’, ‘imparting

education’ or ‘relief to the poor’, but were purely in the nature of object of general public

utility under section 2(15) of the Act.

4. That the Commissioner of Income-tax (Appeals) erred on facts and in law in failing to

appreciate that the Revenue authorities had, in the past years consistently accepted the

activities of the appellant as being in the nature of medical relief, education and relief to

the poor.

5. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that

the appellant’s activities in relation to ‘propagation of yoga’ does not qualify as providing

‘medical relief’ or ‘imparting education’, but was purely in the nature of object of general

public utility under section 2(15) of the Act.

6. That the Commissioner of Income-tax (Appeals) erred on facts and in law in relying upon

erroneous findings given in the special audit report furnished under section 142(2A) of

the Act, without judiciously appreciating the details/ explanation 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.

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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 toM/s. Dynamic Buildcon Private Limited [para7.5(b)]

Rs. 2,40,000

(c) on account of investment in modes other thanspecified in section 11(5) [para 7.5(c)]

Rs.12,00,000

(d) on account of investment in modes other thanspecified in section 11(5) [para 7.5(d)]

Rs. 7,09,560

8. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that

the appellant had undertaken activities outside India, in violation of provisions of section

11(1)(a) of the Act.

9. That the Commissioner of Income-tax (Appeals) erred on facts and in law in upholding

the addition aggregating to Rs.1,26,16,500 on account of corpus donations received by

the appellant, comprising of the following amounts:

(a) Corpus donation for cottages under VanprasthAshram Scheme

Rs.88,73,000

(b) Donation of land at Gurgaon Rs.30,00,000

(b) Donation of land at Shantarshas Rs.34,43,500

Total Rs.1,26,16,500

9.1. Without prejudice, that the Commissioner of Income-tax (Appeals) failed to appreciate

that corpus donation, in any case, represented capital receipt, not liable to tax under the

provisions of the Act.

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9.2. That the Commissioner of Income-tax (Appeals) erred on facts and in law in failing to

appreciate that the contributions received with specific directions, aggregating to Rs.

42,71,84,766, also constituted corpus donations not exigible to tax as under:

(a) Donation from Divya Yog Mandir Trust (forconstruction of Patanjali Yogpeeth-II)

Rs. 38,35,00,000

(b) Donations in relation to Disaster Relief Fund Rs. 4,36,23,766

(b) Donations in University of Patanjali Rs. 61,000

Total Rs. 42,71,84,766

10. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that

the voluntary contribution received by the appellant, including donations received

through Yoga Camps and Yoga Samitis were not eligible 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 Rs.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 Rs.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 Rs. 2,30,60,231, without considering the additional

documentary evidence furnished by the appellant during the course of appellate

proceedings.

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16. That the Commissioner of Income-tax (Appeals) erred on facts and in law in upholding

the following additions/ disallowances made by the assessing officer, by placing reliance

on the findings given in the special audit report:

(a) Disallowance of Rs.55,34,557 under section 40(a)(ia) of the Act;

(b) Addition of Rs. 1,00,000 on account of alleged donation to Gurukul Amsena

(c) Addition of Rs.5,54,123 on account of alleged discrepancies in the books of the

appellant.

17. That the Commissioner of Income-tax (Appeals) erred on facts and in law in confirming

addition of Rs.1,24,80,000 alleging that the appellant failed to produce documentary

evidence in support of delivery of medicines for charitable purpose out of amount

received under the disaster relief scheme.

18. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not allowing

expenditure incurred by the appellant towards acquisition of capital assets as application

of income for charitable purpose

19. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not directing

the assessing officer to delete interest charged under 234B of the Act. “

2. Heard and considered the arguments advanced by the parties in view ofthe orders of the authorities below, material available on record and thedecisions relied upon.3. The general facts in brief are that assessee is a public charitable trustduly registered under section 12A vide order dated 14.03.2005 and is alsoduly approved under section 80G(5)(vi) of the Act vide order dated27.08.2007. During the year the Assessing Officer in the assessment framedunder section 143(3) of the I. T. Act has assessed the income at

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Rs.72,37,98,956/- against the returned NIL income after denying exemptionunder section 11/12 of the Act. The ld. CIT (Appeals) has upheld the samewhich has resulted in the filing of the present appeal before the Tribunal.4. At the outset of hearing, the ld. AR pointed out that issues raised in thegrounds of the present appeal are almost covered by the decision of DelhiBench of the Tribunal in the case of Divya Yog Mandir Trust Vs. JCIT in ITA.No. 387/Del./2013.5. Ground Nos. 1 to 6 : These grounds are on the issue of non-applicabilityof proviso to section 2(15) of the Act.6. In support of the above grounds the ld. AR submitted that the pre-dominant object of the assessee are to provide medical relief throughPrayanam and Yoga and also to impart education in the field of yoga. Hereferred page Nos. 1 to 14 of the paper book i.e. copy of the trust deed dated2.02.2005 wherein objects of the trust have been reduced in black and whiteto support his argument that the assessee was set up as a charitable trustwith the following predominant objectives, which have been carried out overthe years :(a) providing medical relief through Yoga/Prayanam;(b) imparting education in the field of Yoga; &(c ) providing relief to the poor.

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On the basis of these objects the assessee was granted registration undersection 12A of the Act and was also approved under section 80G(5)(vi) of theAct, which the assessee was enjoying during the year under consideration aswell.The ld. AR submitted that the assessee in accordance with the approvedobjectives has been consistently pursuing its charitable activities for the pastfour years including the assessment year under consideration and had alwaysbeen allowed exemption under section 11/12, including in variousassessments completed under section 143(3) of the Act. He asserted thatthere has been no change in facts during the year under consideration.

6.1 In furtherance of its above charitable objects, the assessee iscontinuously undertaking the following charitable activities :-(a) Providing medical relief to various sections of the society, including but not limited to

providing free medicines and treatment by organizing various shivirs/ camps on a regular

basis under the leadership of yoga guru, other trained teachers and teams of doctors.

(b) Conducting programmes and shivirs on a regular basis for propagating yoga and

Ayurvedic methods of treatment and also to promote good health;

(c) Conducting yoga 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.

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It may also be pertinent to mention here that yoga shivirs/ camps are organized across the

country on daily/ weekly/ monthly basis in a systemized/ organized manner to provide/ impart

yoga education and its practical application to millions of people who cannot afford modern

medical methods or have been subjected to ill effects of modern medicine. Such camps/ shivirs

are, it is submitted, organized through ad-hoc committees specifically set up by the assessee for

organizing yoga camps/ shivirs and also through separate/ independent yoga samitis under the

overall guidance/ support of the assessee.

It is further respectfully submitted, that the assessee had, for the purpose of curing/alleviating

various kinds of diseases, conducted both residential and non-residential yog camps in the

assessment year under consideration, which has nowhere been denied/disputed by the assessing

officer.

Apart from providing medical relief, the assessee has, during the assessment year under

consideration, also undertaken educational activities by setting up of Patanjali University for post

graduate courses in yog and related subjects. Besides, substantial donations to educational

institutions were also made by the assessee, in the assessment year under consideration.

Further, to pursue the object of providing relief to the poor, the assessee undertook various relief

activities, for assisting victims of the Bihar flood and Mumbai terrorist attacks in the assessment

year under consideration.

To sum up, the assessee was 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

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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 undertook commercial activities in relation to construction of cottages under

the “Vanprasth Ashram Scheme”;

c) The assessee has violated the provisions of section 13 of the Act by providing benefit to

persons specified in sub-section (3); and

d) The assessee received anonymous donations as defined in section 115BBC of the Act.

For the aforesaid cumulative reasons, the assessing officer denied exemption claimed by the

assessee under sections 11/12 of the Act. Each of the aforesaid findings have been challenged

vide separate grounds of appeal, which ware discussed hereunder:

The CIT(A) erred on facts and in law in upholding the action of the assessing officer in denying

exemption under sections 11/12 of the Act after holding that the assessees activities are not

charitable in nature, for the reasons discussed hereunder:

Section 2(15) of the Act defines “charitable purpose” as under:–

“………..(15) “charitable purpose” includes relief of the poor, education, medical relief,preservation of environment (including watersheds, forests and wildlife and preservationof monuments or places or objects of artistic or historic interest, and the advancement ofany other object of general public utility:………..” (emphasis supplied)

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The proviso inserted in section 2(15) of the Act by the Finance Act, 2008, with effect from

01.04.2009, reads as under:

“…………Provided that the advancement of any other object of general public utility shall not be acharitable purpose, if it involves the carrying on of any activity in the nature of trade,commerce or business, or any activity of rendering any service in relation to any trade,commerce or business, for a cess or fee or any other consideration, irrespective of thenature of use or application, or retention, of the income from such activity;…………..…………..” (emphasis supplied)

The aforesaid proviso provides that if any of the objects of the assessee involve carrying on of

any activity in the nature of trade, commerce or business for cess or fee or any other

consideration, then, irrespective of the nature of use or application of income, the assessee shall

not be regarded as existing for charitable purpose. Similarly, if any of the objects of an assessee

involve carrying on of activity of rendering service in relation to trade, commerce or business for

consideration then, too, the assessee 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 ofdefinition of ‘charitable purpose’ contained in Section 2(15). Hence, such entities willnot be eligible for exemption under Section 11 or under Section 10(23C) of the Act, ifthey carry on commercial activities. Whether such an entity is carrying on an activity inthe nature of trade, commerce or business is a question of fact which will be decidedbased on the nature, scope, extent and frequency of activity.

3.1 There are industry and trade associations who claim exemption from tax undersection 11 or on the ground that their objects are for charitable purposes as these are

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covered under the ‘any other object of public utility’. Under the principle of mutuality, iftrading takes place between the persons who are associated together and contribute toa common fund for the financing of some venture or object, and in this respect have nodealings or relations with any outside body, then the surplus returned to such personsis not chargeable to tax. Therefore, where industry or trade association claims both to becharitable institutions as well as mutual members, these would not fall under the purviewof Section 2(15) owing to the principle of mutuality. However, if such organizations havedealings with the non members, their claim for charitable institution would now begoverned by the additional conditions stipulated in proviso to Section 2(15).

3.2 In the final analysis, whether the assessee has for its object, the advancement of anyother object of general public utility, is a question of fact. If such assessee is engaged inany activity in the nature of trade, commerce or business or renders any service inconnection to trade, commerce or business, it would not be entitled to claim that itsobject is for charitable purposes. In such a case, the object of ‘general public utility’will only be a mask or a device to hide the true purpose which is trade, commerce, orbusiness or rendering of any service in relation to trade, commerce or business. Eachcase would, therefore, have to be decided on its own facts, and generalizations are notpossible. An assessee who claims that their object is ‘charitable purpose’ within themeaning of section 2(15) would be well advised to eschew any activity which is in thenature of trade, commerce or business or rendering of any service in relation to anytrade, commerce or business.” (emphasis supplied)

It would, thus, kindly be appreciated that the aforesaid proviso does not apply to a trust/

institution engaged in the charitable object of providing relief to the poor, imparting education

and providing medical relief.

It may also be pertinent to mention here that the 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

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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 diploma courses for

students in disciplines of Yoga and Ayurveda.

The case of the assessee, it is respectfully submitted, does not fall within the last limb of the

aforesaid definition of charitable purpose given under section 2(15) of the Act. The aforesaid

predominant objects and the vision with which the assessee is being run, it is respectfully

submitted, makes it patently clear that the objects of the assessee are to impart education and

provide medical relief to the society at large.

Considered in the light of the aforesaid basic facts about the objects and nature of activities of

the assessee, it will kindly be appreciated that none of the activities of the assessee are hit by

the proviso to section 2(15) of the Act.

Accepted stand by Department

It is of utmost important to note that the fact that the assessee undertakes the aforesaid activities

has also been recognized by assessing officer in the impugned assessment order, as is evident

from the following extracts:

“3.2 The trust is stated to be carrying out its abovementioned activities though themajor object as per the assessee is to make India Disease Free through yoga. The trusthas organized many yog camps. Apart from that, assessee is also carrying its activitythrough Patanjali Disaster Relief fund. For education, the trust has establishedUniversity of Patanjali.” (emphasis supplied)

On perusal of the aforesaid findings, your Honour may observe that though the assessing officer

has commenced the paragraph using the words “the trust is stated to be carrying out the

abovementioned activities”, he has subsequently categorically asserted that the assessee

undertakes the following activities:

- Organizing yog camps to make India ‘disease free’;

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- Undertaking relief activities through Patanjali Disaster Relief Funds; and

- Providing education through Patanjali University

Despite the aforesaid findings in para 3.2, assessing officer in para 6, however, held that the

objects of the assessee fall within the ambit of sixth limb, i.e. “advancement of any other object

of general public utility”, which is reproduced hereunder:

“The primary object and the core activity of the assessee trust is to provide training inYog so as to make the society and the world free from all diseased and preserve ancientknowledge about Yog, Ayurved etc. The various objects stated in para 2.2 (supra) canonly be brought under the ambit of the sixth limb of the definition of charitable purposeas defined under Section 2(15) of the Act, i.e. advancement of any other object of generalpublic 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 contrary to the

well accepted assessment history of the assessee, as will kindly be noticed from the following:

(a) The fact that assessee is pursuing charitable objects has always has been accepted by the

Revenue in assessment years 2005-06 to 2008-09 vide assessments completed under

section 143(3) of the Act.

(b) In the assessment order dated 24.12.2009 for the assessment year 2007-08 (Refer pages

216 to 217 of the paperbook), assessing officer, in fact, recorded a categorical finding

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that the assessee is mainly dedicated to medical relief and charitable activities related to

education and medical relief. The relevant extracts of the order are reproduced hereunder:

“The Assessee Trust is mainly dedicated to medical relief through Yoga Ayurveda andPranayam and is engaged in the various charitable activities related to education,medical.”

(c) Similarly in the assessment order dated 20.12.2010 for assessment year 2008-09 (Refer

pages 218 to 219 of the paperbook), assessing officer recorded the following categorical

findings:

“The Assessee Trust is also registered u/s 12A of the Income Tax Act, 1961 vide OrderNo. DIT(E)/2004-05/P-977/04/1598 dated 14.03.2005. The assessee Trust is notifiedu/s 80G(vi) of the Income Tax Act.

The Assessee Trust was formed on 2.2.2005 to make India disease free through Yoga.The assessee is running a university under the name and style Patanjali University,Haridwar.”

It may also be pertinent to mention here that there has been no material change in the facts of the

year under consideration. Thus, when the activities undertaken by the assessee were always

classified as being in the nature of providing ‘medical relief and education’, the abrupt change in

the stand of the assessing officer in the assessment year under consideration, by virtue of

amendment in section 2(15) of the Act, is without any basis and unsubstantiated.

In this regard, your Honours may also kindly note that at para 6 of the impugned assessment

order, the assessing officer has, before concluding that the activities of the assessee fall under the

last limb of the definition of ‘charitable purpose’ as defined under section 2(15) of the Act, given

a categorical finding that the primary object of the assessee was to make the society and the

world ‘free from diseases’. The relevant extracts of the said observation is re-produced as under:

“The primary object and the core activity of the assessee trust is to provide training inYog so as to make the society and the world free from all diseases and preserve ancientknowledge about Yog, Ayurved etc. The various objects stated in para 2.2 (supra) canonly be brought under the ambit of the sixth limb of the definition of charitable purposeas defined under Section 2(15) of the Act, i.e. advancement of any other object of generalpublic 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

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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

assessment order, without providing his specific view/comments on such contradictory

observations/inferences made in the impugned assessment order. Further, with respect to the

CIT(A)’s clarification on the issue of violation of principles of consistency, the assessing officer

summarily held that the “principles of res-judicata” are not applicable to proceedings under the

Income Tax Act, without providing any further justification.

Further, it is imperative to state here, that for the subsequent assessment year, i.e. AY 2010-11

also, the assessee was granted registration under section 80G(5)(vi) of the Act, vide order dated

29.09.2009, which was after the amendment in section 2(15) of the Act. In the application filed

seeking registration under section 80G, the assessee had categorically stated that the trust was

pre-dominantly engaged in providing medical relief and education through propagation of yoga.

It was on considering the said predominant objective of the trust that registration under section

80G(5)(vi) was granted to the assessee for the assessment year 2010-11.

In view of the aforesaid facts, it is apparent that the assessing officer has, with the only intent of

denying exemption under sections 11/12 of the Act, reclassified the activities undertaken by the

assessee as being in the nature of “advancement of any other object of general public utility” in

the assessment year under consideration.

In this regard, it is respectfully submitted that in income tax proceedings, though the principle of

res judicata does not strictly apply, yet rule of consistency does apply, i.e. if no fresh facts come

to light on investigation, the assessing officer is not entitled to reopen the same question on mere

ground of suspicion or change of opinion. Thus, a finding arrived at in a subsequent year

ignoring the conclusion arrived at earlier would be vitiated in law.

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In this regard, attention is invited to the decision of the Supreme Court in the case of

Radhasoami Satsang vs. CIT: 193 ITR 321, wherein it has been held that where a fundamental

aspect permeating through the different assessment years is accepted one way or the other, a

different view in the matter is not warranted, unless there be any material change in facts. The

relevant observations at page 329 of the judgment are reproduced as under:

“We are aware of the fact that, strictly speaking, res judicata does not apply to income-taxproceedings. Again, each assessment year being a unit, what is decided in one year maynot apply in the following year but where a fundamental aspect permeating through thedifferent assessment years has been found as a fact one way or the other and parties haveallowed that position to be sustained by not challenging the order, it would not be at allappropriate 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 income year-after-year, will operate as res

judicata and the same question cannot be re-agitated subsequently.

In the following decisions, too, the Courts have held that though the doctrine of res judicata does

not strictly apply to the income-tax proceedings but in order to maintain consistency, the

Revenue cannot be permitted to rake up settled issues.

- DIT (E) vs. Apparel Export Promotion Council: 244 ITR 734 (Del)- CIT V. Neo Polypack (P) Ltd: 245 ITR 492 (Del.)- CIT V. Dalmia Promoters Developers (P) Ltd: 281 ITR 346 (Del.)- DIT v. Escorts Cardiac Diseases Hospital: 300 ITR 75 (Del.)- CIT vs. P. KhrishnaWarrier: 208 ITR 823 (Ker)- CIT vs. Harishchandra Gupta 132 ITR 799 (Ori)- CIT vs. SewaBharti Haryana Pradesh: 325 ITR 599 (P&H)

In the impugned order, the CIT(A) did not apply the decision of the Supreme Court in the case of

Radhasoami Satsang (supra), observing that in the said decision the Court applied principle of

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consistency in the facts of that case and the said principle does not have application in other

cases drawing strength from the following concluding observations of the Court:

“The counsel for the Revenue had told us that the facts of this case being very special,nothing should be said in a manner which would have general application. We areinclined to accept this submission and would like to state in clear terms that the decision isconfined to the facts of case and may not be treated as an authority on aspects which havebeen decided for general application.”

The CIT(A) failed to appreciate that the aforesaid observations were in the context of the final

conclusion of the Court on the merits of the issue regarding allowability of exemption to the

assessee before the Court. The Court nowhere observed/ held that principle of consistency would

not be applicable to other cases.

Further, even if for the sake of argument, it were to be held that the ratio laid down by the apex

Court in the case of Radhasoami Satsang (supra) would have limited application in the

background of the facts of that case, it would kindly be appreciated that the Court has made the

pertinent observations with respect to applicability of principle of consistency in context with

allowability of exemption under sections 11/12 of the Act, which would, it is submitted, strictly

apply even in the case of the assessee. Thus, even if 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:

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ACIT V. Surat City Gymkhana: 300 ITR 214 (SC) (Refer page 1066-1067 of case lawpaperbook)

Sonepat Hindu Educational and Charitable Society v. CIT.: 278 ITR 262 (P&H) (Referpage 1068-1072 of caselaw paperbook)

Hiralal Bhagwati vs CIT: 246 ITR 188(Guj.) Ananda Marga Pracharaka Sangha v. CIT: 218 ITR 254 (Cal) ITO v. Mrs. Dwarika Prasad Trust: 30 ITD 84 (Third Member)(Del.) ITO v. Trilok Tirath Vidyavati Chuttani Charitable Trust: 90 ITD 569 (Chd) Gaur Brahmin Vidya Pracharini Sabha v. CIT: 34 SOT 371 (Del.)

In view of the aforesaid, since the facts in the present case of the assessee in the earlier

assessment years are identical to the assessment year under consideration, thus, on the basis of

principle of consistency, the assessee should not have been denied exemption under sections

11/12 of the Act.

Yoga a form of ‘medical relief’:

One of the primary contentions of the assessing officer/CIT(A) in denying exemption under

sections 11/12 of the Act, is that Yoga as a system, does not provide any ‘medical relief’, but can

at best be categorized as an object of general public utility.

In forming such conclusion, the CIT(A) has relied upon the decision of the Bombay High Court

in the case of CIT vs. Rajneesh Foundation: 280 ITR 533 and held that yoga do not fall under

“education” or “medical relief”.

In this regard, it is respectfully submitted that Yoga, is one of the well recognized

traditional system of physical exercise and meditation for attaining physical wellbeing and

is a complete medicinal science in itself.

Various features, methods, aspects and benefits of yoga have been highlighted by various authors

in various publications and literature, one such publication being “Yog in synergy with medical

science” written by Ayurved Acharya Balkrishna. The said publication was documented on the

basis of clinical tests which were conducted in the most scientific manner showing the

clinical effect of yoga on the participants in various yoga camps. The said study portrays

without any ambiguity that yoga camps organized by the institution, conducted under the

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supervision of qualified doctors and fully trained yoga instructors were held to cure

physical ailments of the participants. The aforesaid publication also documents the

feedback/testimonies of various people who were suffering from various chronic diseases and

have benefited from yoga. (Refer pages 53 to 131 of the paperbook)

It may also be mentioned here that there are various publications which clearly highlight yoga as

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, Naturopathy, Ayurveda,Homoeopathy, Siddha and Unani system of medicines or any other system ofmedicine as may be recognized by the Central Government.” (emphasis supplied)

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Kind attention of the Hon’ble Bench is also invited to information on Yoga available on the

website of Department of Ayush (Minister of Health and Family Welfare) [Source:

http://www.indianmedicine.nic.in].

Reference, in this regard, is specifically made to the following information on Yoga as available

on the aforesaid website:

“YogaThe concepts and practices of Yoga originated in India about several thousand yearsago. Its founders were great Saints and Sages. The great Yogis presented rationalinterpretation of their experiences of Yoga and brought about a practical andscientifically sound method within every one’s reach. Yoga today, is no longer restrictedto hermits, saints, and sages; it has entered into our everyday lives and has aroused aworldwide awakening and acceptance in the last few decades. The science of Yoga andits techniques have now been reoriented to suit modern sociological needs and lifestyles.Experts of various branches of medicine including modern medical sciences arerealising the role of these techniques in the prevention and mitigation of diseases andpromotion 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 knownas "Ashtanga Yoga" for all-round development of human beings. They are:- Yama,Niyama, Asana, Pranayama, Pratyahara, Dharana, Dhyana and Samadhi. Thesecomponents advocate certain restraints and observances, physical discipline, breathregulations, restraining the sense organs, contemplation, meditation and samadhi. Thesesteps are believed to have a potential for improvement of physical health by enhancingcirculation of oxygenated blood in the body, retraining the sense organs therebyinducing tranquility and serenity of mind. The practice of Yoga prevents psychosomaticdisorders and improves an individuals resistance and ability to endure stressfulsituations.” (emphasis supplied)

Other information downloaded from the aforesaid website, it is respectfully submitted, also

makes it patently clear that Yoga is 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.

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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

school going children in the country. The said report further provides that Yoga is one of the

core components of Health and Physical Education. (Refer pages 201 to 205 of the paperbook)

It may also be worth noting that the Madhya Pradesh Government has introduced various formal

‘Alternative Medicine Courses’ in the field of Yoga which inter-alia includes M.Sc. in Human

Consciousness and Yogic Science, Ph.D in Yogic Science, M. Phil in Yogis Science, P.G.

Diploma in Yoga etc. This only goes to prove that Yoga is now a well accepted medical

science which is effective in providing medical relief to numerous diseases. (Refer pages 206

to 207 of the paperbook)

In September 2012, the Harvard University of USA came forward to introduce Yog and Ayurved

subjects in their university in collaboration with Swami Ramdevji in the wake of dreadful

diseases being cured by Swamiji's Pranayam and his Ayurved medicines (Source:

wikipedia.org/wiki/Ramdev). (Refer pages 208 to 210 of the paperbook)

Further, the term ‘medical’ as defined in Major Law Lexicon by P. Ramanatha Aiyar (2010

Edition) is re-produced as under:

“of pertaining to or having to do with the art of healing disease, or the science ofmedicine; containing medicine; used in medicine” (emphasis supplied)

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On perusal of the aforesaid, it may be observed that the term ‘medical’ has been defined very

broadly. The definition clearly provides that the ‘art of healing any disease’ constitutes medical

relief and the same need not be restricted to conventional methods of treatment.

Yoga, thus, as a system of medicine, has been successful in curing various dreadful diseases and

providing relief to the sufferings of people. Thus, it undoubtedly qualifies as a form of ‘medical

relief’ as provided in section 2(15) of the Act.

Decision in Rajneesh Foundation – not applicable

Further, with respect to the reliance placed by the CIT(A)’s on the judgment of the Bombay High

Court in the case of Rajneesh Foundation (supra), it is respectfully submitted that the said

decision was rendered prior to introduction of proviso to section 2(15), when there used to be no

dispute in so far as classification of charitable objectives was concerned for the purpose of

claiming exemption under sections 11/12 of the Act. Thus, this issue was never precipitated by

the assessee before the Hon’ble Court.

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 thatin 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 arebecoming more and more popular among the Indians who are now becoming consciousabout their physical, mental and spiritual health. Not only in India, meditation and Yogaare being accepted in the Western Countries also as a great source for physical andmental health and spiritual attainment. When a large number of people feel thatmeditation is a great source for physical, mental and spiritual well-being, it must be heldto be an activity for the advancement of general public utility”. (emphasis supplied)

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On perusal of the aforesaid, it will kindly be noticed that in the aforesaid case it was not at all the

case of the assessee that meditation fell within the category of “medical relief”; in fact in the

context of the pre-amended law it mattered little to the assessee in which category the objective

of the assessee fell.

In fact, it is pertinent to note that the Court, in the aforesaid decision observed, “Not only in

India, meditation and Yoga are being accepted in the Western Countries also as a great

source for physical and mental health…..”; meaning thereby that yoga is a source for medical

relief, as is the case of the assessee.

In view of the aforesaid, it is submitted that yoga, as a science, is a well recognized system of

medicine, which has therapeutic effects in treating various serious ailments.

Thus, the predominant objective of the assessee trust being providing medical relief, though

propagation of yoga for the purpose of treating/curing various diseases, undoubtedly falls under

the category of providing ‘medical relief’ and accordingly exemption could not have been denied

to the assessee on this ground.

Propagation of Yoga constitutes imparting of education

That apart, the CIT(A)/ assessing officer further failed to appreciate that 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 under section 2(15) of the Act, as elaborated

hereunder:

The expression ‘education’ has not been defined under the Act, however reliance in this regard

may be placed on various legal precedents as discussed hereunder:

The Supreme Court in the case of Lok Shikshana Trust: 101 ITR 234, explained the meaning

of the word `education’ in the context of section 2(15) of the Act as under:

“We have set out above the relevant clauses of the trust deed and the material part of thecommunications sent by the Sole Trustee. It would appear therefrom that though anumber of objects, including the setting up of educational institutions, were mentioned inthe trust deed as the objects of the trust, supplying the Kannada speaking people with an

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organ of educated public opinion was also one of those objects. The communication sentby the Sole Trustee to the Income-tax Officer shows that the trust at present is carryingout only the last mentioned object of the trust, namely, supplying the Kannada speakingpeople with an organ or organs of educated public opinion. The concentration so far ofthe 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 andutilise the money and the property of the trust for any of the purposes of the trust in suchmanner as to him may appear proper.The sense in which the word "education" has been used in section 2(15) is thesystematic instruction, schooling or training given to the young in preparation for thework of life. It also connotes the whole course of scholastic instruction which a personhas 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, because as a result oftravelling you acquire fresh knowledge. Likewise, if you read newspapers and magazines,see pictures, visit art galleries, museums and zoos, you thereby add to your knowledge.Again, when you grow up and have dealings with other people, some of whom are notstraight, you learn by experience and thus add to your knowledge of the ways of theworld. If you are not careful, your wallet is liable to be stolen or you are liable to becheated by some unscrupulous person. The thief who removes your wallet and theswindler who cheats you teach you a lesson and in the process make you wiser thoughpoorer. If you visit a night club, you get acquainted with and add to your knowledgeabout some of the not much revealed realities and mysteries of life. All this in a way iseducation in the great school of life. But that is not the sense in which the word"education" is used in clause (15) of section 2. What education connotes in that clauseis the process of training and developing the knowledge, skill, mind and character ofstudents by normal schooling.” (Emphasis supplied)

The essence/ principle emanating from the aforesaid decision is that for an activity to be

regarded as education, the same must:

a) involve systematic instruction, schooling or training;

b) develop the knowledge, skill, mind and character of students

Thus, 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) of the Act.

Following the aforesaid decision, the Delhi High Court in the case of Delhi Music Society vs.

DGIT: 246 CTR 327/ 204 Taxman 231 (Del) held 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

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school or educational institution in a systemic manner with regular classes, the same therefore,

met the requirement of an educational institution within meaning of section 10(23C)(vi) of the

Act.

Reliance in this regard may also be placed on the decision of the Tribunal in the case of ITO vs

S.R.M. Foundation of India: 21 ITD 598 (Del), wherein the assessee was a spiritual

regeneration movement foundation of India, which was registered under section 12A and under

section 80G of the Act. It was founded 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 in all walks of life, the same

constituted imparting of ‘education’ and the assessee was entitled to exemption under section

10(22) of the Act. The pertinent findings of the Tribunal are re-produced as under:

“We have given our careful consideration to the able arguments addressed to us on both thesides It had to be examined whether the following prerequisites of section 10(22) wassatisfied in the present case :

(i) the assessee foundation should be an educational institution ;

(ii) it should be existed solely for educational purposes ; and

(iii) it should not be existing for purposes of profit.

As held by the Madras High Court in the case of Addl. CIT v. Aditanar EducationalInstitution [1979] 118 ITR 235 on the language of section 10(22) the principle of ejusdem

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generis can have no application. One has, therefore, only to fall back on the expression ‘orother educational institution.’There is no requirement prescribed under section 10(22) that the institution should berecognised by a University or State or Central Government. Thus, the assessing officer’sinsistence on any such recognition was not justified. It was not necessary that the institutionshould have a building. The word ‘institution’ has not been defined in the Act. Thus, theassessee could be treated as an institution. In the instant case the assessee‘s foundationwas dedicated to offering peace, harmony and happiness to everyone in all walks of lifethrough the system of transcendental deep meditation. This system was developed by hisHoliness Maharishi Mahesh Yogi whereby every normal man, regardless of caste, creedand denomination could easily reach the deeper levels of consciousness, unfold latentfaculties and realise more complete happiness. The syllabus recommended by the assesseelisted 33 lessons of what was termed as the science of creative intelligence. The assesseehad also 23 branches throughout India where TM instructions were imparted to thestudents as part of then normal schooling. The optimistic instruction in TM was initiallyimparted to the trainers and then the qualified trainers imparted instructions to thetrainees. The test of ‘Systematic schooling’ was, therefore, satisfied. There was no purposeother than the educational so far as the assessee-foundation was concerned. Therefore, thesecond ingredient or prerequisite of section 10(22) was also satisfied. That the assesseefoundation did not exist for the purpose of profit was also clear from the objects clause. Thiswas also clear from the balance sheet and income and expenditure account. It was clear thatthe assessee-foundation duly established the requirements under section 10(22) andqualified 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 objects of the trust are to provide practical and

theoretical training in the field of yoga, which would ultimately provide medical relief to

the society at large. In pursuance of the said objective, the assessee trust has imparted yoga

education by means of organising yog shivirs/ camps across the country on

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daily/weekly/monthly basis in a systemized/ organized manner in order to provide medical relief

to people who cannot afford modern medical method or have been subjected to ill effects of

modern medicine. Such Yoga education was given in the shivirs/ camps by Yoga Gurus (i.e.

Yoga teachers).

The aforesaid systemized/ organized manner of providing yoga knowledge, it is submitted,

clearly tantamount to “education” as explained by the apex Court in the case of Lok Shikshana

(supra).

In the impugned order the CIT(A), has referred to the assessee receiving donations and issuing

donation coupons for yoga camps and held that the same is like a ticket to avail facilities.

The CIT(A), however, failed to appreciate that the assessee organizes yoga science camps in

furtherance of its predominant object of providing medical relief and imparting yoga education.

The ad-hoc committees issues donation coupons in the denomination of Rs. Nil (i.e. free),

Rs.100, Rs.500, Rs.1100 and Rs.2100 to various voluntary donors who attend the camps, which

is nothing but small donations given by the voluntary donors who attend the shivir/ camps. The

CIT(A) 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 further be pertinent to note that donations which have been received from participants of

such camps, were purely voluntary, depending upon the paying capacity and willingness of such

participants. Further, there was no hard and fast rule that the participants had to mandatorily

make donations for the purpose of participating in such camps. In this regard, the Hon’ble Bench

may also kindly note that there have been various yog camps which have been conducted in the

assessment year under consideration, where no donations have been collected at all.

The aforesaid facts, in our respectful submission, lead to the inescapable conclusion that the only

underlying intention of the assessee was to provide ‘medical 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.

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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 1175 to 1177 of the case law

paper book] is highly misplaced and distinguishable on facts, as in the said case the assessee

was denied registration under section 12AA of the Act on the ground that the assessee was not

undertaking any charitable activities in so far as there was no fee concession provided to the

deserving students and no initiative was undertaken to provide free education to the

economically weaker sections of the society and the fee structure of the assessee- trust itself

contemplated an element of profit in the educational activities to be carried on. It was on

considering this aspect that the Tribunal held that the institution was run on purely commercial

lines and did not involve any element of ‘charity’ and thus, the action of the DIT(E) in denying

registration under section 12AA of the Act was upheld.

However, in the instant case, the assessing officer/CIT(A) have nowhere alleged that the assessee

has undertaken the activity of imparting education through ‘Patanjali University’ on purely

commercial lines. On the contrary, the fact is that the assessee charges fee on concessional basis

in order to encourage the economically weaker sections of the society to pursue courses in

Ayurveda/Yoga. Thus, the reliance placed by the CIT(A) on the aforesaid decision is highly

misplaced and of no consequence.

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Thus, in view of the aforesaid, it is respectfully submitted that imparting of yoga training

through well structured yoga shivirs/ camps also falls under the category of imparting

‘education’, one of the charitable objects defined under section 2(15) of the Act andaccordingly the assessee’s activities are not hit by the proviso inserted in the definition of

“charitable purpose” as contained in the said section.

No commercial activities undertaken

On perusal of the impugned assessment order, it may be observed that, in concluding that the

assessee had undertaken commercial activities in the assessment year under consideration, the

assessing officer has primarily alleged that the assessee has received certain contributions under

the scheme for construction of cottages at Patanjali Yog Peeth-II known as “Vanprasth Ashram”,

which tantamount to providing ‘services’ to contributors and is in the nature of business, which

is hit by proviso to section 2(15) of the Act.

Your Honour’s kind attention, in this regard, is invited to 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

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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 consideration, not incurred any cost on

the construction of such cottages. Thus, the assessee fails to appreciate how any services could

possibly have been rendered to the contributors or any business/commercial activity undertaken

in the assessment year under consideration, when there were no cottages in existence in the said

year.

Thus, at the very threshold it is submitted that the contention of the assessing officer that the

assessee allegedly provided cottages and services/facilities to the contributors in the year under

consideration, which amounted to conduct of business activity, is factually incorrect and highly

misplaced. In this regard, it is pertinent to note that the assessing officer himself has admitted to

this fact at para 9.2 of the impugned assessment order which is re-produced as under:

“……………………The cost incurred on the construction has not been booked by thetrust………………..”

Thus, when there was practically no activity undertaken by the assessee under the “Vanprasth

Ashram Scheme”, in the assessment year under consideration, and no services could have

possibly been provided by the assessee, the denial of exemption by the assessing officer on the

alleged ground that business/commercial activities were undertaken in the said year is erroneous

and legally unsustainable

Furtherance of Charitable Objectives

That apart, it is further submitted that the assessing officer failed to appreciate that “Vanprasth

Ashram” at Patanjali Yog Peeth-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. The said ashram was constructed by the assessee at Haridwar with the only intention

of providing basic living/ lodging facility (ies) to the persons/ volunteers who come from various

places all across the country for medical relief and yoga education. It was on this account that the

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assessee received voluntary contributions from various donors for constructing cottages at the

“Vanprasth Ashram”.

The assessing officer has, in this regard, failed to appreciate that people from various sections of

the society from all across the country come to Haridwar for attending yoga shivirs/camps which

are organized by the assessee. Such yoga shivirs/camps, as stated above, were organized by the

assessee with the underlying 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 facilities and was not to exploit the

cottages for the purpose of earning profits. If such was the case, then the assessee would not have

placed restrictions on the usage of cottages by attendees only.

In this regard, it is emphatically submitted that the assessee embarked upon the noble

cause of constructing cottages under the “Vanprasth Ashram Scheme”, with the onlyintention of encouraging more and more people to participate in the yog shivir/camps

organized by the assessee, in order to propagate yoga and provide medical relief to as many

people as possible. The non-availability of accommodation facilities at Haridwar, where the

yog shivirs/camps are frequently held, proved to be a major deterrent, on account of which

people were reluctant to participate in the yog shivirs/camps. It was for this reason that the

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assessee introduced the scheme for construction of cottages, to provide accessible

accommodation and encourage people to participate in the yog shivirs/camps.

However, on account of scarcity of resources, the assessee was unable to infuse its own funds

and introduced the “Vanprasth Ashram Scheme”, in order to mobilize resources and accepted

voluntary donations from willing contributors for construction of cottages and granted

permission to such donors to stay in the cottages.

To put it simply, it is submitted that construction of cottages for providing accommodation

facility is like providing hostel facility to school/ college students and/ or rooms in the hospital

where the patients stay back during their medical treatment. It will kindly be appreciated that

charging students for availing/ utilizing the hostel facility or charging room rent from patients

cannot, by any stretch of argument, be regarded as charging fees for providing services in the

nature of business, as has erroneously been held by the assessing officer. At the cost of duplicity,

it is respectfully reiterated that the predominant object of the assessee is to provide medical relief

through yoga and to impart yoga training/education, which cannot be regarded as in the nature of

business.

In the aforesaid circumstances, it is submitted that assessing officer erred in drawing adverse

inference merely from the fact that the assessee received donations for construction of cottages

and granted permission to the donors to stay in the cottages.

Further, the assessing officer has 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.

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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 cottagesNumber of Cottages constructed 340Cottages Allotted to Donors (only during theirlifetime)

109

Cottages allotted to volunteers/vanaprasthi’s whoare serving the trust (no contribution made)

4

Total Allotted Cottages 113Total UnallottedCottages (Provided to generalpublic for temporary lodging/stay)

227

On perusal of the above table, it is evident that majority of the cottages under the said scheme

have been utilized by the general public, i.e. non-contributors who use the cottages for temporary

stay purposes during yog shivir/camps. Further, the assessee does not charge any fee/rent from

the general public for usage of such cottages. The cottages are allotted to general public on the

basis of availability i.e. on first come first serve basis and no other conditions are stipulated for

usage of such cottages.

It is further pertinent to mention that the permission to stay has been granted to the donor only

during his life time, which is not transferable even to the legal heir(s) and such persons are

required to contribute their time and skill for the objectives of the assessee. It is also pertinent to

mention that the cottages, at all times, remained the property and continues to be in the

possession of the trust.

In view of the aforesaid, it is respectfully submitted that the assessing officer/CIT(A) completely

failed to appreciate the nature and purpose of donation received by the assessee for “Vanprasth

Ashram” and grossly erred in alleging the donation received as towards providing services to

contributors and held the same to be in the nature of business.

Activities of the trust not hit by proviso to section 2(15) of the Act

Without prejudice to the primary contention of the assessee that the assessing officer erred in

concluding that the activities of the assessee fall within the ‘advancement of any other object of

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general public utility’, it is alternatively submitted that, even if for the sake of argument it is

presumed that the objectives of the assessee trust falls within the last limb of the definition of

‘charitable purpose’ as defined under section 2(15) of the Act, the same cannot, it is submitted,

result in denial of exemption under sections 11/12 of the Act, as the aforesaid activity of

providing cottage facility and/ or issuance of donation coupons/ receipts was clearly in

pursuance/furtherance of the charitable objectives of the assessee 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’ are

as under:

- As per Webster's New Twentieth Century Dictionary, (Second edition), is, amongst

others, "A means of earning one's living, occupation or work".

- In Black's Law Dictionary "trade" has been defined to mean a business which a person

has learnt or he carried on for procuring subsistence or profit; occupation or employment,

etc.

- In Halsbury’s Laws of England, third edition vol. 38 p. 8, the word `trade’ is defined as

(a) exchange of goods for goods or goods for money, (b) any business carried on with a

view to profit, whether manual or mercantile, as distinguished from learned art or

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professions and from agriculture (Secretary, Madras Gymkhana Club Employees’ Union

v. Management of Gymkhana Club, AIR 1968 SC 554, 562; State of Punjab v. Bajaj

Electricals Ltd., AIR 1968 SC 739, 741).

The term “commerce” has also not been defined in the Act. According to Webster’s Third New

International Dictionary, the term “commercial” means of, in or relating to commerce. The term

''commerce" means "the exchange or buying and selling of commodities especially on a large

scale and involving transportation from place to place". According to Chamber's Twentieth

Century Dictionary, "Commerce" means "interchange of merchandise on a large scale between

nations or individuals; extended trade or traffic".

While applying the above definitions, the Delhi High Court in the case of Ram Swaroop vs.

Janki Dass Jai Kumar (AIR 1976 Del 219), observed that ‘commercial’ means “pertaining to

commerce; mercantile”, thus, commerce involves essentially an exchange of buying and selling

of commodities. If a person buys goods with a view to selling them at a profit, it is an ordinary

case of trade and if the transactions are on large scale they are called as commerce: Gannon

Dunkerley & Co v. State of Madras (1954) 5 STC 216 (Mad.).

On perusal of the aforesaid, it would be noticed that the three words, viz. ‘trade’,

‘commerce’ and ‘business’, connote and indicate a series of organized activities primarilyundertaken on commercial lines for profit motive.

Thus, a profit motive is surely the essence of trade, commerce or business, and, therefore, in a

situation in which services are rendered without a profit motive, such rendering of service will

not have anything in common with trade, business or commerce. In the instant case, the assessee

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.

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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 which is incidental or ancillary towards fulfillment of object of other general

public utility will not normally amount to business, trade or commerce, unless there is some

intention to carry on business, trade or commerce on a permanent basis or with a reasonable

continuity.

Reliance in this regard is placed on the following decisions:

- PHD Chamber of Commerce and Industry vs. DIT(E): 357 ITR 296 (Del HC)- Bureau of Indian Standard vs. DGIT(E) : 27 taxmann.com 127 (Del HC) (Refer page

1126 to 1132 of caselaw paperbook)- Institute of Chartered Accountants of India v. DIT (Exemptions): 245 CTR 541 (Del HC)- DIT (Exemptions) v. Commerce Teachers Association: 203 Taxman 171 (Del HC)- Bombay Presidency Golf Club Ltd. vs DIT: ITA No. 319/Mum/2012 (Mum Tri)- Pave v. DIT (Exemptions): ITA No.6057/Del./2010 (Del Tri.)- Himachal Pradesh Environment Protection and Pollution Control Board vs. CIT: 42 SOT

343 (Chd.)- Hamsadhwani vs. DIT (Exemptions): ITA No. 494 (MDS.) of 2011 (ITAT-Chennai)

Your Honour’s kind attention is further invited to the decision of the Nagpur Bench of the

Tribunal, in the case of SevaGram Ashram Pratisthan vs. CIT: 129 TTJ 506, wherein the

assessee was engaged in publication on Gandhian thoughts and philosophy. Every year at an

average, 2 lakhs visitors visited the Ashram and purchased lots of books on Gandhian literature

and by this process there was propagation of Gandhian thoughts and philosophy. The Sahitya

Bhandar sold and distributed books by having a stall inside the Ashram. They exhibited the

books there in order to facilitate the visitors to purchase the books of their choice. Further, a

Yatri Nivas (guest house) was also maintained by the trust, to take care of stay of visitors

/travelers who come to visit the Ashram for their great respect for Gandhiji and his philosophy.

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However nominal rates were charged from such visitors/travelers for providing accommodation

facilities.

The assesse was, however, for the assessment year 2009-10, denied renewal of registration under

section 80G(5) of the Act on the ground that the assessee’s activity did not fall within the

definition of charitable purpose as amended from 01.04.2009. However, the Tribunal in this

regard categorically observed that the amended proviso to Sec. 2(15) of the Act is constraint only

for those assessees who attempt to defraud the Revenue 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 it as well as with the help of the

receipts from rendering services. Charging of fee to meet a part of the cost for rendering

charitable services cannot make the services as business activities and, accordingly, the

institution will continue to be as a charitable institution and it cannot be effected by the

proviso to section 2(15) of the Act.

It may also be pertinent to note that the assessing officer has not been able to demonstrate even a

single instance of the assessee having earned any profit or of having undertaken any trading

activity in the assessment year under consideration. Further, as elaborately provided supra, no fee

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is being charged by the assessee from attendees/participants for the accommodation facility

provided in subsequent years.

Thus, even if it were to be held that the activities of the assessee fall under advancement of any

other object of general public utility, the assessee would still be entitled to claim exemption

under sections 11/12 of the Act, in view of the purely charitable objects pursued by the assessee

in the assessment year under consideration.

In this regard, it is further respectfully submitted that in the impugned order, the CIT(A), while

affirming the finding of the assessing officer that the activities undertaken by the assessee were

commercial in nature, has nowhere raised objection against the ‘Vanaprasth Ashram’ Scheme

undertaken by the assessee and has nowhere held that such activity constituted a commercial

activity under section 2(15) of the Act.

Issue covered by the decision of Delhi Tribunal

Your Honour’s kind attention in this regard is invited to the decision of the Delhi Bench of

the Tribunal in the case of Divya Yog Mandir Trust vs. JCIT in ITA No. 387/Del./2013

(Refer page 986 to 1055 of the paperbook) which squarely covers the aforesaid issues in the

favor of the assessee. In the said case, the Tribunal has held that Yoga as a science is a well

recognized system of medicine, which has therapeutic effects in treating various serious

ailments. It has been further held that in view of the fact that yoga is a recognized system of

medicine as per section 2(h) of Clinical Establishment (Registration and Regulation) Act,

2010, there is no hesitation in coming to the conclusion that yoga can be safely accepted as a

system fit into the definition of ‘medical relief’.

Further, with respect 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 ofsystematic 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

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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 recognizedsystem of medicine as per section 2 (h) of Clinical Establishment (Registration andRegulation) Act 2010 and the complete information made available by the ayush on itswebsite we find no hesitation in coming to the conclusion that yoga can be safelyaccepted as a system fit into the definition of 'medical relief'. Yoga as a science is a wellrecognized system of medicine, which has therapeutic effects in treating variousserious ailments. The predominant objective of the appellant trust as it is apparentfrom its objects, remained to provide medical relief through ayurveda and propagationof yoga for the purpose of treating/curing various diseases.……………………………….6.5.1 The expression 'education' has not been defined under the provisions of Income TaxAct. The Hon'ble Supreme Court in the case of Lok Shikshana Trust (supra), relied uponby the Ld. AR, has been pleased to explain the meaning of the word 'education' in thecontext of section 2(15) of the Act. As per this decision the education is the process oftraining and developing the knowledge, skill, mind and character of students byschooling by way of systematic instruction, schooling or training. The Hon'ble DelhiHigh Court in the case of Delhi Music Society v. DGIT (supra) has been pleased to holdthat 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 asystemic manner with regular classes, the same therefore meet the requirement of aneducational institution within the meaning of section 10(23C)(vi) of the Act. In the case ofITO v. SRM Foundation of India (supra) the Delhi Bench of the Tribunal, where theassessee was" engaged in spreading the system of transcendental meditation (TM) hasheld that irrespective of the fact that the assessee has its own prescribed syllabus, trainedteachers, branches all over India to spread system of transcendental deep meditationamong people in all walks of life, the same constituted imparting of education and theassessee was entitled to exemption u/s 10(72) of the Act. We thus come to the conclusionthat any form of educational activity involving imparting of systematic training inorder to develop the knowledge, skill, mind and character of students, is to be regardedas 'education' covered u/s 2(15) of the Act. In view of these decisions we hold thatimparting of yoga training through well structured yoga shivir/camps also falls underthe category of imparting education which is one of the charitable objects defined u/s2(15) of the Act. The appellant's activities are thus not hit by the proviso inserted in thedefinition of charitable purpose in section 2(15) of the Act.” (emphasis supplied)

The facts of the aforesaid case, being identical to the case of the appellant, it is most

respectfully submitted that the activities undertaken by the appellant, being in the nature

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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 ‘impartingeducation’ as provided under section 2(15) of the Act, meaning thereby that the proviso tosection 2(15) of the Act would not apply. “

7. The ld. CIT [DR], on the other hand, placed reliance on the orders of theauthorities below with further submission that under the facts of the case ofthe assessee it falls under the sixth limb of the definition of charitable purposegiven under section 2(15) of the Act i.e. advancement of any other object ofgeneral public utility and was thus covered within the mischief to proviso ofsection 2(15) of the Act. The transactions indulged by the assessee are in thenature of business or commerce which are similar to private commercialconcern in the market. The objectives of the assessee being propagation ofYoga does not qualified as “medical relief or imparting of education but falls inthe recibery category of advancement of any other object of general publicutility. It undertook commercial activities in relation to construction ofcottages under the “Vanprastha Ashram Scheme”. The assessee has alsoviolated the provisions of section 13 of the Act by providing benefit to personsspecified in sub-section (3) as it has provided benefits to trustees and elatedpersons. He submitted that assessee had received anonymous donations asdefined in section 115BBC of the Act. The ld. CIT [DR] pointed out that as perdetails available on record, Swami Ramdev Ji is not assessed to Income Tax.Acharya Bal Krishna Ji is Director of / having interest in 34 companies / LLPSand assessed at Haridwar. Swami Muktanand Ji is Director of / havinginterest in 13 companies / LLPS and assessed at Haridwar. He submitted thatthe trust was created with corpus of Rs.25,000/- and on 31.03.2009 the

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assessee had a corpus fund of Rs.3.39 crores. In support he referred page No.22 of the paper book filed on behalf of the Revenue i.e. copy of application ofincome and investment of the trust income / receipts.7.1 The ld. CIT [DR] submitted further that Divya Yog Mandir Trust, BharatSwabhiman Trust, Acharyakul Shishka Sansthan all are having commontrustees. He submitted that special audit under section 142(2A) was orderedby the Revenue on 29.12.2011 and auditors had submitted its special auditreport on 27.06.2012 making several adverse observations on theconstitution and activities of the trust. In this regard he referred page Nos. 5to 10 of the paper book. He submitted that there are over-riding powers inthe hands of the life President i.e. Swami Ramdev Ji. Yog training is the coreactivity that has resulted in revenue generation for the trust during therelevant year. The relevant objects do not specify that the said activity is to becarried on no profit no loss basis. In actual practice, the said activity hasresulted in creation of huge surplus for the trust. Raising of funds, acceptingdonations and gifts to realize activities for profit to do business andarrangement of loans from different financial institutions, loans from bankand mortgaging the asset to repay the loan are such activities which do notrule out carrying on the activities of profit. The trust deed does not set outthe manner in which income derived from trust property is to be utilized.The ld. CIT [DR] submitted that the area of activity of the trust being India andthe whole of the world and the trustees, in their discretion, having not beenprohibited from applying income for charitable purpose either in India or

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abroad, question arises as to whether the trust is entitled to tax exemptioneven 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 generalmeeting is not convened atleast once in a year. He submitted that during therelevant year 618 accounts in the name of samitees at various placesappeared in the books of accounts of the trust which were all reduced to NILon 31.03.2009 by treating the amount of Rs.2.1 crores receivable from themas expenditure in contravention of accounting principle. The trust had usedthe logo of Divya Yog Mandir Trust as its logo, which is indicative of inter-dependence between the two trusts. On the donation coupons issued by thetrust against non-residential camps, though number of the order undersection 80G was mentioned, it was found to be without date, which indicatethat the assessee’s documentation is not proper.7.3 The ld. CIT [DR] submitted that the trust deed contains no provisions forelection and Swami Shankar Dev Ji on account of having non attended fourconsequentive meetings of the board of trustees, the said patron has beenremoved from the board of trustees. He also showed his doubts that theassessee was following the conditions laid down by the Government whilegiving registration under section 12A of the Act. From the approval granted tothe assessee under section 12A of the Act it can be observed that no specificlimb of section 2(15) has been mentioned by the competent authority. It isalso observed from the objects of the assessee trust that many of them relateto the last limb of section 2(15) i.e. general public utility. In addition to these

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are the objects of Vanprastha Ashram for which assessee had reflected theamounts so received under the corpus fund. The perusal of the objects of theVanprastha Ashram reflect that the project is (i) for enjoyment experiencingpersonal and pleasure invironment and (ii) on anti corruption /black moneyissues. These are the main objects bvased on which the whole scheme hadbeen started. The ld. CIT [DR] submitted that these objects may be a personalagenda of Swami Ram Dev Ji but definitely not part of the objects of the trust.7.4 The ld. CIT [DR] submitted further that granting of registration is adecision taken only once and the exemption is not granted or renewed everyyear. The exemption is available only after the Assessing Officer is satisfiedwith the genuineness of the activities in each financial year and all theprovisions of law abutting thereupon. Accordingly the Assessing Officer hasanalysed the activities of the assessee for the assessment year underconsideration and then has arrived at the conclusion that under which limbthe activities of assessee fall i.e. general public utility.7.5 The ld. CIT [DR] in the written synopsis made on behalf of theDepartment has reproduced the following ir-regularities in the books ofaccounts pointed out by the special auditor in their audit report :-“ (i) Instances of difference in voucher Numbers as per Physical Records andComputerized Records;(ii) Cases where more than one voucher found for the same entry;(iii) Method of accounting as per the notes to the accounts and significantaccounting policies forming integral part of the balance sheet as on 31.03.2009

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states that books of accounts are maintained on Mercantile basis. The auditoron examination found that non maintenance of books of account strictly inaccordance with declared mercantile method of accounting. The method ofaccounting 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 Rs.1084 before the date of accrual. An amount ofinterest of Rs.1084/- was credited on 16.09.2009 in account No.003002000005555 with Indian Overseas Bank, was found to be recorded inbooks 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 account were missing.

(xii) Bank reconciliation statement could not be furnished by the assessee

(xiii) Payments made to parties by cash through a single voucher, were broken into

more than one payment made on different dates, resulting not only in alteration

of entries in the books of account but also in delay of booking of the expense.

(xiv) No details of fixed assets I .rxed assets Register were found maintained.

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(xv) The auditor in SAR - part A. page- 14 has pointed out that bank interest of

Rs. 5.44. J 23/- was not recorded in the books of account.

(xvi) The auditor in SAR - part B-Il, page- 384 as pointed out that receipts of

Rs 9,86, J 72/- were not recorded in the books of account.. The assessee vide

letter dated 21.8.2012 (In response to Q. No. 85 of letter dated J 6.8.20 12 )

admitted the mistake and offered the same for calculation of anonymous

donation of Rs. 34,7 J ,437/-

(xvii) The auditor in SAR - part B-II, page- 384 has pointed out that receipts entered

in books with wrong amount of Rs 5,50.846/-. The assessee admitted the

mistake and considered the same for calculation of anonymous donation of Rs.

34,71.437/- . “

7.6 The ld. CIT [DR] placed reliance on the following decisions :-(i) Disha Trust V. Director of Income-tax (Exemptions)152 I.T.D. 42 [ITAT] (Chen.);(ii) Municipal Corporation of Delhi Vs. Children Book Trust (1992)63 Taxman 385 (SC);(iii) Income Tax Officer, Ward-2, Sri Ganganagar V. Smt. VidyawantiLabhuram Foundation for Science Research & Social Welfare ITATJodhpur Bench (2012) 20 Taxman.com 793 (Jodh.);(iv) Aditanar Educational Institution V. Additional Commissioner ofIncome Tax (1997) 90 Taxman 528 (SC);(v) CIT Vs. Sthanakvasi Vardhman Vanik Jain Sangh (2003)131 Taxman 270 (Guj.);(vi) Little Tradition V. DDIT (Exemption) (2009)119 I.T.D. 127 (ITAT) (Del.);

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(vii) Trustees of Kilachand Devchand Foundation Vs. CIT (1988)172 ITR 382 (Bom,.);(viii) R. B. Shreeram Religious & Charitable Trust Vs. CIT (1998)233 ITR 53 (SC);(ix) Kanahya Lal Punj Charitable Trust Vs. DIT (Exemption) (2008)171 Taxman 134 (Del.);(x) DIT (E) Vs. Charanjiv Charitable Trust (2014)43 Taxman.com 300 (Del.);(xi) Mundakapadam Mandirams Society Vs. CIT (2002)125 Taxman 515 (Ker.);(xii) Kamma Sangham Vs. DIT (E) (2014)43 Taxman.com 192 (AP);(xiii) Shri Dhakad Samaj 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 notapplicable in the provisions of Income Tax Act and hence acceptance of thereturns of income for earlier two years in the case of assessee does not giveany right of similar acceptance to the assessee for the year underconsideration. 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 thesaid provision. He submitted further that facts in the case of the present

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assessee are different from those in the case of Divya Yog Mandir Trust,decided by the cornet bench of the Tribunal earlier. The recent amendmentby insertion of “Yog” with effect from 1.04.2015 makes it clear that before1.04.2015 “’yoga was not part of section 2(15) definition. He submitted thatYog, Auverdic college etc. are not coming under the definition of “medicalrelief”. He submitted that charges are different for different types of people inVanprastha Ashram accommodation. He pointed out that the land is ownedby person defined under section 13(3) of the I. T. Act. The assessee hadbenefitted Acharya Bal Krishan Ji. In Dynamic Buildcon Pvt. Ltd., Acharya BalKrishan Ji was holding 99% shares and the very object therefrom inferred thatit was to benefit him. He submitted that bikes were purchased in the name ofAcharya Bal Kishan Ji and it was transferred subsequently in assessee’s nameas an after-thought.8. The ld. AR re-joined with these submissions that the insertion of provisoto section 2(15) with effect from 1.04.2009 does not affect the object of theassessee as held by the cornet bench of the Tribunal in the case of Divya YogMandir Trust (supra) and referred page No.1024 of the paper book dealingwith an identical issue under almost similar set of facts. The ld. AR made astatement at the Bar that the assessee has not incurred any expenditureoutside India nor has it carried out any business. The registration given undersection 12-A of the Act was continuing during the year under considerationand it is still continuing. Thus, character of the assessee being charitable perse cannot be doubted. He pointed out that it is an established position of law

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of the land that assessee can be owner of the building constructed by it, even ifland is owned by others.8.1 In rejoinder, the ld. AR submitted that the ld. CIT (Appeals) has failed toappreciate that the Revenue had in the past years, consistently accepted theactivities of the assessee as being in the nature of medical relief, education andrelief to the poor. He has also erred in relying upon erroneous findings givenin the special audit report furnished under section 142(2A) while confirmingthe order of the Assessing Officer in denying exemption under sections 11/12of the Act.8.2 The ld. AR on queries raised by the Bench responded that assessee trustis not running shops or distribution of products and for those shoppings anddistribution and selling of products, as on commercial basis different entity isthere which is paying tax under the provisions of Income Tax Act, 1961.9. Having gone through the decisions cited above, we are of the view thatto examine as to whether the character of an assessee is charitable or not, thepredominant objects of it are to be examined to define its character. There isno dispute in the present case that (a) providing medical relief through Yoga /Pranayam; (b) imparting education in the field of Yoga; and (c) providingrelief to the poor are pre-dominant objects of the assessee which the assesseehad been carrying out over the years since it was set up in the year 2005. It isalso an undisputed fact that the assessee was registered under section 12A

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vide order dated 14.03.2001 and approved under section 80G(5)(vi) of the Actvide order dated 27.08.2007 and during the year it was enjoying theregistration and approval under the above provisions and still enjoying. Ofcourse, principle of res judicata are not applicable in the cases under theprovisions of Income Tax Act, 1961, but as per the established position of law,the Revenue is required to maintain consistency in its approach on anidentical issue under similar facts of the case in the subsequent assessmentyears.9.1 In earlier years under the similar set of facts the benefit of exemptionunder sections 11 and 12 of the Act has been undisputedly allowed to theassessee. During the year the Assessing Officer has took a different stand, asper the ld. CIT [DR] it was due to insertion of proviso to section 2(15) of theAct with effect from 1.04.2009, that the assessee is not eligible for the benefitof exemption available under sections 11/12 of the Act, since as per theAssessing Officer the ld. CIT (Appeals) the propagation of Yoga does notqualify as “medical relief” or “imparting of education”, but falls in theresiduary category of “enhancement of any other object of general publicutility”. The authorities below remained of the view that the assessee is notcharitable since substantial powers have been conferred on the settler or thetrust and also alleged that the appellant has violated the provisions of section13 of the Act by providing benefit to persons specified under sub-section (3)thereto.

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9.2 Now the first question before us as to whether propagation of Yoga bythe assessee qualifies as a medical relief or imparting of education or not ordoes it fall in the residuary category of “advancement of any other object ofgeneral public utility”. An identical issue under the almost similar set of factshas been dealt with by the coordinate bench of the Tribunal in the case ofDivya Yog Mandir Trust Vs. ICIT, ITA. No. 387/Del./2013 assessment year2009-10 vide its order dated 27.08.2013. The relevant para Nos. 6.4.1 to 6.4.6are being reproduced hereunder for a ready reference :-“Medical Relief” through yoga

6.4.1. While examining the issue as to whether medical relief can begiven through yoga on the basis of above submissions made by the partieswe find that in the Clinical Establishment (registration and regulation) Act2010, the legislature has defined “recognized system of medicine” inSection 2 (h ) of the said Act . As per this definition “(h) recognized systemof medicine means allopathy, yoga, naturopathy, ayurved, homeopathy,siddha and unani system of medicines or any other system of medicine asmay be recognized by the Central Government.” This bill was introduced bythe Central Government in the year 2007 to provide for registration andregulation of all clinical establishment in the country with a view toprescribe the minimum standards of facilities and services provided bythem. A copy of this Act has been made available at page Nos. 161 to 163of the paper book.

6.4.2. A reference of the recommendation of the standing committee ofHuman Resources Development Department (HRD) made for making theyoga a compulsory for all school going children in the country, has alsobeen made wherein it has been provided that the yoga is one of the corecomponents of health and physical education. Full copy of the report hasbeen made available at page nos. 177 to 192 of the paper book and paraNo.9.8 at page No. 181 thereof is relevant for the purpose. It reads asunder :-

“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. Yogahas been gaining immense popularity due to the short term as well as longterm benefits that it provides. Yoga helps one to achieve all rounddevelopment. Considering the immense potential of this ancient knowledge

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of India, the Committee recommends that yoga be made compulsory for allschool going children in the country.

ACTIION TAKEN

The National Curriculum Framework in School Education – 2005prepared by the National Council of Education Research and Trainingprovides for Health and Physical Education as a compulsory subject fromprimary to secondary stage as an optional subject at higher secondarystage. Yoga is one of the core components of Health and PhysicalEducation.”

6.4.3. On the contrary the Ld. CIT(A) for the purpose of determiningwhether yoga can be classified as a form of medical relief has placedreliance on the determination of the term “medical” as provided in MajorLaw Laxicon by P Ramanatha Aiyar (2010 edition) as per which “ pertainingto or having to do with the art of healing disease or the science of medicine; containing medicine ; used in medicine”. We find that the term “medical”has been defined very broadly in this definition as per which the art ofhealing any disease constitute a medical relief and the same need not berestricted to conventional method of treatment. Ld. CIT(A) at page 15 ofthe first appellant order has also selectively quoted from the website ofdepartment of Ayush (Ministry of Health and Family Welfare) to come thisconclusion that yoga is a discipline appears to address more the issues ofspiritual well being rather address the problems associated with the morewordly “medical relief” and exercises forming part of the yoga system wouldat the best have indirect salutary benefit on the health of an individual. Heheld that yoga is a spiritual system more than a curative system foralleviating or even curing various ailments. It is not seen as a specificremedy for physical ailment at par with medical system like allopathy oreven ayurveda. In this regard the Ld. CIT(A) has placed reliance on thedecisions in the cases of Kasyap Ved Research Foundation vs. CIT 131 ITD370 (Cochin) and CIT vs. Rajneesh Foundation, 280 ITR 533 (Bom). Acomplete information on yoga available on the website of the Ayush i.e,.‘Httpp://www.Indiamedicine.nic.in’ has been made available by theassessee at page Nos. 639 to 655 of the supplementary paper book No. 1and at page No. 757 to 793 of the supplementary paper book No. 2 filed bythe assessee. The Ld. AR has drawn our attention also on the followinginformation on yoga available on the aforesaid website :

"Yoga

The concepts and practices of Yoga originated in India about severalthousand years ago. Its founders were great Saints and Sages. The great

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Yogis presented rational interpretation of their experiences of Yoga andbrought about a practical and scientifically sound method within everyone'sreach. Yoga today, is no longer restricted to hermits, saints, and sages; ithas entered into our everyday lives and has aroused a worldwideawakening and acceptance in the last few decades. The science of Yogaand its techniques have now been reoriented to suit modern sociologicalneeds and lifestyles. Experts of various branches of medicineincluding modern medical sciences are realising the role of thesetechniques in the prevention and mitigation of diseases andpromotion 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 ofYoga systematically in his "Yoga Sutras" (aphorisms). He advocated theeight folds path of Yoga, popularly known as "Ashtanga Yoga" for all-rounddevelopment of human beings. They are:- Yama, Niyama, Asana,Pranayama, Pratyahara, Dharana, Dhyana and Samadhi. Thesecomponents advocate certain restraints and observances, physicaldiscipline, breath regulations, restraining the sense organs,contemplation, meditation and samadhi. These steps are believedto have a potential for improvement of physical health byenhancing circulation of oxygenated blood in the body, retrainingthe sense organs thereby inducing tranquility and serenity ofmind. The practice of Yoga prevents psychosomatic disorders andimproves an individuals resistance and ability to endure stressfulsituations." (emphasis supplied)

6.4.4. In the above said information it has been observed that expertsof various branches of medicine including modern medical sciences arerealizing the role of these techniques in the prevention and mitigation ofdiseases and promotion of health. It has been further observed that thesesteps are believed to have a potential for improvement of physical health byenhancing circulation of oxygenated blood in the body, retraining the senseorgans thereby inducing tranquility and serenity of mind ; the practice ofyoga prevents psychosomatic disorders and improves an individual’sresistance and ability to endure stressful situations. Even in the extracts ofthe 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 hasbeen stated that yoga is a discipline to improve or develop one’s inherentpower in a balanced manner. It offers the means to attain completeselfrealisation.

As per literal meaning of Sanskrit word ‘yoke” it has been notedthat the yoga can be defined as a means of uniting the individual spirit with

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the universal spirit of God and according to Maharishi Patanjali, yoga is thesuppression of medications of the mind. The information given under thehead “yoga as soul therapy” has also been extracted by the Ld. CIT(A) asper which all parts of yoga (japa, karma, bhakti) have healing potential toshelter out the effects of pains. It has been further noted therein that oneespecially needs proper guidance from an accomplished exponent, who hasalready treated the same track to reach the ultimate goal. If we read theseinformations available on the website of Ayush in its totality we find itdifficult to concur with the view of Ld. CIT(A) that yoga as a system doesnot fit into the definition of medical relief as mentioned in section 2(15) ofthe Act. The very observation of Ld. CIT(A) in this regard at page No. 16 ofthe first appellate order that yoga is a discipline appears to address morethe issues of spiritual well being rather than address the problemsassociated with the more wordly ” medical relief” itself suggests that the Ld.CIT(A) remained of the view that yoga as a discipline addresses theproblems associated with the medical relief but it address more the issuesof spiritual well being. Thus he has not completely disagreed with thesubmission of the assessee that yoga as a discipline addresses medicalrelief also. So far as the decisions relied upon by the Ld. CIT(A) to arrive ata conclusion that yoga as a system does not fit into the definition of medicalrelief are concerned, we find that these are having distinguishable facts andissues hence are not helpful to the revenue. In the case of Kasyapa VedaResearch Foundation vs. CIT (supra) it has been observed by the CochinBench that yoga is an ancient Indian science of meditation. There is nodispute on it. But only on the basis of such observations which is one of theaspects of the yoga it cannot be arrived at a conclusion that yoga as asystem does not clearly fit into the definition of “medical” which in turnleads to the term “medical relief”. The issue raised before the Cochin benchof the Tribunal in this case was as to whether assessee trust forms forpropagating of Vedas was entitled to registration u/s 12A in the status of areligious and charitable trust. Likewise the decision of Hon’ble Bombay HighCourt in the case of Rajneesh Foundation (supra) is not relevant as the saiddecision was rendered prior to introduction of proviso to section 2 (15),when there used to be no dispute in so far as classification of charitableobjectives was concerned for the purpose of claiming exemption u/s 11/12of the Act. The decision was referred in the context of classifying’meditation’ as a charitable objectives for the purpose of section 2(15) ofthe Act. The Hon’ble High Court has adjudicated only upon the issue ofclassification of ‘meditation’ , ‘preaching/propagation of philosophy as acharitable object falling under the category of general public utility but hasnowhere explicitly dealt with yoga except for making passing references inrespect of the same. In the said decision the Hon’ble High Court hashowever also been pleased to observe that not only in India but in thewestern countries also meditation and yoga are being accepted as a greatsource of physical and mental health. Meaning thereby that yoga is a source

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for medical relief. For a ready reference the relevant extract of the saiddecision is being reproduced hereunder :-

Admittedly, main thrust of the respondent is on meditation andnobody can dispute that in India meditation has been very important sourcefor physical, mental and spiritual ~ well-being of the human beings.Cognizance has to be taken that the meditation and Yoga I are becomingmore and more popular among the Indians who are now becomingconscious about their physical, mental and spiritual health. Not only inIndia, meditation and Yoga are being accepted in the WesternCountries also as a great source for physical and mental health andspiritual attainment. When a large number of people feel thatmeditation is a great source for physical, mental and spiritual wellbeing,it must be held to be an activity for the advancement ofgeneral public utility".(emphasis supplied)

6.4.5. Ld. AR has also referred the survey report of US Nationalcenter for complementary and alternative medicine (NCCAM) based onsurvey conducted in December, 2008, made available at page Nos. 193 to196 of the paper book (assessee) as per which yoga has been recognizedas a complementary and alternative medicine to prevent and treat disease.NCCAM defines CAM as a group of diverse medical and health care systems,practices and products that are not generally considered part ofconventional medicines. NCCAM found that yoga was the sixth mostcommonly used alternative therapy in the USA during 2007, with 6.1% ofthe population participating. The said study states yoga has been used assupplementary therapy for diverse conditions such as cancer, diabetes,asthama and AIDS and the scope of medical issues where yoga is used as acomplementary 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 beenmade, relevant extracts of which ahs been made available at page Nos. 555to 633 of the supplementary paper book (appellant). This publication hasbeen documented on the basis of clinical tests conducted showing theclinical effect of yoga on the participants in various yoga camps.As discussed above the Ld. CIT (DR) has basically placed relianceon the orders of the authorities below asserting that yoga is a way ofmeditation rather than a way of medication to qualify for ‘medical relief’. Areference of contents of page No. 638 of the paper book has also beenmade to support his submission that in September, 2012. the HarvardUniversity of USA came forward to introduce yoga and ayurved subject intheir university in collaboration with Swami Ramdevji in the wake of

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dreadful diseases being cured by Swamiji’s Pranayam and his ayurvedmedicines.

6.4.6. In view of above discussions especially the recognition of yoga asa recognized system of medicine as per section 2 (h) of ClinicalEstablishment (Registration and Regulation) Act 2010 and the completeinformation made available by the ayush on its website we find nohesitation in coming to the conclusion that yoga can be safely accepted asa system fit into the definition of ‘medical relief’. Yoga as a science is a wellrecognized system of medicine, which has therapeutic effects in treatingvarious serious ailments. The predominant objective of the appellant trustas it is apparent from its objects, remained to provide medical relief throughayurveda and propagation of yoga for the purpose of treating / curingvarious diseases. “

9.3 Besides above we want to add further that there are several pathiesand methods by which the medical relief is achieved. These pathies areallopathy, homeopathy, neaturopathy, Ayurvedic, Unani, Yoga etc. and aperson suffering from any disease including chronic diseases approachesthese pathologies and method for the relief and for such person the pathy ormethod from which he gets relief is the medical relief from the method orpathy followed by him. In other words, the ultimate goal of all these pathiesand methods is to achieve relief and certainly Yog is the one of such method orpathy. There is no dispute that in case of certain diseases certain pathy ormethod is more helpful and other pathy or other method is helpful for therelief in the other type of sufferings. Now it is well established fact that thepractice of yoga gives positive reliefs in the cases of asthma, migraine, hypertension, stress etc. Other examples are also there wherein following of Yogahas become very helpful. Now the very insertion of “Yoga” in the definition of“charitable purpose” under section 2(15) of the Act by the Finance Act, 2015with effect from 1.04.2016 has removed all the doubts that propagation of

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yoga itself is a charitable purpose to make the assessee eligible for claimingexemption under sections 11/12 of the Act.9.4 We thus following the above decision in the case of Divya Yog MandirTrust (supra) hold that Yoga also gives ‘medical relief‘ and thus also fallsunder the definition of charitable purpose. The authorities below were thusnot right in denying claimed exemption under section 11/12 of the Act on thebasis that propagation of yoga does not give medical relief and thus not fallunder “charitable purpose” defined under section 2(15) of the Act and it fallsin the residuary category of “advancement of any other object of generalpublic 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 alsofalls under “imparting of education” to bring it eligible for the exemptionunder 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 inthe case of Divya Yog Mandir Trust Vs. JCIT (supra) the relevant para Nos. 6.5and 6.5.1 are reproduced hereunder :

‘Imparting Education’

6.5. The question now is as to whether the appellant trust falls withinthe purview of providing “imparting education”. The grievance of theappellant is that the authorities below have failed to appreciate that thepropagation of yoga by way of conducting yoga classes on a regular basisand in a systemized manner also falls under the category of ‘imparting ofeducation’ as provided u/s 2(15) of the Act. Reliance has been placed onseveral decisions, which we will discuss hereunder. The contention of the

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Ld. AR remained that the predominant object of the appellant trust are toprovide practical and theoretical training in the field of yoga, which wouldultimately provide medical relief to the society at large. It was submittedthat in pursuance of the said objective the appellant trust has made intertrustdonations to Patanjali Yog Peeth to support their endeavors ofimparting yoga education by means of organizing yog shivirs/camps acrossthe country on daily/weekly/monthly basis in a systemized/organizedmanner in order to provide medical relief to people who cannot affordmodern medical method or have been subjected to ill effects of modernmedicine. It was submitted that imparting of yoga training through wellstructured yoga shiviirs/camps also falls under the category of imparting‘education’ one of the charitable objects defined u/s 2(15) of the Act andaccordingly the appellant’s activities are not hit by the proviso inserted inthe definition of charitable purpose as contained in the said section. Duringthe course of hearing the appellant was directed to provide complete detailsof the Patanjali Bhartiya Ayurvigyan Avam Anusandhan Sansthan atHaridwar for imparting education in the field of ayurveda which startedoperations w.e.f. 20.7.2009. In compliance the Ld. AR submitted that duringthe year the appellant had applied substantial amount on construction ofthe ayurveda medical college which is affiliated to the UttarakhandTechnical University. It was submitted that ayurveda medical college set upby the appellant was approved and duly recognized by the Department ofAyurveda, yoga & naturopathy, unani, siddha and homoeopathy (AYUSH)vide notification dated 20.7.2009, a copy thereof has been made availableat page No. 805 and 806 of the supplementary paper book –II. Departmentof Ayush is a body set up by the Ministry of Health & Family Welfare, Govt.of India with the primary objective of regulating and upgrading theeducational standards, quality control and standardization of drugs,improving the availability of medicinal plant material, research anddevelopment and awareness generation about the efficacy of ayurveda,yoga and naturopathy, unani, siddha and homoeopathy systems ofmedicines. For the purpose of recognizing and granting permission forestablishment of medical colleges, the department of AYUSH mandatesfulfillment of certain minimum standard and requirements as prescribedunder the Indian Medical Central Council Act 1970 (IMCC Act). One of theprimary conditions laid down in the IMCC Act for the grant of recognition isthe existence of a medical hospital attached to the ayurvedic college withthe prescribed bed strength alongwith outdoor patient department (OPD)and Indoor patient department (IPD) facilities. Ld. CIT(DR) on the otherhand has placed reliance on the orders of the authorities below, asdiscussed above.

6.5.1. The expression ‘education’ has not been defined under theprovisions of Income Tax Act. The Hon’ble Supreme Court in the case ofLok Shikshana Trust (supra), relied upon by the Ld. AR, has been pleased

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to explain the meaning of the word ‘education’ in the context of section2(15) of the Act. As per this decision the education is the process oftraining and developing the knowledge, skill, mind and character ofstudents by schooling by way of systematic instruction, schooling ortraining. The Hon’ble Delhi High Court in the case of Delhi Music Society vs.DGIT (supra) has been pleased to hold that since the assessee society wasteaching and promoting all forms of music and dance , western, Indian orany other and was run like any school or educational institution in asystemic manner with regular classes, the same therefore meet therequirement of an educational institution within the meaning of section10(23C)(vi) of the Act. In the case of ITO vs. SRM Foundation of India(supra) the Delhi Bench of the Tribunal, where the assessee was engagedin spreading the system of transcendental meditation (TM) has held thatirrespective of the fact that the assessee has its own prescribed syllabus,trained teachers, branches all over India to spread system of transcendentaldeep meditation among people in all walks of life, the same constitutedimparting of education and the assessee was entitled to exemption u/s10(22) of the Act. We thus come to the conclusion that any form ofeducational activity involving imparting of systematic training in order todevelop the knowledge, skill, mind and character of students, is to beregarded as ‘education’ covered u/s 2(15) of the Act. In view of thesedecisions we hold that imparting of yoga training through well structuredyoga shivir / camps also falls under the category of imparting educationwhich is one of the charitable objects defined u/s 2(15) of the Act. Theappellant’s activities are thus not hit by the proviso inserted in the definitionof charitable purpose in section 2(15) of the Act. “

9.6 We thus following the above decision hold that propagation of yoga aspre-dominant objective in the case of present assessee very much falls withinthe definition of “charitable purpose” provided under section 2(15) of the Actas it is also “imparting of education”. There is no dispute that the assessee hasbeen continuously undertaking the following activities :(a) Providing medical relief to various sections of the society, including but not limited to

providing free medicines and treatment by organizing various shivirs/ camps on a

regular basis under the leadership of yoga guru, other trained teachers and teams of

doctors.

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(b) Conducting programmes and shivirs on a regular basis for propagating yoga and

Ayurvedic methods of treatment and also to promote good health;

(c) Conducting yoga 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 dealwith in the succeeding paragraphs, but as per un-rebutted submission of theassessee, it is also pertinent to mention over here that the issuance ofdonation coupons in the domination of Rs.NIL (i.e. free), Rs.100/-, Rs.500/-,Rs.1,100/- and Rs.21,00/- to various voluntary donors who attend the yogacamps, which is nothing but small donations given by the voluntary donors,who attend the Shivir/camp. The ld. CIT (Appeals) has referred to donationcoupons without appreciating that Yoga Shivir/camp is open to all and notmerely restricted to persons who volunteer to donate to the charitable causeof the assessee. It may also be pointed out that the assessee has appliedsubstantial amount in setting up of “Patanjali University”, a DeemedUniversity set up under the University of Patanjali Act, inter-alia, for havingcourses in M.A. {Yoga Science}, M.Sc. (Yoga Science), B.A. (Yoga Science) PostGraduate Diploma in Panchkarma, Post Graduate Diploma in Yoga Science andPost Graduate Diploma in Yoga Health and Cultural Tourism. It has also beeninformed that the university has become operational on September, 2009.

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The finding of the authorities below that propagation of Yoga by theassessee does not qualify as medical relief or imparting of education is thusheld as not justified.9.8 The other allegations on the basis of which the authorities below havedenied exemption are that the assessee during the year had undertakencommercial activities by receiving certain contributions under the scheme forconstruction of cottages at Patanjali Yogpeeth–II known as “VanprasthaAshram” which tantamount to providing “services to contributors” and is inthe nature of business hit by proviso to section 2(15) of the Act. We, however,do not find substance in the above allegation after considering thesubmissions made by the parties as well as material available on record. Thereason being that during the year assessee had not undertaken any activitiesin relation to the construction of cottages nor provided any kind of service /facility under the “Vanprastha Ashram Scheme”. The construction of cottagesunder the said scheme as per the unrebutted submission of the ld. AR,commenced only in assessment years 2010-11 and cottages were inauguratedon 4.04.2011 in assessment year 2012-13. It remained the submission of theassessee that “Vanprastha Ashram” at Patanjali Yogpeeth-II was proposed tobe constructed by the assessee in furtherance of its charitable objectives ofproviding medical relief through Yoga and to impart Yoga training /education.It was submitted that assessee did not charge any fee / rent from the generalpublic for uses of such cottages constructed under Vanprastha AshramScheme. The cottages are allotted to general public on the basis of availability

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i.e. on first come first served basis and no other conditions are stipulated foruses of such cottages.9.9 We also agree with the submission of the ld. AR that “businessrefers to real, substantial, organized course of activity for earning profits as“profit motive is essential requisite for conducting business. This view is fullysupported by the Hon’ble Supreme Court in the case of Distributors Baroda P.Ltd. (supra). The Special Bench of the Tribunal in the case of BJP Vs. DCIT(supra) has held that an activity to be treated as “business” should have asymbolance of trade, an attribute of commercial activity and an expectation toearn income over a reasonable period. The Tribunal further held that theexpression “trade” and “commerce” are narrower in scope than theexpression “business”. The expression “trade” or “commerce” signifyeconomic/commercial activity with the motive of earning profit. The threewords viz. “trade”, “commerce” and “business”, connote and indicate a seriesof organized activities primarily undertaken on commercial lines for profitmotive. We have discussed the facts of the present case in the precedingparagraphs as well as the predominant objects of the assessee in detailsupported with activities done by it from which no inference can be drawnthat assessee is in trade, commerce and business. The Hon’ble Supreme Courtin the case of ACIT Vs. Surat Art Silk Cloth Mfg. Association 121 ITR 1 (SC) hasbeen pleased to hold that where an activity was not pervaded by profitmotive, but was carried on primarily for serving the dominant charitablepurposes, it would not be correct to describe it as an activity for profit. Butwhere an activity was carried on with the predominant object of earning

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profit, it would be an activity for profits, though it may be carried on in theadvancement of the charitable purpose of the trust or the institution. Theabove view expressed by us on the basis of the fact of the prevent case is thusfully supported by the ratio laid down in this decision of the Hon’ble SupremeCourt. Charging of fee to meet a part of the cost for rendering charitableservices cannot make the services as business activities and accordingly, theinstitution will continue to be a charitable institution and it cannot be affectedby the proviso to section 2(15) of the Act as wrongly held by the authoritiesbelow in the present case. The decisions relied upon by the ld. CIT [DR] in thecases of Shah Trust Vs. Director of Income-tax (Exemption) (supra); MunicpalCorporation of Delhi Vs. Children Book Trust (supra); Aditanar EducationalInstitution Vs. ACIT (supra) etc. having distinguishable facts are not applicablein the present case and also because there is no dispute about the ratio laiddown therein, but the question is whether it is applicable in the facts of thepresent case. In the case of Disha Trust Vs. Director of Income-tax(Exemption) (supra) the ld. Director of Income-tax (Exemption) had notexamined the objects of the trust for granting registration under section 12AAof the Act, but went on wrong premises that the assessee trust has not startedits activities and the objects are mixed. The matter was set aside withdirection that in the process the ld. Director of Income-tax (Exemption) shallanalyse the objects of the assessee trust and determine whether the objectwould fall within the purview of section 2(15) of the Act and if so, underwhich limb of the provision. In the case of Municipal Corporation of Delhi Vs.Children Book Trust (supra), the Hon’ble Supreme Court has been pleased tohold that merely imparting of education will not be regarded as charitableobject, but it must involve public benefit. It rather supports the case of

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present assessee before us as imparting of education i.e. practice of yogainvolves public benefit as discussed above. Similarly in the case of AditanarEducational Institution Vs. ACIT (supra) the Hon’ble Supreme Court has beenpleased to hold that an educational society or a trust or other similar bodyrunning an educational institution solely for educational purposes and not forpurpose of profit could be regarded as “other educational institutions” comingwithin section 10(22) of the Act. No such issue is involved in the present casebefore us. In view of above findings, the ground Nos. 1 to 6 are decided infavour 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 ofallegations made by the authorities below while denying the claimedexemptions under sections 11/12 of the Act.10.1 The authorities below have alleged that the assessee had violated theprovisions of section 13 of the Act on several accounts like on account ofservices being made available to M/s. Vedic Broadcasting Ltd., on account ofgiving interest free loan and advance to M/s. Dynamic Buildcon Pvt. Ltd., andon 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 claimed by the assessee under sections 11/12 alleging that the

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assessee violated various conditions of section 13 of the Act. Such allegations have been levelled

by the assessing officer on the basis of incorrect inferences drawn from factual details/

documents filed by the assessee during the course of assessment proceedings.

Kind attention of your Honours in this regard is firstly invited to the relevant provisions of

section 13 of the Act, which read as under:

“13. Section 11 not to apply in certain cases.(1) Nothing contained in section 11 or section 12 shall operate so as to exclude from the total

income of the previous year of the person in receipt thereof—………………………(c) in the case of a trust for charitable or religious purposes or a charitable or religiousinstitution, any income thereof—

(i) if such trust or institution has been created or established after the commencement of thisAct and under the terms of the trust or the rules governing the institution, any part of suchincome enures, or

(ii) if any part of such income or any property of the trust or the institution (whenevercreated or established) is during the previous year used or applied,directly or indirectly for the benefit of any person referred to in sub-section (3) :

………………………….(d) in the case of a trust for charitable or religious purposes or a charitable or religiousinstitution, any income thereof, if for any period during the previous year—(i) any funds of the trust or institution are invested or deposited after the 28th day of February,

1983 otherwise than in any one or more of the forms or modes specified in sub-section (5) ofsection 11; or(ii) any funds of the trust or institution invested or deposited before the 1st day of March, 1983otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11continue to remain so invested or deposited after the 30th day of November, 1983; or(iii) any shares in a company, other than—(A) shares in a public sector company ;(B) shares prescribed as a form or mode of investment under clause (xii) of sub-section (5) ofsection 11, are held by the trust or institution after the 30th day of November, 1983….………………(2) Without prejudice to the generality of the provisions of clause (c) and clause (d) ofsub-section (1), the income or the property of the trust or institution or any part of suchincome or property shall, for the purposes of that clause, be deemed to have been used orapplied 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 sub-

section (3); or

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(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 provisions of section 13(1)(c) and particularly

the deeming fiction contained in section 13(2) of the Act, which contains a legal fiction, must be

strictly construed.

In the light of the aforesaid legal position, the specific instances of alleged violation of section 13

of the Act and its brief rebuttal are tabulated.

10.2 The ld. AR drew our attention on the above table placed at page Nos. 37to 49 of the submission made by the assessee. The ld. AR contended that theld. CIT (Appeals) has summarily concluded that the assessee has violated theprovisions of section 13 of the Act without disposing off the specific objectionsraised by the assessee against the various allegations leveled by the AssessingOfficer in the impugned assessment order.10.3 Without prejudice to above, the ld. AR also made following submissionavailable at page Nos. 37 to 49 of the submission made on behalf of theassessee :Absolute Denial of exemption not warranted

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Without prejudice to the aforesaid that there is no violation under section 13(1), as alleged by the

assessing officer, it is respectfully submitted that even if for the sake of argument the allegation

of alleged violation is accepted to be correct, still, however, it is respectfully submitted that there

was no warrant to completely deny exemption under sections 11/12 of the Act, for the reasons

elaborated hereunder:

Section 13 of the Act (as re-produced supra) spells out certain circumstances in which the

exemption provided under sections 11/12 will not be available. Further section 164(2) and 164(3)

of the Act reads as under:

“[(2) In the case of relevant income which is derived from property held under trustwholly for charitable or religious purposes, or which is of the nature referred to in sub-clause (iia) of clause (24) of section 2, or which is of the nature referred to in sub-section(4A) of section 11, tax shall be charged on so much of the relevant income as is notexempt under section 11 or section 12, as if the relevant income not so exempt were theincome of an association of persons :

Provided that in a case where the whole or any part of the relevant income is notexempt under section 11 or section 12 by virtue of the provisions contained in clause(c) or clause (d) of sub-section (1) of section 13, tax shall be charged on the relevantincome or part of relevant income at the maximum marginal rate.

(3) In a case where the relevant income is derived from property held under trust in partonly 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 religiouspurposes (or any part thereof) is not specifically receivable on behalf or for the benefit ofany one person or the individual shares of the beneficiaries in the income so applicableare indeterminate or unknown, the tax chargeable on the relevant income shall be theaggregate of—

(a) the tax which would be chargeable on that part of the relevant income which is applicableto charitable or religious purposes (as reduced by the income, if any, which is exemptunder section 11) as if such part (or such part as so reduced) were the total income of anassociation of persons; and

(b) the tax on that part of the relevant income which is applicable to purposes other thancharitable or religious purposes, and which is either not specifically receivable on behalfor for the benefit of any one person or in respect of which the shares of the beneficiariesare indeterminate or unknown, at the maximum marginal rate

………………………………………” (emphasis supplied)

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Thus, the aforesaid sections provide that income of trust will be taxable at ‘maximum marginal

rate of tax’:

i. If any fund of the organization has been invested or deposited, for any part of the year, as

per section 13(1)(d) read with section 11(5) of the Act;

ii. If any part of income has been applied directly or indirectly for the benefit of any of the

excluded persons under section 13(1)(c) r.w.s. 13(3) of the Act.

However, the section categorically provides that tax shall be charged on the ‘relevant income’

or ‘part of relevant income’ which has forfeited exemption at the maximum marginal rate.

Thus, on a conjoint reading of section 13(1) and section 164 of the Act, , it may be observed

that taxability of the income of an organization forfeiting exemption under section 13(1)(c)

or 13(1)(d), shall be charged at maximum marginal rates of tax only on that part of income

which has forfeited exemption. Thus, where the trust contravenes the provisions of section

13(1)(c) or (d) of the Act, the maximum marginal rate will apply only to that part of the

income which has forfeited exemption.

Further, the language of section 13(1)(c) and (d) also supports this view which provides to

exclude from the total income, ‘any income thereof’ which as a whole or in part has forfeited

exemption.

In this regard, it is further submitted that the word "such" used in the section 13(1)(c)(ii) is

important and refers to only that part of income which goes to the benefit of specified persons.

Further, similar treatment should be given in respect of cases covered under clause (d ) of section

13(2) providing for disallowance in respect of services of the trust given to specified persons.

Your Honours kind attention in this regard is invited to Circular No. 387 dated 06.07.1984

[(1985) 152 ITR (St.) 1 at 20] which clarifies the aforesaid position. The relevant extracts of the

said circular has been re-produced as under:

“28.6 It may be noted that new sub-section (1A) inserted in section 161 of the Income-taxAct, which provides for taxation of the entire income received by trusts at the maximummarginal rate is applicable only in the case of private trusts having profits and gains ofbusiness. So far as the public charitable and religious trusts are concerned, their

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business profits are not exempt from tax, except in the cases falling under clause (a) orclause (b) of section 11(4A) of the Income-tax Act. As the maximum marginal rate of taxunder the new proviso to section 164(2) applies to the whole or a part of the relevantincome of a charitable or religious trust which forfeits exemption by virtue of theprovisions of the Income-tax Act in regard to investment pattern or use of the trustproperty for the benefit of the settlor, etc., contained in section 13(1)(c) and (d) of thatAct, the said rate will not apply to the business profits of such trusts which are otherwisechargeable to tax. In other words, where such a trust contravenes the provisions ofsection 13(1)(c) or (d) of the Act, the maximum marginal rate of income-tax will applyonly to that part of the income which has forfeited exemption under the saidprovisions.” (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

complete denial of exemption under sections 11/12 of the Act.

The Delhi Bench of the Tribunal in the case of Span Foundation vs. ITO: 2008 TIOL 108-

ITAT-Del. [refer pages 1141 to 1145 of the case law paper book] held that even in a case of

alleged violation under section 13, benefit under section 11 would not be available only to the

extent of application of income or property for the benefit of person referred to in section 13(3)

of the Act. The same could not, however, the Tribunal further held, result in total denial of

exemption under section 11 of the Act. The pertinent observations of the Tribunal read as under:

“8. We have considered the rival submissions. Section 13 operates as an exception tosection 11 of the Act. Section 13 treats only the difference between the adequate rentchargeable for the building and the actual rent charged by an assessee as attracting theprovisions of section 13 of the Act. In other words, the benefit of section 11 could notbe available only to the extent of application of the property or income of the trustdirectly or indirectly for the benefit of persons referred in sub-section(3) of section 13of the Act. The benefit of section 11 could not be totally denied. The question thatarises for consideration is as to whether the rent charged by the assessee from its sisterconcern was adequate rent.………………”(emphasis supplied)

Further appeal preferred by the Revenue against the aforesaid decision of the Tribunal has been

dismissed by the Delhi High Court in the case reported as DIT V. Span Foundation: 178

Taxman 436, though on other issues and without specifically considering/ dealing with the

aforesaid principle laid down by the Tribunal.

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You Honour’s kind attention, in this regard, is invited to the decision of the Calcutta High Court

in the case of Birla Vidhya Vihar: 136 ITR 445 wherein the Court held that solitary fact of

diverting/ application of income from the school for non-educational purposes was not very

material for completely denying exemption under section 10(22) of the Act.

Your Honour’s kind attention is also invited to the recent decision of the Delhi Bench of the

Tribunal in the case of ACIT v. Idicula Trust Society 52 SOT 1, wherein, the assessee-society

came into existence in July 1991. It was running schools and colleges in Faridabad and Kerala.

The managing committee consisted 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

Rs. 8,16,000, Rs. 7,20,000 & Rs. 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 Rs. 14,64,000 under section 40A(2)(b) of the Act as against the total

expenditure of Rs. 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

preferred an appeal before the Tribunal.

The Tribunal confirmed the order of the CIT(A) by holding as under:

“11. A bare perusal of section 13(1)(c)(ii) would suggest that whatever has been statedin sections 11 and 12 providing certain benefits to the assessee would not be availableon the amounts which have been extended directly or indirectly for the benefit of anyperson referred to in sub-section (3) of section 13 of the Act, meaning thereby, if anassessee has extended any undue benefit to the person mentioned in sub-clause (3)then those amounts would not be considered as application of income for the purposeof fulfillment of objects of the society and benefit of sections 11 and 12 would not beavailable to the assessee on those amounts. Thus, section 13(3)(1)(c)(ii) is analogous tosection 40A(2)(a) and section 13(3) is an analogous to sub-clause (b) of section 40A(2)

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of the Act. Learned CIT (Appeals) has rightly observed that restriction is applicable tothose amounts which have been applied directly or indirectly for the benefit of anyperson referred to in sub-section (3) of the Act. It will not lead to any conclusion thatassessee would loose its charity status. In other words, if a small amount is to bedisallowed that would not disqualify to enjoy the status of charity. Thus, we do not findany merit in ground Nos. 2 and 3 raised by the revenue.

12. Let us examine whether assessee has extended any undue benefit directly or indirectlyto the persons referred to in sub-section (3). As far as the salary paid to two persons,namely, Mr. T.I. John and Mr. A. John of Rs.8,16,000 and Rs.7,20,000 is concerned, wefind that a similar salary was paid in assessment years 2005-06 to 2007-08. Inassessment years 2005-06 and 2006-07, Assessing Officer made the disallowance and theITAT has upheld the deletion of disallowance. Thus, the issue is squarely covered by theorder of the ITAT. As far as the salary paid to Mr. Joseph John is concerned, we find thatthe salary of Rs.55,000 per month has been paid. Assessing Officer disallowed the salaryto the extent of 2/3rd. We find that Learned CIT (Appeals) has considered the order of theITAT in assessment years 2003-04 to 2006-07 wherein salary in the case of Mr. JosephJohn has been partly disallowed. It was brought to our notice that in assessment year2007-08, Assessing Officer has allowed the total salary paid to Mr. Joseph John and thesalary was @ Rs.55,000 per month. We further find that in this year, Assessing Officerhas independently not brought any evidence which can show how much salary a personhaving qualification equivalent to Mr. Joseph John could fetch in the open market. Whatare the rates of salary paid by other institution to a person who is teaching as well asmanaging the school. We have noticed the duties performed by Shri Joseph John.Assessing Officer is harboring upon the evidence collected by the Assessing Officer inassessment 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 Commissionwhich resulted into a handsome enhancement in the salary of the employees including thegovernment teaching staff and the salaries have almost enhanced by 30% to 40%. If theincrease in the salary of Shri Joseph John allowed to him by the ITAT in 2004-05, isbeing looked into with this angle also then sum of Rs.55,000 would not be on a higherside. Considering all these aspects and the detailed order of the Learned CIT (Appeals),we do not find any reason to interfere in it and the appeal of revenue is dismissed.

13. In the result, the appeal of the revenue is dismissed.” (emphasis supplied)

Further, in the case of DCIT vs. Help Age India: 133 TTJ 590 (Del), the assessee-trust filed the

return of income declaring total income of Rs. 49.96 lakhs. This income was claimed to be

exempt under section 11(1)(a) of the Act. In the course of assessment proceedings, it was noticed

by the Assessing Officer that the assessee was holding shares and bonds of 25 species, some of

which were in the demat-form. These holdings were not in conformity with the provisions of

section 11(5) of the Act. Therefore, the Assessing Officer held that the assessee had infringed the

provisions of section 13(1)(d )(iii), as substituted by the Finance Act, 2007, retrospectively with

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effect from 1-4-1999. Accordingly, the assessee was not allowed exemption under section

11(1)(a) of the Act in respect of application of the income.

On appeal, the Commissioner (Appeals) noted that, although the assessee had no intention to

invest its funds in the aforesaid securities, those securities came in its possession on account of

small donations. The assessee was also not in a position to dispose of those shares and bonds. In

these circumstances, according to the Commissioner (Appeals), if the contention of the

Assessing Officer was accepted, then holding the aforesaid securities of the small value of

Rs.2.05 lakh would bring the entire charitable activities of the assessee to the extent of about

Rs.30 crore to a naught. Thus, it was held that on the facts and in the circumstances of the case,

there was no infringement of the provision contained in section 13(1)(d)(iii). Accordingly,

exemption was allowed under sections 11 and 12 of the Act.

On appeal preferred by the Revenue, the Tribunal held in favor of the assessee, by making the

following pertinent observations:

“6. We have considered the facts of the case and rival submissions. We find that theassessee received certain shares and bonds of small values, which statedly came into itspossession on account of death of the inmates. Since there was no manifest transfer of theshares and bonds to the assessee, the same were not taken into account in the books ofaccount. The shares were of small value and some were in odd lots which could not bedisposed of immediately and, therefore, they continued to remain in possession of theassessee. 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. Theshares and bonds belonged to the deceased intimates which normally would have gone totheir legal heirs who were not traceable. This was the reason for non-entering the sharesetc. in the books. The bonds and shares were also not saleable immediately. In thesecircumstances, 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 ofthe assessee to the exclusion of all others, which is not the case here. In thesecircumstances, we are of the view that total denial of exemption u/s 11(1)(a) on theground that the shares were held by the assessee will be against even the language ofthe provision. The Ld. CIT(A) has reached more or less on the same conclusion bymentioning that infringement, if any, was technical, which should be ignored byapplying the rule of purposive construction. We tend to agree with him on the facts ofthe case. In such circumstances, what can be done is that income derived from theshares, if taken into account in the books, may be brought to tax. However, we agreewith the Ld. CIT(A) that there cannot be a complete denial of the exemption u/s11(1)(a). Thus, ground Nos. 1 and 2 are dismissed” (emphasis supplied)

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Further in the case of Gurdayal Berlia Charitable Trust vs. ITO: 34 ITD 489 (Mum), the

assessee was a public charitable trust, derived income by way of dividend, bank interest and

donations. By virtue of the provisions of section 11(5), which came into effect from the

assessment year 1984-85, it lost exemption under section 11 of the Act in respect of dividend

income. However, relying on the provisions of section 164(2), it contended before the ITO that

only the dividend income was liable to tax, while the other income would still be exempt under

section 11 of the Act. In the assessment framed under section 143(3) in respect of the assessment

year 1984-85, the ITO rejected the assessee’s claim. On appeal, the Commissioner (Appeals)

also rejected the assessee’s claim. On second appeal, the Tribunal held as under:

“The requirement of investment of accumulated funds in specified securities which hasbeen introduced in the form of sub-section (5) of section 11, is likely to create difficultiesfor old trusts which have been granted exemption under section 11 [as it stood before theintroduction of sub-section(5)], but which are not in a position to invest in specifiedsecurities their accumulated funds for some reason or the other. In the instant case, itwas a known fact that during the relevant previous year it was not possible to dispose ofthe shares in question, as there was hardly any buyer. Now, the income of the trust, whichis receivable by the trustees, is called ‘relevant income’ under section 164(1). A portionof such relevant income in the present case would suffer tax mainly because the conditionof investment in specified securities as prescribed under section 11(5) had not beenfulfilled. But, non- fulfilment of such condition could not be said to deprive the trust ofthe exemption of its other income which had already been granted to it in the earlieryears. Therefore, in a case of this type, the provisions of sub-section(2) of section 164along with the proviso thereto would come into operation and only such income wouldbe brought to tax at the maximum marginal rate which could not be treated as exemptby virtue of non-fulfilment of condition of investment in specified securities asprescribed by section 11(5).

There is nothing in section 11(5) which can be interpreted to mean that if a portion ofthe accumulated income of the trust is not invested in specified securities, theexemption under section 11 which had already been granted to the trust in earlieryears would be withdrawn. Therefore, the assessee-trust could not be denied exemptionunder section 11 and only its income from dividend should be brought to tax at theprescribed rate because such income was not from specified securities.” (emphasissupplied)

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

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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

power to deny exemption to that extent under section 13(1)(c) of the Act. The pertinent findings

of the Tribunal in this regard, are reproduced as under:

“21.Reverting to section 12AA it can be seen that the Commissioner has to orderregistration of the trust where he is satisfied about the objects of the trust and thegenuineness of its activities. So long as the objects of the trust are charitable and theactivities are in advancement of such objects, the registration cannot be refused. Onceregistration is granted to trust or institution but later on it is found by the AssessingOfficer during the course of assessment proceedings that the income of charitable trustis applied directly or indirectly for the benefit of persons referred to in section 13(3),then he has ample power to deny exemption to that extent under section 13(1)(c).

22.Coming back to the facts of the instant case it is seen that the trust deed adequatelyprovides that, after the death of the settlor, the income from the trust property is to beused for charitable purposes, which are covered under section 2(15) of the Act. Thisshows that the objects of the trust, after the death of settlor, were fully charitable. Theassessee produced copies of its final accounts for last three years ending on 31st March,2006, 2007, 2008 before the Commissioner. It was specifically claimed that not even asingle paisa was applied for the benefit of any lineal descendants of the father of thesettlor. The Commissioner, despite the availability of audited accounts before him for thelast three years, failed to point out any single instance in which the income of the trustwas not utilized for the charitable purposes set out in the trust deed or the money wasapplied for the lineal descendants of the father of the settlor. Even if any amount isactually spent on the relatives of the settlors, then there is section 13(3) enabling theAssessing Officer to refuse exemption under section 11 read with section 13 to thatextent and that too in the year in which such amount is spent. It cannot be a reason torefuse registration under section 12AA. As such it is noticed that both the conditionsunder section 12AA warranting the registration of the trust, are fully satisfied in thepresent case…….” (emphasis supplied)

In view of the aforesaid, it is respectfully submitted that even assuming there 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 so-

called alleged payments/benefits to the interested persons as application of income for charitable

purposes.

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11. The ld. CIT [DR], on the other hand, placed reliance on the orders of theauthorities below. He submitted that there is apparent violation of provisionsof section 13(1)(c ), 13(1)(d) and other provisions laid down under section 13of the Act on the basis of which the authorities below were justified in denyingthe 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 worthRs.96,00,000/- made available to M/s. Vedic Broadcasting Ltd. as per paraNo.7.5(a) of the assessment order; on account of giving interest free in directadvances of Rs.2,40,000/- to M/s. Dynamic Buildcon Pvt. Ltd., para No.7.5(b)of the assessment order; on account of investment of Rs.12,00,000/- andRs.7,09,560/- made in modes other than specified in section 11(5) of the Actmentioned in para Nos. 7.5(c) and 7.5(d) of the assessment order. Theseallegations also include purchase of land from United Infracon, purchase ofland from M/s. Sri Niramaya Properties and Mr. Pawan Sharma, constructionon the land owned by Swami Muktanand Ji, construction of PatanjaliYogpeeth-II not owned by the assessee; payment to Divya Yog Mandir Trust,Motorcycle purchased was not registered in the name of the assessee trustand payment of advances etc.12. After considering the submissions of the parties in view of the materialavailable on record, we find that the assessee has tried its best to dislodgeeach and every allegation made by authorities below with specificexplanation. For a ready reference a chart made in this regard by the assesseeis being reproduced hereunder :-

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ParagraphReference

Issue

Para 7.5 (a)

Refer page16 to 18 ofAO order

Vedic Broadcasting Limited

Case of the Assessing officer/CIT(A)

The assessing officer has alleged that the assessee had earlier entered into an agreement

with a company of Star TV group where-under the assessee was receiving Rs.96 lacs for

broadcasting yoga program.

Subsequently, Aastha channel was acquired by M/s Vedic Broadcasting Limited (in short

“Vedic Broadcasting”), which is a company in which Acharya Balkrishnan, one of the

trustees of the Assessee holds substantial interest. As a consequence of yoga programme

being telecasted on Aastha channel, Star TV discontinued the arrangement resulting in

loss of revenue in the hands of the Trust.

As a result of the aforesaid arrangement, services of the assessee were made available to

Vedic Broadcasting without adequate remuneration and hence there is violation of section

13(2)(d) of the Act

Rebuttal:

The assessing officer, it is respectfully submitted failed to appreciate the facts in its

correct perspective, which are briefly set out hereunder:

Divya Yog Mandir Trust (in short “DYMT”), another charitable trust, it is respectfully

submitted, had entered into an agreement dated 21st May, 2005 with Astha Broadcasting

Network Limited (in short “Astha Broadcasting’) for broadcasting/ telecasting 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

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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 Rs.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 agreements/ arrangements/

licenses, etc.

As a necessary consequence of Aastha Channel being taken over by Vedic Broadcasting,

agreement that had been entered into by Aastha Broadcasting came to Vedic

Broadcasting.

In view of the aforesaid, it is respectfully submitted that the assessing officer failed to

appreciate that agreement that had been entered into by DYMT with Astha Broadcasting

stood transferred to Vedic Broadcasting as a necessary consequence of takeover of going

concern/business of Astha Broadcasting by Vedic Broadcasting.

The assessing officer further failed to appreciate that Aastha channel is engaged in

broadcasting various social, religious and spiritual programs and charges fees for

telecasting of the programs from everyone. Therefore, Aastha channel also charged from

DYMT.

It is all the more important to note that assessing officer erroneously proceeded to treat the

aforesaid two agreements as similar without appreciating that:

(a) Agreement with Aastha channel was entered into by DYMT and not assessee;

(b) In Agreement with Media Content and Communications, exclusive license for

shooting and telecasting was with the said company and not Assessee; whereas in case

of Agreement of DYMT with Aastha channel, exclusive license was with DYMT;

(c) Agreement was entered into by DYMT with Aastha channel on 21st May, 2005 for a

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period of 15 years. On the other hand, agreement of the assessee with Media Content

was entered into in October, 2006 and was for a short duration of 1 year

(d) Agreement was entered into by DYMT with Aastha channel at the request of the

DYMT since DYMT wanted to spread Vedic yoga and propagate its positive effects

by broadcasting its various yoga programs/ shivirsthrough Aastha channel. On the

other hand, in the case of agreement of the assessee with Media Content, the latter

company approached the assessee and not the assessee and offered to pay the amount

to the assessee and there was no reason for the assessee to refuse to take the amount to

be applied for charitable purposes.

Apart from the aforesaid, it is pertinent to note that agreement of assessee with M/s.

Media Content was one-off/ isolated transaction where under the telecasting company

paid the amount for shooting and telecasting programme.

No amount is received from various other channels who, too, broadcast shivirs/ camps of

the assessee, some of which are 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,

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let alone any service to persons specified under section 13(3), in the assessment year

under consideration, to attract the provisions of section 13(2)(d) of the Act. Services, if

any, were only received by the assessee, by way of free broadcast of its yog

shivirs/camps, which benefited the assessee in achieving its charitable objective of

propagation of yoga for providing medical relief. Thus, there was no application of

section 13(2)(d) of the Act in any case.

It is further ironic to note that the assessing officer on the one hand has been alleging that

the assessee trust is not undertaking charitable activities and is engaged in generating

profit, which is in violation of provisions of section 2(15), and on the other hand contends

that the assessee has not charged adequate remuneration, in violation of section 13(2)(d)

of the Act. In this regard, the assessing officer has failed to appreciate that the primary

objective of the assessee trust is to spread the science of Vedic yog and to propagate the

positive effects of yoga in medical treatment for curing/ alleviating various diseases and

not to earn profits.

Para 7.5 (b)

Refer page18 to 19 ofAO order

Purchase of land from M/s United Infracon

Case of the Assessing officer/CIT(A)

The assessing officer has alleged that advance of Rs.1.55 crores was given to M/s. United

Infracon Private Limited for purchase of land at Faridabad. Out of the said amount,

Rs.1.33 crore was claimed as application of income in earlier year.

Further, out of the total amount of Rs.1.55 crores, Rs. 20 lakhs was advanced by United

Infracon to Dynamic Buildcon Private Limited, a company controlled by Acharya

Balkrishnan.

It is also alleged that land has not been registered in the name of trust whereas land is

found to be registered in the name of Dynamic Buildcon.

As a result of the aforesaid there is violation of section 13(1)(c) of the Act.

Rebuttal

The assessing officer has, it is submitted, mixed separate and independent transactions to

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come to erroneous conclusion.

The assessee had, during the financial year 2006-07, entered into a Memorandum of

Understanding (MOU) dated 03.10.2006, with M/s United Infracon, for the purpose of

purchasing land at Faridabad, in order to extend its charitable activities. In this regard, the

assessee advanced an amount of Rs. 2 crores through 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 Rs. 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 Rs.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 Buildcon, is very vague and not supported by

any documentary evidence

It is an admitted fact that land was registered in the name of the assessee (Trust) on 30th

September, 2011, though advance was given in financial year 2006-07. (Refer pages 299

to 319 of the paperbook)

There is not dispute that the aforesaid land has been acquired by the assessee for pursuing

its charitable objects.

Further, it is not even the case of the assessing officer that the assessee had paid excessive

amount for purchase of the said land. Thus, the assessee fails to appreciate how the

alleged advance of Rs. 20 lakhs paid by United Infracon to Dynamic Buildcon would at

all tantamount to violation of provisions of section 13(1)(c) of the Act, when the assessee

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has not advanced any amount to any concern/ person specified in sub-section (3) of

section 13 of the Act in the said transaction.

In view of the aforesaid, the assessing officer erred in alleging that there is violation of

section 13(1)(c) of the Act.

Para 7.5 (c)

Refer page19 to 20 ofAO order

Purchase of land from M/s Shree Niramaya Properties

Case of the Assessing officer/CIT(A)

The assessing officer has observed that Rs.1 crore was advanced to M/s Shree Nirmaya

Properties Private Ltd in financial year 2006-07 for purchase of land at Chhabla without

any agreement in writing and the deal has not been materialized even after lapse of long

period of time.

The assessee has thus, invested money in the mode other than specified in section 11(5)

and has consequently, violated the provisions of section 13(1)(d) of the Act

Rebuttal

The assessing officer failed to appreciate that the advance was given for purchase of 56

bigha land in Village Chhabla.

The assessing officer failed to appreciate that giving of advance for purchase of land to be

acquired and used for the purposes of the Trust is nothing but application of income for

charitable purposes and is not a mode of investment contemplated in section 11(5) of the

Act.

Reference, in this regard, may be made to the following decisions wherein

purchase of capital asset has been held to be application of

income for charitable purposes:

- S. RM M.CT.M Tiruppani Trust vs. CIT: 230 ITR 637 (SC)- St. Lawrence Educational Socieity (Regd.) v. CIT: 197 Taxman 504 (Del.) (Refer

page 1138 to 1140 of caselaw paperbook)- DIT (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)

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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 page20 of AO

order

Purchase of land from Mr. Pawan Sharma

Case of the Assessing officer/CIT(A)

The assessing officer has observed Rs.59.13 lakhs were advanced in cash to Mr. Pawan

Sharma in financial year 2005-06 for acquisition of land at Brijwasan, registry whereof

has been made on 22nd February, 2012.

Pawan Sharma, in turn, had given an unsecured loan of Rs.2 crores to M/s Vedic

Broadcasting.

Thus, the trust has, thus, invested money in the mode other than specified in section 11(5)

and has consequently, violated the provisions of section 13(1)(d) of the Act

Rebuttal

The assessing officer has, it is submitted, again mixed separate and independent

transactions to come to erroneous conclusion.

It is an admitted fact that land was registered in the name of the assessee (Trust) on 22nd

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February, 2012, though advance was given in financial year 2005-06. (Refer pages 334 to

339 of the paperbook)

There is no dispute that the aforesaid land has been acquired for pursuing its charitable

objects.

There was no relationship between the advance given by the assessee to Pawan Sharma

and the loan advanced by him to Vedic Broadcasting, which are two independent and

separate transactions. This is clearly evident from the fact that Vedic Broadcasting

Limited was incorporated on 21st April, 2006 whereas the assessee had given advance for

purchase of land in financial year 2005-2006, i.e., much before the incorporation of Vedic

Broadcasting.

As stated above, the assessing officer failed to appreciate distinction between investment/

deposit of funds and application of income for charitable purposes while alleging that the

assessee invested money in other than mode specified in section 11(5) of the Act.

Advancing of money for acquisition of capital asset for sub-serving charitable objects is,

it is reiterated, application of income and not investment/ deposit of funds.

The provisions of section 13(1)(d) of the Act are thus, not violated at all.

Para 7.5 (e)

Refer page21 of AO

order

Construction on the land owned by Swami MuktanandJi

Case of the Assessing officer/CIT(A)

The assessing officer has observed that the assessee has constructed building on land

admeasuring 2.668 hectare owned by one of the trustees, i.e. Swami MuktanandJi.

Thus, the trust has spent money on construction 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,

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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 page21 to 22 ofAO 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 Acharya Balkrishnan and on part of the land

received as donation from another trust, viz., DYMT.

The assessing officer held that the Trust, by undertaking construction on land belonging to

the trustees/ related trust, without legal ownership of the land, has indirectly benefited

those persons.

It is, thus, the case of the assessing officer that in view of provisions of section 13(2)(g) of

the Act, benefit has been transferred to persons covered under sub-section (3) of that

section.

Rebuttal

During assessment it was submitted by the assessee that the two trustees have allowed

indefinite use of the land for the objects of the trust, without deriving any income/charges,

which is duly supported by declaration given by the Trustees.

Thus, no benefit was derived by the two trustees; on the contrary, benefit was actually

derived by the assessee by usage of land belonging to the trustees.

As regards the land of DYMT, it was pointed out during the course of assessment

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proceedings that the said land was received as donation from the said trust, which, too is a

charitable trust having similar objects as that of the assessee. The land was given as

donation by DYMT for furthering the predominant objects of the assessee, including

construction of PYP-II. (Refer pages 341 to 342 of the paperbook)

It may also be pertinent to mention here that since the permission from the State

Government of Uttarakhand was under process/ pending, the land was not registered in

the name of the assessee. (Refer pages 355 to 374 of the paperbook)

On perusal of the aforesaid, it will, thus, kindly be noticed that the two trustees had made

available their individual land to be used by the assessee and no rent/remuneration is

being paid by the assessee for use of the land. As regards land of DYMT, the assessee has

received the land as donation and, therefore, the land now belongs to the assessee.

In the aforesaid circumstances, the assessee, it is respectfully submitted, fails to appreciate

as to how the provisions of section 13(2)(g) of the Act are at all attracted.

The aforesaid section, it is respectfully submitted, provides that a charitable trust/

institution shall not divert any income or property during the relevant previous year in

favour of any person specified under sub-section (3) of that section.

In the present case, land as well as construction thereon, under consideration, 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

Payment of Advance to DYMT

Case of the Assessing officer/CIT(A)

The assessing officer has observed that Rs.14.25 lakhs is appearing as opening balance of

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22 to 23 ofAO order

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 assessee that the

advance of Rs.14.25 lakhs was given for purchase of land to DYMT vide agreement dated

7th September, 2007. A copy of the said agreement was also filed before the assessing

officer. (Refer pages 380 to 383 of the paperbook)

The contention of the assessing officer that the assessee has violated the provisions of

section 11(5) is, it is respectfully submitted, legally unsustainable inasmuch as submitted

supra, the assessing officer failed to appreciate the distinction between the application of

income for charitable purposes and investment/ deposit of funds under section 11(5) of the

Act.

The assessee has, it is reiterated, advanced money for purchase of land, which is

application of income for charitable purpose and is not in the nature of any investment/

deposit as contemplated under section 11(5) of the Act.

In view of the aforesaid, the contention of the assessing officer that the assessee violated

provisions of section 13(1)(d) r.w.s.11(5) of the Act is erroneous.

Para 7.5 (i)

Refer page23 of AO

order

Motor cycle not registered in the name of the assessee trust

Case of the Assessing officer/CIT(A)

Some of the motor cycles were purchased by the trust but invoices are in the name of

Acharya Balkrishnan.

Rebuttal

The assessing officer, it is respectfully submitted, failed to appreciate that registration of

property of the trust in the name of its trustees is not violative of any provision inasmuch

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as trust, not being a separate legal entity, is not competent to hold property in its own

name. Therefore, property of the trust is normally held in the name of its trustees, who

hold the same in fiduciary capacity for and on behalf of the trust.

The assessing officer, it is respectfully submitted, further failed to appreciate that the

assessee is not only the beneficial owner of the motor cycles but also exercised complete

dominion and control over the same. Furthermore, motorcycles were actually used by the

trust for pursuing its charitable object.

It is further respectfully submitted, that the trustee, Sh. Acharya Balkrishnaji had applied

for transfer of registration of such motor cycles in the name of the assessee trust. In

pursuance to such application made, the said motorcycles now stand registered in the

name of the assessee Trust. (Refer pages 385 to 413 of the paperbook)

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 page

Payment of Advances

Case of the Assessing officer/CIT(A)

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24 of AOorder

Advances of Rs.3,98,00,261 were made to various parties which remained as such till the

end of the relevant year.

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

It was stated before the assessing officer that advances were given for purchase of

material for PYP-II and Yog Gram. Since bills were not received, such advances were not

adjusted during the relevant year.

It is respectfully submitted that the assessing officer has vaguely held that the assessee

violated provision of section 13(1)(d) r.w.s.11(5) of the Act. The assessing officer failed

to appreciate that all the advances were given in the normal course for construction of

PYP-II and Yog Gram and not for making any investment/ deposit as contemplated in

section 11(5) of the Act.

Further, that the said advances were squared off/settled in subsequent years, details of

which were filed before the CIT(A). (Refer pages 418 to 420 of the paperbook)

The provisions of section 13(1)(d) r.w.s. 11(5) of the Act were, therefore, not at all

violated.

12.1 In absence of rebuttal of the above explanation made by the assesseeand even on the verification of its merits, we find that allegations of violationof provisions of section 13 of the Act made by the authorities below areerroneous and legally unsustainable. The allegations are based on incorrectappreciation of the facts of the case and the position of law. On the basis ofthose unsustainable allegations the action of the Assessing Officer in assessingthe income of the assessee treating it to be a non-charitable is not tenable inlaw. We find that the ld. CIT (Appeals) has also summarily concluded that the

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assessee has violated the provisions of section 13 of the Act withoutjudiciously disposing off the specific objections raised by the assessee meetingout the various allegations leveled by the Assessing Officer in the assessmentorder. In view of these observations, we conclude that the allegations leveledby the authorities below are not tenable and hence their action of denial ofexemption on the basis of violation of the provisions laid down under section13 of the Act is held as not justified. In result, the ground Nos.7, 7.1 and 7.2are allowed.13. Ground Nos. 8 to 10: In ground No. 8, the assessee has questioned thevalidity of finding of the ld. CIT (Appeals) that the assessee had undertakenactivities 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 ofadditions of Rs.44,25,01,268/- made on account of corpus donations receivedby the assessee. In ground No. 10, the finding of the ld. CIT (Appeals) that thevoluntary contribution received by the assessee, including donations receivedthrough yoga camps and yoga samities were not eligible for exemption hasbeen questioned.13.1 In support of the above grounds, the ld. AR has furnished followingsubmissions :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 Rs. 44,25,01,268/- on account of corpus donations

received by the assessee in the assessment year under consideration, by holding that corpus

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donations also constitutes ‘income’ of the trust and accordingly were not eligible for exemption

under sections 11/12 of the Act.

The break-up of such corpus donations received by the assessee during the assessment year

under consideration is tabulated as under:

S. No. Particulars Amount (Rs.)1. Received from Divya Yog Mandir Trust (for

construction of Patanjali Yogpeeth-II)38,35,00,000

2. Donations in relation to Vanprasth Ashram 88,73,0023. Donations in relation to Disaster Relief Fund 4,36,23,7664. Donation in University of Patanjali 61,000

Total 43,60,57,768

Further, the assessee had also received corpus donations in the form of immovable property,

which was recorded at nil value, in the books of the assessee. However, the assessing officer has,

in the impugned assessment order, made addition on account of such immovable property, on the

basis of its estimated market value, which aggregated to Rs. 64,43,500/-.

The aforesaid donations were, it is submitted, received by the assessee with the explicit direction,

to be utilized for a specific cause and was not for attaining/achieving the general objects of the

assessee trust. The aforesaid donations formed part of the corpus of the trust. Being so, such

donations are, it is submitted, per se, a capital receipt not liable to tax, irrespective of the fact

whether the receiving trust is eligible for exemption or not.

In this regard, it is, at the outset, respectfully submitted, that donations received are, per se,

capital receipt not liable to tax under the provisions of the Act. 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

sections 11/12 of the Act. Such voluntary contributions, it is respectfully submitted, are

contributions other than for capital purposes, i.e. contributions which do not form part of the

corpus of the trust, whether or not such trust is eligible for exemption.

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Capital contributions received as 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 hands of recipient

society. The pertinent findings of the Court in this regard, are re-produced as under:

“Normally, a gift of shares or its own capital by a charitable trust to another charitabletrust would be income in the hands of the recipient trust. The recipient trust would be freeto spend the money or expend the property as it liked in furtherance of its objects. But, inthe instant cases, the donor trust attached specific conditions to the donation. Thesewere: (i) that the donation did constitute the corpus of the donee trust or be held as anaccretion to the corpus of the donee trust; (ii) that no part of the donation be utlizied bythe donee trust for its objects ; (iii) that no part of the donation be sold without the priorpermission of the donor trust ; and (iv) if such permission were granted, the saleproceeds be treated as part of the endowment fund or corpus of the donee trust. Thedonee trust accepted the donation subject to these conditions. In these circumstances,there was a material difference with regard to the gift in the instant cases, as comparedto the normal gift of shares by one charitable trust to another.

The words "such contributions" in sub-section (2) of section 12, refer to contributionswhich constitute income of the recipient trust. It would, therefore, appear that "anyincome" of a trust derived from voluntary contributions made to a trust by anothertrust or charitable institution or religious institution to which the provisions of section11 apply will be deemed to be income derived from property for the purpose of thatsection in the hands of the recipient trust or institution. The section relates to "anyincome" of the trust and not to the capital or endowment of the trust.

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In the instant cases, the voluntary contributions did not constitute income in the handsof the recipient trust. The conditions imposed on the voluntary contributions ensuredthat they were to be part of the capital or corpus of the donee trust. These voluntarycontributions not being income, would fall outside the scope of section 12(1) and,therefore, outside the ambit of section 12(2).

The new section 12 provides that any voluntary contributions received by a charitabletrust would be deemed to be income derived from property unless they contain a specificdirection that they shall form a part of the corpus of the recipient trust. Therefore, suchcapital contributions can be retained by the donee trust as corpus without attractingany income-tax liability.

Therefore, the voluntary contributions to the capital assets were to be excluded fromthe 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 provisions of the said section would not apply. Hence in this case it was held that

the impugned donations did not constitute income in the assessee’s hands for the purpose of

exemption under section 11 of the Act.

In the case of Sri Dwarkadheesh Charitable Trust vs. ITO: 98 ITR 557 (All), it was held that

voluntary contributions made with a specific direction that they would form part of corpus of

donee-trust and accepted by donee-trust as such, are not voluntary contributions which constitute

income within meaning of section 12(1) of the Act and such contributions are not within purview

of sub-section (2). Therefore, such donations cannot by themselves be deemed to be income from

property held under trust within meaning of section 11 of the Act.

Further, in the case of CIT vs. Sthanakvasi Vardhman Vanik Jain Sangha: 260 ITR 366

(Guj), the assessee, a public charitable trust, received certain amount towards construction of

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wadi for the caste people. The assessing officer held that the amount in question represented

income of the assessee and added the same to the assessee’s total income. On appeal, the CIT(A)

deleted the addition on the ground that the amount had been received by the assessee with a

specific direction for construction of wadi and, hence, the same should form part of the corpus of

the trust. The Tribunal confirmed the order of the CIT (A). On further appeal, the High Court

held dismissing the departmental appeal as under:

“All the three authorities below had found that the amount was received by the assessee-trust for the purpose of construction of wadi and it was the case of the assessee allthroughout that since the said amount was received towards corpus of the trust and for aspecific purpose, it would not form part of the income of the trust and the said amountwas exempt looking to the provisions contained in section 12. On a plain reading ofsection 12, it is obvious that any voluntary contribution which is made with a specificdirection that it shall form part of the corpus of the trust or institution would not bedeemed to be the income derived from the property held under trust wholly forcharitable or religious purposes. In view of the above, the Tribunal was justified inholding that the donation received by the assessee-trust which was not utilized for theobject of the trust, was not income of the trust.” (emphasis supplied)

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

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“corpus” or “for specific use”, it would be treated as corpus donation and not ‘income’ and hence

would not be includible in the total income of the assessee.

Further, in the case of ITO vs. Satya Kabir Sahabani Gadi: 50 TTJ 501 (Ahd), it was held

that Building Fund and Kayami Fund were corpus of the Trust and donations received towards

such funds were corpus donations.

In view of the aforesaid, it is respectfully submitted that even if exemption under sections 11/12

of the Act were to be denied to the assessee, still the contributions received by the assessee in the

form of corpus donations, would in any case not be liable to tax, as the same constitutes capital

receipt.

Alleged activities undertaken outside India

The assessing officer has, at para 7.5(k) of the impugned assessment order held that the assessee

had undertaken various activities outside India which was in violation of provisions of section

11(1)(c) of the Act. Further, in affirming the aforesaid observation of the assessing officer, the

CIT(A), has relied upon the decision of the Delhi High Court in the case of NASSCOM: 345

ITR 362.

In this regard, it is at the outset respectfully submitted that, as a matter of fact, no activity was

carried out by the assessee outside India and the events referred by assessing officer were

organized by certain overseas trust. Further, the assessing officer has not brought anything on

record to substantiate the aforesaid allegation. The aforesaid is further substantiated by the fact

that the assessing officer has nowhere quantified the amount of expenditure incurred in relation

to such activities undertaken outside India. This only leads to the inescapable conclusion that the

assessing officer has only made bald statements/allegations in the assessment order.

In the aforesaid factual circumstances, reliance placed by the CIT(A) on the decision of the Delhi

High Court in the case of NASSCOM (supra) is totally misplaced.

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That apart, in the aforesaid decision, the Delhi High Court merely held that amount spent outside

India would not be allowed as application of income. It was nobody’s case that complete

exemption should be denied under sections 11/12 of the Act.

Thus, the allegation of the assessing officer/CIT(A) that the assessee had undertaken activities

outside India is factually incorrect and vehemently denied.

14. The ld. CIT [DR], on the other hand, tried to justify the orders of theauthorities below. He submitted that under the provisions of section 11(1),income in the form of voluntary contributions made with a specific directionthat they shall form part of the corpus of the trust is excluded from the totalincome of the assessee. But the Income Tax Act does not define as to whatconstitute a “corpus” or as to under what circumstances a contribution can betermed as “corpus contribution”. In simple words, corpus contribution is acontribution made with a specific direction from donor that a particulardonation shall form part of corpus and that shall form part of the capital andincome therefrom is used in accordance with directions. He submitted that asper the provisions of the Income Tax Act, no assessee trust or institution canclaim application in respect of any corpus fund withdrawn by it. As per thescheme of section 11 an income derived from property hailed under trust isexempt when it is applied or accumulated as per the provisions of the Act.Therefore, the application has to be out of current income because provisionsof section 11 to 13 only provide for exempting the current income if it isapplied or accumulated as per the Rules provided in section 11. The corpusdonation is exempt and is not subject to any rules of application andaccumulation provided in various sub-sections and clauses of section 11 of theIncome Tax Act. The corpus donation is only required to be invested as per

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section 11(5) and in the event of violation of section 13(1)(d) read withsection 11(5), the trust would lose exemption for the relevant assessmentyear. Thus, voluntary donations are income of the trust and have to be routedthrough income and expenditure account and not through balance sheet. Ifsuch year-marked donations are directly taken to the balance sheet, then thetreatment is wrong. On the basis of assessment order, the ld. CIT [DR]submitted that corpus fund of Rs.88.73 lakhs received under VanprasthaAshram Scheme in return of certain facilities cannot be called to be voluntarydonation. Corpus donation of Gurgaon land at Rs.30,00,000/- of which fullmarket value was not shown as income in the accounts. Similar treatment hasbeen given to the corpus donation of land at Shantarshah at Rs.34.43 lakhs aswell as corpus donation of vehicle Tata Sumo of Rs.6,52,493/- for which fullmarket value was not shown as income in the accounts. He placed reliance onthe following decisions:(i) Vidyawanti Labhoo Ram Foundation for ScienceResearch & Social Welfare,20 Taxman.com 793 (Jodhpur Trib.);(ii) Little Tradition Vs. DDIT (2009)119 I.T.D. 127 (Del.)

(iii) Trustees of Kilachand Dev Chand Foundation Vs. CIT (2009)172 I.T.R. 382 (Bom..)

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(iv) R.B. Sri Ram Religious & Charitable Trust Vs. CIT233 ITR 53 (SC);(v) Kanhaiya Lal Punj Charitable Trust Vs. DIT (E)171 Taxman 134 (Del.);(vi) Director of Incokme Tax (E) Vs. Chiranjeev Charitable Trust43 Taxman.com 300 (Del.);

15. Having gone through the decisions relied upon by the parties, we areof the view that the ratio laid down in these decisions are applicable on thebasis of the facts of the present case. In the case of CIT Vs. Eternal Science ofMan’s Society (supra) the Hon’ble High Court of Delhi has been pleased tohold that any receipt of capital nature could notbe treated as income andhence it was outside the purview of section 12 of the Act. It was held thatdonation of shares made by one charitable organization to another with aspecific direction that these shares would constitute the corpus of the doneeorganization, could not be deemed to be income in the hands of receipientsociety. 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 section12(2) of the Act are applied to such contributions as were referred to in sub-section (1) to section 12 of the Act. Sub section (1) referred to contributionswhich were voluntary contributions and applicable solely to charitable orreligious purposes. It was held that donations of a capital nature might bevoluntary, but could not, however, be applied to charitable or religious

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purpose. It is the income thereof that must be so applied. A contributionmade expressly to the capital or corpus of a trust, though voluntarily, doesnot, therefore, fall within the purview of section 12(2) of the Act. Accordingly,such contributions could not be deemed to be income derived from propertyfor the purpose of section 11 of the Act and provisions of the said sectionwould not apply. Again the Hon’ble Allahabad High Court in the case ofDwarka Dheesh Charitable Trust Vs. ITO (supra) has held that voluntarycontributions made with a specific direction that they would form part ofcorpus of donee trust and accepted by donee trust as such are not voluntarycontributions which constitute income within the meaning of section 12(1) ofthe Act and such contributions are not within the purview of sub section (2)thereto. Therefore, such donations cannot by themselves be deemed to beincome from property held under trust within the meaning of section 11 ofthe Act. In the case of CIT Vs. Sthanakavasi Vardhman Vanik Jain Sangh(supra) before the Hon’ble Gujarat High Court, the assessee, a publiccharitable trust received certain amounts towards construction towards awardi for the caste people. The Assessing Officer held that the amount inquestion represented income of the assessee and added the same to theassessee’s total income. On appeal the ld. CIT (Appeals) deleted the additionon the ground that the amount had been received by the assessee with aspecific direction for construction of wardi and, hence, the same should formpart of the corpus of the trust. The Tribunal confirmed the first appellateorder. On further appeal, the Hon’ble High Court upheld the decision of theTribunal with this finding that on a plain reading of section 12, it is obviousthat any voluntary contribution which is made with a specific direction that itshall form part of the corpus of the trust or institution would not be deemed

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to be the income derived from the property held under trust wholly forcharitable or religious purposes. Further in the case of DIT (Exemption) Vs.Jaipur Golden Charitable Clinical Laboratory Trust (supra) where the assesseetrust, running a hospital had received donation from consulting doctorsworking in the hospital, which donations were voluntary and towards corpusof fund, it was held that such donations could not be treated as income ofassessee trust. In view of these ratios, when we examine the facts of thepresent case, we find that the Assessing Officer was not justified in making theadditions aggregating to Rs.44,25,01,268/- on account of corpus donationsreceived by the assessee in the assessment year under consideration byerroneously holding that the corpus donations also constitute “income” of thetrust and accordingly were not eligible for exemption under sections 11/12 ofthe Act. The donations in questions were received from Divya Yog MandirTrust for construction of Patanjali Yogpeeth-II, in relation to VanaprasthaAshram, disaster relief fund and in the University of Patanjali.15.1 Besides, the assessee had also received corpus donation in the formof immovable property which was recorded at NIL value in the books of theassessee. The Assessing Officer, however, added the amount of Rs.64,43,500/-on account of such immovable property on the basis of its estimated marketvalue. There is no dispute that the aforesaid donations were received by theassessee with the specific direction, to be utilized for a specific cause and wasnot for attaining/achieving the general object of the assessee trust. Thedonations in question formed part of the corpus of the trust and thus, suchdonations are per se capital receipt not liable to tax irrespective of the fact

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that whether the receiving trust is eligible for exemption or not. We concurwith the contention of the ld. AR that in terms of section 2(24)(iia), voluntarydonations received, inter alia, by a charitable trust/institution are by legalfiction treated as income and is thereafter, excluded from total income inaccordance with the provisions of sections 11/12 of the Act. Such voluntarycontributions are contributions other than for capital purposes i.e.contributions which do not form part of the corpus of the trust, whether ornot such trust is eligible or not for exemption. We hold accordingly. In paraNo. 7.5(k) of the assessment order, the Assessing Officer has alleged thatassessee had undertaken various activities outside India which was inviolation of provisions of section 11(1)(c) of the Act. We, however, find thatthe Assessing Officer has not brought anything on record to substantiate theaforesaid allegation nor has he quantified the amount of expenditure incurredin relation to such activities undertaken outside India. The Hon’ble HighCourt of Delhi in the case of Nasscom (supra) relied upon by the ld. CIT(Appeals) while upholding the action of the Assessing Officer, held thatamount spent outside India could not be allowed as application of income. Inabsence of establishing the allegation made and upheld by the authoritiesbelow, we are of the view that the Assessing Officer was not justified indenying the exemption on the basis that assessee had undertaken variousactivities outside India in violation of provisions of section 11(1)(c ) of the Act.We order accordingly. In view of above discussion, the denial of exemptionsunder sections 11/12 of the Act treating the voluntary contributions receivedtowards corpus by the assessee as non-charitable, as the same in our view,could not be regarded as “income” and the same would constitute a capitalreceipt not liable to tax and the allegation that there was various activities

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undertaken by the assessee outside India in violation of provisions of section11(1)(c) of the Act does not stand. The above cited decisions relied upon bythe ld. CIT [DR] are not helpful to the Revenue. There is no dispute on theratio laid down therein, the only question is as to whether those decisions arehelpful to the Revenue under the facts of the present case or not. In the caseof ITO Vs. Smt. Vidyawanti Labhoo Ram Foundation for Science Research &Social Welfare (supra) it has been held that a voluntary contribution wouldqualify to form a part of income of recipient trust. However, only exception iswhere such income is directed to form part of corpus of trust or institutionand it is in that case, in view of specific provision of section 11(1)(d), it cannotbe applied for charitable purposes and hence for claiming exemption. In thecase of Little Tradition Vs. DCIT(E) (supra) it has been held that income can beapplied by way of donations to other charitable institutions having similarobjects. In the case of R.B. Sri Ram Religious & Charitable Trust Vs. CIT(supra) it has been held that voluntary contribution not applied for charitablepurposes is not entitled to exemption under section 12 of the Act. In the caseof Kanhaiya Lal Punj Charitable Trust Vs. Director of Income-tax (E) (supra) ithas been held that according to sections 11 and 12 of the Act, the voluntarycontribution made with specific direction that they shall form part of thecorpus of the trust or institution, shall not be included in the total income ofthe previous year of the trust. In the case of DIT (E) Vs. Charanjeev CharitableTrust (supra) the view of the Assessing Officer that real motive of assesseewas to advance its surplus moneys to APIL without charging any interest andsince APIL was a prohibitive person within meaning of section 13(3),provisions of section 13(1)©(ii) were attracted with result that assessee couldnot be allowed exemption under section 11. As discussed above, the facts of

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the present case before us, do not attract denial of the claimed exemption,hence the above cited decisions by the ld. CIT [DR] are not adverselyapplicable in the case of the assessee. The ground Nos. 8 to 10 are thusallowed.16. Ground No. 11 : This ground has been raised against the allegation ofannoynimous donation of Rs.13,68,99,745/- under section 115BBC of the Act.16.1 In support of the ground, the ld. AR has made following submissions :As regards allegation of anonymous donations of Rs.13,68,99,745 under section 115BBC of the

Act, it is respectfully submitted that assessing officer failed to appreciate the methodology

followed by the assessee.

As stated above, assessee organizes yoga shivirs/ camps for providing medical relief through

yoga and also imparting yoga education/ training. Such camps/ shivirs are, as stated above,

organized through ad-hoc committees specifically set up by the assessee for organizing yoga

camps/ shivirs and also through separate/ independent yoga samitis spread across the country

under the overall guidance/ support of the assessee. Such yoga camps/ shivirs are attended by

thousands of persons across various sections of the society. Two types of camps/ shivirs are

normally organized, viz., residential camps and non-residential camps. During such camps,

voluntary donations are received from various persons who attend the yoga shivirs/ camps.

The detailed break-up of such donations received during the assessment year under

consideration, and which has been treated as anonymous donations by the assessing officer in the

impugned assessment order are as under:

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Sl. No. Particulars Amount (Rs.)

1.Received from Non-residential Camp(Received through yog samitis)

6,61,27,782

2.Received from Yog Teachers Camp(for which complete details available)

5,99,98,525

3.Others(Voluntarily admitted by the assessee)

1,07,73,438

Total 13,68,99,745

During the course of assessment proceedings, it was pointed out that in the yoga science camps

organized by the assessee through ad-hoc committees, donation coupons in the denomination of

Rs. Nil (i.e. free), Rs.100, Rs.500, Rs.1100 and Rs.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 Rs.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 voluntary donations of Rs.5,99,98,525

was received in the form of donation receipts issued in small denominations of Rs.11, Rs.20,

Rs.21, Rs.25, Rs.31, Rs.50, Rs.500, Rs.1100, Rs.2,100, Rs.5,100 and Rs.7,000. It was further

pointed out that in the receipt issued to the donors, name and address as communicated by the

donor is clearly mentioned, details of which were also submitted before the lower authorities. In

certain cases donation was also received from yoga teacher who usually contributed donation of

Rs.1100. (Refer Annexure –I & II)

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It may further be pertinent to mention here that even on furnishing the details in the form

of names and address of the donors, the assessing officer/CIT(A) has not even attempted to

verify such details, and has summarily concluded that the said donations were in the nature

of anonymous donations as defined under section 115BBC of the Act. Further, it may also be

noted that donations have also been received by the assessee through cheques, which can, by no

stretch of argument, be held to be ‘anonymous’ in nature.

In the aforesaid circumstances, it was submitted that the aforesaid donations could not be

regarded as anonymous donations inasmuch as the identity of the donor is available.

Without appreciating the aforesaid contentions of the assessee, assessing officer erroneously held

that the assessee received total anonymous donation of Rs.13.68 crores taxable under section

115BBC of the Act. It is respectfully submitted that sufficient details are available and/ or

brought on record by the assessee to identify the donors and therefore, there was no reason to

treat donations received as anonymous donations.

17. The ld. CIT [DR], on the other hand, placed reliance on the orders ofthe authorities below and referred contents of page Nos.42 and 43 of theassessment order. He submitted that Rs.6.61 crores was received throughsale of coupons from 22 Yoga camps. The assessee did not maintain therecord of identity and address of the donors as prescribed under section115BCC(3) of the Act. During the special audit the assessee admitted that thenames and addresses of the participants of residential camps are availablewhereas names and addresses of non-residential camp are not available. Hesubmitted that under section 12A of the Act the assessee was required tomaintain the record consisting of name and address of the donors whichassessee has failed to do. Similar discrepancies were there with regards to the

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remaining donation The Assessing Officer was, thus justified in treatingdonation amounting to Rs.13.68 crores as annoynimous donation and byvirtue of provision of section 13(7), provisions of section 11 and 12 will notapply to annoynimous donation. He submitted that identity of donors wasalso not verifiable. The assessee failed to furnish serial wise details of identityshown in receipts mentioned by the auditors in the report.18. Having gone through the orders of the authorities below in view of theabove submissions, we find that Rs.13,68,99,745/-received was alleged asannoynimous donation under section 115BBC of the Act. It was alleged thatthe assessee had not maintained record consisting of name and address of thedonors. The Assessing Officer observed that Rs.6.61 crores was receivedthrough sale of coupons from 22 Yoga camps, which was organized publicallyas well as telecasted on TV channels. Assessing Officer further observed thatRs.5.99 crores were received during the relevant assessment year whereidentity of donors was not verifiable. And the remaining Rs.1,07,73,438/- wasreceived from others. The Assessing Officer accordingly made addition ofRs.13.68 crores. The explanation of the assessee remained that assesseeorganizes Yoga shivirs / camps for providing medical relief through Yoga andalso imparting Yoga education/training. Such camps/shivirs are organizedthrough ad-hoc committees especially set up by the assessee for organizingYoga camps/shivirs and also through separate / independent Yoga samitiesspread across the country under the over-all guidance / support of theassessee. Such Yoga camps/shivirs are attended by thousand of personsacross various sections of the society. Two types of camps/shivirs are

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normally organized viz. residential camp and non-residential camps. It wasexplained that during such camps voluntary donations are received by variouspersons who attend the Yoga shivirs/camps. During the year Rs.6,61,27,782/-was received from non-residential camps [received through Yog Samitees],Rs.5,99,98,525/- was received from Yoga teacher camps and Rs.1,07,73,438/-was received from others totaling to Rs.13,68,99,745/- in question. It wasfurther explained that in the Yoga camps organized by the assessee throughad-hoc committees, donation coupons in the denomination of Rs.NIL (i.e. free),Rs.100/-, Rs.500/-, Rs.1100/- and Rs.2100/- were issued to various voluntarydodnors who attended the camps. Such voluntary donors were dulysupported by the affidavits of the presidents of various Yoga camps organizingcommittee, which were furnished before the Assessing Officer and a referenceof page Nos. 503 to 569 of the paper book filed on behalf of the assessee wasmade in support. It was further explained that Yoga camps are organizedpublically and are telecasted from time to time by various TV channels andentire recordings of Yoga camps in the form of 4 DVDs were filed before theAssessing Officer.18.1 We find that the only allegation of the Revenue on the issue is thatassessee had not maintained the details of the donors to make it verifiable.Hereinabove we have noted the break-up of donations of Rs.13,68,99,745/-.There is no dispute on organizing Yoga shivirs/camps by the assessee nor isthere any dispute that the assessee had noted names and addresses of thedonors. The Assessing Officer held these details maintained by the assesseeare not verifiable. There is no doubt that these Yoga camps are attended by

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the persons in thousands still the assessee has maintained names and addresscommunicated by the donors, but without verifying the same the AssessingOfficer has summarily concluded that the said donations were in the nature ofanonymous donations as defined under section 115BBC of the Act. Theassessee had also furnished affidavits of organisors of ad-hoc committeesthrough whom the assessee had organized Yoga camps made available at pageNos. 503 to 569 of the paper book, but the Assessing Officer did not botherhimself to verify the same even on test-check basis. In absence of such effortsby the Assessing Officer, we are of the view that the authorities below werenot justified in making and sustaining the treatment of receipt of Rs.13.68crores as annonymous donation. Undisputedly, in almost all donations nameand address of the donors have been maintained and thus bonafide of theassessee cannot be doubted where such detail has remained to be maintainedin some cases. Such donations worth Rs.1,07,73,438/- has also not beenalleged 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 theAssessing Officer to accept the claimed receipt as donation. The ground No.11 is thus allowed.19. Ground Nos. 12 to 18 : In these grounds the assessee has questionedthe validity of several allegations made by the authorities below to justifydenial of exemption by them. The main allegation is about certainirregularities in the books of accounts maintained by the assessee. The ld. ARwith the assistance of a tabular chart made available at page Nos. 66 to 73 ofthe written submissions has tried to meet out each and every allegation

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leveled by the authorities below. The ld. AR submitted that the application ofincome by the assessee in the form of acquisition of fixed assets and othercapital expenditure, which were shown in the statement of utilization ofincome for charitable purposes, filed along with the return of income havealso not been considered by the Assessing Officer. In this regard he referredpage Nos. 50 to 52 of the paper book. He submitted that such expenditure wasincurred by the assessee solely for the purpose of fulfillment of its charitableobjectives during the year under consideration and should accordingly havebeen considered as application of income for charitable purposes. He placedreliance on the following decisions in support :-1. S.RM.M.CT.N. Tiruppani Trust Vs. CIT230 ITR 637 (SC);2. St. Lowrance Educational Society (Regd.) Vs. CIT197 Taxman 504 (Del.);3. DIT (Exemption) Vs. Leelawati Kirti Lal Mehta Medical Trust;ITA(L) 2990 of 2009 (Bombay High Court);4. Pinegrove International Charitable Trust Vs. UOI327 ITR 73 (P & H);5. Lissie Medical Institution Vs. CIT348 ITR 344 (Ker.);

19.1 Without prejudice to the above submissions the ld. AR submitted thatin case the assessee was held to be non-charitable, then the assessee appellant

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should have been allowed depreciation on assets in accordance with theprovisions of the Act.20. The ld. CIT [DR], on the other hand, placed reliance on the orders of theauthorities below. Regarding the alleged donation of vehicle, land not ownedby the assessee trust, disallowance of expenditure, disallowance ofexpenditure for non deduction of tax at source, donation to Gurukul Amsena,Bank interest and purchase of medicines, the ld. CIT [DR] has tried to justifythe action of the authorities below in this regard.21. Having gone through the submissions of the parties on the issues raisedin ground Nos. 12 to 18 of the appeal, we find that the assessee has tried hisbest and has successfully met out each and every allegation made and upheldby the authorities below with the assistance of the following tebular chart :

ParagraphReference Issue

Para 13

Refer page 41 ofAO order

Ground No. 12: Donation of vehicles

In this para the assessing officer has added an amount of Rs.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 Rs.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.

In this regard, it is respectfully submitted that the assessing officer has failed to

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appreciate that the vehicle was received as voluntary donation, which constituted

capital receipt not liable to tax under the provisions of the Act as elaborated

supra. Further, the vehicle, being a capital asset was capitalized in the books

of the assessee at a nominal value of Rs.1/-, which clearly corroborates the

fact that such donation in any case constituted a capital receipt not liable to

tax.

In view of the aforesaid, it is respectfully submitted that even if exemption

under sections 11/12 of the Act were to be denied to the assessee, still the

contributions received by the assessee in the form of capital asset, would in

any case not be liable to tax, as the same constitutes capital receipt.

Paras 15 to 15.5

Refer page 49 to52 of AO order

Ground No. 13: Land not owned by assessee trust

In these paras, the assessing officer has observed that construction of building on

land not owned/ registered in the name of the appellant during the year under

consideration could not be regarded as application of income.

This is fundamentally erroneous, since capital expenditure was incurred by the

appellant for construction of building actually used for pursuing charitable objects.

Therefore, such expenditure is clearly allowable as application of income as has

been held, inter alia, in the following cases:

RM M.CT.M Tiruppani Trust vs. CIT: 230 ITR 637 (SC)

St. Lawrence Educational Socieity (Regd.) v. CIT: 197 Taxman 504 (Del.)

In view of the aforesaid, it is submitted that the assessing officer erred 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.

Para 8.2 Ground No. 15: Disallowance of expenditure

In this para, the assessing officer has alleged that the assessee incurred expenditure

of Rs.2,30,60,231 which is not supported by any bills/vouchers.

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Refer page 27 ofAO order

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 Rs.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 Rs.2,15,36,134 was

nothing but such assistance/donation, allowed to be retained by the samitis for

incurring various expenditure.

In support of the aforesaid, the assessee is placing on record, utilization certificate

received from various samitis, in support of its repeated contention that the amount

of assistance/donation was utilized for the charitable purpose of promoting yoga

and providing medical relief. (Copies enclosed at pages 570 to 580)

In view of the aforesaid, it is respectfully submitted that the assessing officer

grossly erred in holding that donation/assistance given to samitis was not supported

by adequate bills/vouchers.

Insofar as other expenditure of Rs.20,84,787 is concerned, it is respectfully

submitted that the said expenditure was incurred on day to day activities of the

assessee. Merely because the assessee does not have documentary evidence/bills to

support the said expenditure, the same could not have been disallowed as

application of income.

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Para 8.3

Refer page 28 ofAO order

Ground No. 16(a): Disallowance of expenditure for non-deduction of tax at

source

In this para, the assessing officer has alleged that since the assessee failed to deduct

tax at source of certain payment aggregating to Rs.55,34,557, such expenditure is

disallowable under section 40(a)(ia), since the assessee is not eligible for benefit of

provision of sections 11/12 of the Act.

The aforesaid issue, it is respectfully submitted, is consequential to the

determination of the principal issue as to whether the assessee is eligible for

exemption under sections 11/12 of the act or not.

It is settled law that income of a charitable trust claiming exemption under sections

11/12 of the act has to be computed in accordance with the normal commercial

principles and not under artificial head defined in section 14 of the Act.

In order to compute income not required to be included in the total income under

section 11 of the Act, a charitable trust/society is, it is submitted, required to

consider the extent of application of income for charitable purpose.

The expression ‘income’, it is settled, has been understood in the context of the

aforesaid section 11 to mean income as understood in the popular or general sense

and not the sense in which the income is arrived at for the purpose of assessment 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 charitablepurposes. The charity can accumulate 25 per cent of the income. Theapplication as well as the accumulation has necessarily to be the incomeas 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 understoodin the popular or general sense and not in the sense in which the income isarrived at for purpose of assessment to tax by the application of someartificial provisions either giving or denying deduction. That income cannot

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be understood in the sense of what is arrived at for the purpose of income-tax would be clear if we pay some attention to s. 10. For instance, s. 10(1)exempts agricultural income. It is not necessary to find out what theagricultural income is. It is enough if the agricultural income as a categoryis excluded. There is no need or scope to arrive at the income in the mannercontemplated by the I.T. Act. Taking into account the purpose for whichthe conditions of s. 11(1)(a) are imposed, it would be clear that we have toconsider the income as arrived at in the context of what is available in thehands of the assessee, subject of course to any adjustment for expensesextraneous to the trust. If the expression " income " is so understood,then we have to take the accounts of the assessee with reference to thereceipts and deduct therefrom the expenses necessary for earning orlooking after that income. The net amount that remains would beavailable for distribution or application for charitable purpose. Inapplying the income for charitable purposes, even capital expendituremay be incurred. Therefore, the nature of the expenditure in the hands ofthe entity which receives the money is not the criterion. So long as theassessee disburses the amount for charitable purposes, whether theamounts are utilised for capital or revenue purposes by the charityconcerned, the assessee would have complied with that part of therequirement of s. 11, namely, application of the income for charitablepurposes……..……………….” (emphasis supplied)

It has been similarly held in the following cases that income for the purpose of

section 11 means the income as is understood in the commercial sense/ principles

to mean the surplus of receipts over expenditure/disbursements:

CIT v. Sheth Manilal Ranchhoddas Vishram Bhavan Trust: 198 ITR598(Guj)

CIT v. Raipur Pallottine Society: 180 ITR 579 (MP) CIT v. Society of the Sisters of St. Anne: 146 ITR 28 (Kar) CIT v. Maharana of Mewar Charitable Foundation: 164 ITR 439 (Raj) CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal: 211 ITR 293 (Guj) CIT V. Programme for Community Organisation: 228 ITR 620 (Ker.)

The aforesaid principle has also been affirmed by the Hon’ble Tribunal in the case

of Divya Yog Mandir Trust (supra), wherein after holding 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).

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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 ofAO order

Ground No. 16(b): Alleged donation to Gurukul Amsena

In this para the assessing officer has made addition of Rs. 1,00,000/- on account of

alleged donation of Rs. 1,00,000 made to Gurukul Ashram Armsena. The

assessing officer, however, failed to appreciate that the said donation was made by

Swami Ramdevji and not by the assessee.

The assessee, in this circumstance, fails to appreciate as to how the amount of

donation, which was not at all claimed as application of income by the assessee,

could at all be added while computing the assessee’s taxable income. The assessing

officer, it is further submitted, has failed to appreciate that the negative onus of

establishing a particular expenditure of not having been incurred cannot be put on

the assessee. Further, the assessee had, before the assessing officer, categorically

stated that the said donation was made by Swami Ramdev Ji and therefore there

was no basis for the assessing officer to make addition thereof in the hands of the

assessee.

Para 8 (xv)

Refer page 26 ofAO order

Ground No. 16(c) Bank Interest

In this para the assessing officer has alleged that the assessee has failed to record

the bank interest of Rs. 5,44,123 received by the assessee during the assessment

year under consideration.

In holding so, the assessing officer has failed to appreciate that though the said

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interest amount of Rs. 5,44,123/- was not explicitly reflected in the income and

expenditure account of the assessee, however the same was inadvertently classified

under the head ‘donations’ and the said amount was duly taken into consideration

for the purpose of determining the income of the assessee for the assessment year

under consideration. Further, the assessing officer has disregarded the fact that the

books of the assessee were in complete reconciliation with the bank statements and

thus, there was no probability that the assessee had skipped to consider the

aforesaid interest amount.

In view of the aforesaid, it is respectfully submitted that the assessing officer has

failed to appreciate the facts in its correct perspective and has erred in considering

the amount of interest amounting to Rs. 5,44,123/- as income of the assessee,

which was already considered by the assessee, resulting in double addition of the

same amount.

Para 12

Refer page 40 to41 of AO order

Ground No.17: Purchase of medicines

In this ground, the assessee has challenged the addition of Rs.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 rs.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 addition of Rs.1,24,80,000 as a consequence of denial of

exemption under sections 11/12 of the Act.

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Further, the certificate issued by the Patanjali Yogpeeth Samiti, Bihar, supporting

the assessee’s plea that medicines were actually distributed to the flood victims, in

the relief activities undertaken. Copy enclosed at page 434.

However, the CIT(A) has, in the impugned order failed to appreciate the facts in its

correct perspective and has summarily concluded that the assessee has attempted to

change its stand by filing names of various concerns. In holding so, the CIT(A) has

failed to realize that the details of squared up accounts were filed in relation to

miscellaneous expenses claimed by the assessee (referred @ ground no. 15 supra)

and was not in relation to the medicines purchased from DYMT and distributed

during the Bihar Relief activities undertaken by the assessee.

It is respectfully reiterated that since the assessee is eligible for exemption under

sections 11/12 of the act for purchase of medicines, which are duly supported by

appropriate bills/vouchers, there was no warrant to make addition of

Rs.1,24,80,000 while computing income of the assessee

21.1. We also agree with the submission of the assessee that application ofincome in the form of acquisition of fixed assets and other capital expenditureincurred solely for the purpose of fulfillment of its charitable objectives duringthe year should be considered as application of income for charitablepurposes. Besides, the explanation of the assessee to meet out the smallirregularities shown in the books of account maintained by the assessee,which are based on special audit report, cannot be out-rightly ignoredespecially when it is not the case of the Revenue that the out-come of it wasutilized somewhere else rather than on the objects of the assessee.

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21.2 We thus decide the issues raised in ground Nos. 12 to 18 questioningthe validity of several allegations leveled by the authorities below and denialof exemption on those basis, in favour of the assessee. In result, the groundNos. 12 to 18 are allowed.22. Ground No. 19 : In this ground the assessee has questioned the validityof interest charged under section 234B of the Act, which in our view, isconsequential in nature and hence does not need any independentadjudication.23. Before parting with the order, we find it pertinent to mention overhere that there may be small discrepancies here and there in the maintenanceof the accounts in a proper way or other general allegations, but certainly andundisputedly, it is not the case of the Revenue that the amounts received havebeen spent or the donations have been used on other than the objects of theTrust. Besides, the Revenue is also required to maintain consistency in itsapproach on an issue on similar facts of the case in the following years.Undisputedly, in earlier years since the inception of the assessee, the Revenuehas been accepting the claimed exemption, however, during the year underalmost similar facts the Revenue has taken different stand by treating theassessee non-charitable, which cannot be justified. In its recent decision inthe case of CIT Vs. Excel Industries Ltd. (2013) 358 ITR 295 (SC), the Hon’bleSupreme Court applying its earlier decisions in the cases of RadhasoamiSatsang 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 viewtaken in favour of assessee, the Court will not take different view without very

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convincing reasons. That being so, the Revenue cannot be allowed to flip-flopon the issue and it ought let the matter rest rather than spend the taxpayers’money in pursuing litigation for the sake of it.24. In result, appeal is allowed.25. The order is pronounced in the open court 09 .02. 2017.Sd/- Sd/-

( L. P. SAHU ) ( I. C. SUDHIR )ACCOUNTANT MEMEBR JUDICIAL MEMBER

Dated the : 09th February, 2017.*MEHTA*Copy forwarded to:1) Appellant2) Respondent3) CIT4) CIT (Appeals)5) DR: ITAT BY ORDER

ASSISTANT REGISTRAR