No.- I.T.A. No. 2267/Del./2013

SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI L. P. SAHU, ACCOUNTANT MEMBER

For The Appellant : Shri Ajay Vohra, Sr. Adv.; and Shri Rohit Jain, Adv.;
For The Respondent : Shri N. C. Swain, CIT [DR];

ORDER

The order of the Bench was delivered by

I. C. SUDHIR, J. M. :-The assessee has questioned first appellate order on the following grounds :
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.

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:

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:

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.

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:

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.

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 of the orders of the authorities below, material available on record and the decisions relied upon.

3. The general facts in brief are that assessee is a public charitable trust duly registered under section 12A vide order dated 14.03.2005 and is also duly approved under section 80G(5)(vi) of the Act vide order dated 27.08.2007. During the year the Assessing Officer in the assessment framed under section 143(3) of the I. T. Act has assessed the income at Rs. 72,37,98,956/- against the returned NIL income after denying exemption under section 11/12 of the Act. The ld. CIT (Appeals) has upheld the same which 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 the grounds of the present appeal are almost covered by the decision of Delhi Bench 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-applicability of proviso to section 2(15) of the Act.

6. In support of the above grounds the ld. AR submitted that the predominant object of the assessee are to provide medical relief through Prayanam and Yoga and also to impart education in the field of yoga. He referred page Nos. 1 to 14 of the paper book i.e. copy of the trust deed dated 2.02.2005 wherein objects of the trust have been reduced in black and white to support his argument that the assessee was set up as a charitable trust with the following predominant objectives, which have been carried out over the years :

(a) providing medical relief through Yoga/Prayanam;
(b) imparting education in the field of Yoga; &
(c ) providing relief to the poor.

On the basis of these objects the assessee was granted registration under section 12A of the Act and was also approved under section 80G(5)(vi) of the Act, which the assessee was enjoying during the year under consideration as well.

The ld. AR submitted that the assessee in accordance with the approved objectives has been consistently pursuing its charitable activities for the past four years including the assessment year under consideration and had always been allowed exemption under section 11/12, including in various assessments completed under section 143(3) of the Act. He asserted that there has been no change in facts during the year under consideration.

6.1 In furtherance of its above charitable objects, the assessee is continuously 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.
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 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 preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility: ………..” (emphasis supplied)

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 a charitable 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 the nature 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 of definition of ‘charitable purpose’ contained in Section 2(15). Hence, such entities will not be eligible for exemption under Section 11 or under Section 10(23C) of the Act, if they carry on commercial activities. Whether such an entity is carrying on an activity in the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extent and frequency of activity.

3.1 There are industry and trade associations who claim exemption from tax under section 11 or on the ground that their objects are for charitable purposes as these are covered under the ‘any other object of public utility’. Under the principle of mutuality, if trading takes place between the persons who are associated together and contribute to a common fund for the financing of some venture or object, and in this respect have no dealings or relations with any outside body, then the surplus returned to such persons is not chargeable to tax. Therefore, where industry or trade association claims both to be charitable institutions as well as mutual members, these would not fall under the purview of Section 2(15) owing to the principle of mutuality. However, if such organizations have dealings with the non members, their claim for charitable institution would now be governed 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 any other object of general public utility, is a question of fact. If such assessee is engaged in any activity in the nature of trade, commerce or business or renders any service in connection to trade, commerce or business, it would not be entitled to claim that its object 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, or business or rendering of any service in relation to trade, commerce or business. Each case would, therefore, have to be decided on its own facts, and generalizations are not possible. An assessee who claims that their object is ‘charitable purpose’ within the meaning of section 2(15) would be well advised to eschew any activity which is in the nature of trade, commerce or business or rendering of any service in relation to any trade, 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 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 the major object as per the assessee is to make India Disease Free through yoga. The trust has organized many yog camps. Apart from that, assessee is also carrying its activity through Patanjali Disaster Relief fund. For education, the trust has established University 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’;
- 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 in Yog so as to make the society and the world free from all diseased and preserve ancient knowledge about Yog, Ayurved etc. The various objects stated in para 2.2 (supra) can only be brought under the ambit of the sixth limb of the definition of charitable purpose as defined under Section 2(15) of the Act, i.e. advancement of any other object of general public utility.”

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 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 and Pranayam 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 Order No. DIT(E)/2004-05/P-977/04/1598 dated 14.03.2005. The assessee Trust is notified u/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 in Yog so as to make the society and the world free from all diseases and preserve ancient knowledge about Yog, Ayurved etc. The various objects stated in para 2.2 (supra) can only be brought under the ambit of the sixth limb of the definition of charitable purpose as defined under Section 2(15) of the Act, i.e. advancement of any other object of general public utility” (emphasis supplied)

Thus, when the predominant object of the assessee is to provide ‘medical relief’ by way of alleviating diseases through yog, which has also been consciously admitted by the assessing officer in more than one instance, a conclusion drawn, contrary to the admitted facts is, it is submitted, not justifiable and bad in law.

On highlighting the aforesaid inconsistencies in the findings recorded by the assessing officer before the first appellate authority, the CIT(A), vide letter dated 28.02.2013 directed the assessing officer to provide clarification on the same. However, the assessing officer vide remand report dated 12.03.2013, merely reproduced certain portions/paras of the impugned 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.

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-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.”(emphasis supplied)

In the case of DIT (Exemptions) vs. Guru Nanak Vidya Bhandar Trust: 272 ITR 379, the Hon’ble Delhi High Court held that the department is expected to be consistent with its own stand which has been taken in earlier years, when there is no change in the objects of the trust during the year and such objects when found permissible for exemption in the past, notwithstanding the fact that it has manifold objects some of which are vulnerable.

Further in the case of CIT vs. Shri Agastyar Trust: 149 ITR 609, the Madras Court held that it is well established that a decision on the question whether certain trust is a charitable trust or not, which has nothing to do with the fluctuations in the 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 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 are inclined to accept this submission and would like to state in clear terms that the decision is confined to the facts of case and may not be treated as an authority on aspects which have been 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:
ACIT V. Surat City Gymkhana: 300 ITR 214 (SC) (Refer page 1066-1067 of case law paperbook)

Sonepat Hindu Educational and Charitable Society v. CIT.: 278 ITR 262 (P&H) (Refer page 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 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 of medicine as may be recognized by the Central Government.” (emphasis supplied) 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:

“Yoga
The concepts and practices of Yoga originated in India about several thousand years ago. Its founders were great Saints and Sages. The great Yogis presented rational interpretation of their experiences of Yoga and brought about a practical and scientifically sound method within every one’s reach. Yoga today, is no longer restricted to hermits, saints, and sages; it has entered into our everyday lives and has aroused a worldwide awakening and acceptance in the last few decades. The science of Yoga and its techniques have now been reoriented to suit modern sociological needs and lifestyles. Experts of various branches of medicine including modern medical sciences are realising the role of these techniques in the prevention and mitigation of diseases and promotion of health.

Yoga is one of the six systems of Vedic philosophy. Maharishi Patanjali, rightly called "The Father of Yoga" compiled and refined various aspects of Yoga systematically in his "Yoga Sutras" (aphorisms). He advocated the eight folds path of Yoga, popularly known as "Ashtanga Yoga" for all-round development of human beings. They are:- Yama, Niyama, Asana, Pranayama, Pratyahara, Dharana, Dhyana and Samadhi. These components advocate certain restraints and observances, physical discipline, breath regulations, restraining the sense organs, contemplation, meditation and samadhi. These steps are believed to have a potential for improvement of physical health by enhancing circulation of oxygenated blood in the body, retraining the sense organs thereby inducing tranquility and serenity of mind. The practice of Yoga prevents psychosomatic disorders and improves an individuals resistance and ability to endure stressful situations.” (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.

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 of medicine; containing medicine; used in medicine” (emphasis supplied)

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 that in India meditation has been very important source for physical, mental and spiritual wellbeing of the human beings. Cognizance has to be taken that the meditation and Yoga are becoming more and more popular among the Indians who are now becoming conscious about their physical, mental and spiritual health. Not only in India, meditation and Yoga are being accepted in the Western Countries also as a great source for physical and mental health and spiritual attainment. When a large number of people feel that meditation is a great source for physical, mental and spiritual well-being, it must be held to be an activity for the advancement of general public utility”. (emphasis supplied)

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 the communications sent by the Sole Trustee. It would appear therefrom that though a number of objects, including the setting up of educational institutions, were mentioned in the trust deed as the objects of the trust, supplying the Kannada speaking people with an organ of educated public opinion was also one of those objects. The communication sent by the Sole Trustee to the Income-tax Officer shows that the trust at present is carrying out only the last mentioned object of the trust, namely, supplying the Kannada speaking people with an organ or organs of educated public opinion. The concentration so far of the activities of the trust only on that object is in pursuance of clause 6 of the trust deed, according to which the original trustee shall have power and authority to spend and utilise the money and the property of the trust for any of the purposes of the trust in such manner as to him may appear proper.

The sense in which the word "education" has been used in section 2(15) is the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. The word "education" has not been used in that wide and extended sense, according to which every acquisition of further knowledge constitutes education. According to this wide and extended sense, travelling is education, because as a result of travelling 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 not straight, you learn by experience and thus add to your knowledge of the ways of the world. If you are not careful, your wallet is liable to be stolen or you are liable to be cheated by some unscrupulous person. The thief who removes your wallet and the swindler who cheats you teach you a lesson and in the process make you wiser though poorer. If you visit a night club, you get acquainted with and add to your knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education 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 clause is the process of training and developing the knowledge, skill, mind and character of students 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 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 the sides It had to be examined whether the following prerequisites of section 10(22) was satisfied 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 Educational Institution [1979] 118 ITR 235 on the language of section 10(22) the principle of ejusdem generis can have no application. One has, therefore, only to fall back on the expression ‘or other educational institution.’
There is no requirement prescribed under section 10(22) that the institution should be recognised by a University or State or Central Government. Thus, the assessing officer’s insistence on any such recognition was not justified. It was not necessary that the institution should have a building. The word ‘institution’ has not been defined in the Act. Thus, the assessee could be treated as an institution. In the instant case the assessee‘s foundation was dedicated to offering peace, harmony and happiness to everyone in all walks of life through the system of transcendental deep meditation. This system was developed by his Holiness Maharishi Mahesh Yogi whereby every normal man, regardless of caste, creed and denomination could easily reach the deeper levels of consciousness, unfold latent faculties and realise more complete happiness. The syllabus recommended by the assessee listed 33 lessons of what was termed as the science of creative intelligence. The assessee had also 23 branches throughout India where TM instructions were imparted to the students as part of then normal schooling. The optimistic instruction in TM was initially imparted to the trainers and then the qualified trainers imparted instructions to the trainees. The test of ‘Systematic schooling’ was, therefore, satisfied. There was no purpose other than the educational so far as the assessee-foundation was concerned. Therefore, the second ingredient or prerequisite of section 10(22) was also satisfied. That the assessee foundation did not exist for the purpose of profit was also clear from the objects clause. This was also clear from the balance sheet and income and expenditure account. It was clear that the assessee-foundation duly established the requirements under section 10(22) and qualified for the grant of exemption under section 10(22). The order of the Commissioner (Appeals) was, therefore, justified.” (emphasis supplied)

Further, according to Halsbury’s Laws of England (4th Edition, Volume 5, paragraph 522) the advancement and propagation of education and learning generally are charitable purposes, even in the absence of an element of poverty in the class of beneficiaries, but the trust must be for the benefit of a sufficient section of the community. Halsbury goes on to say further in paragraph 524 that the promotion of education in particular subjects, such as art, artistic taste, the appreciation of fine arts, music, commercial education, training for industrial employment, the art and science of Government, economic and sanitary science or psychological healing is charitable.

In the case of the assessee, the predominant 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 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. 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.

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 and accordingly 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 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 the trust………………..”

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 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 only intention 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 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.

The status of allotment of cottages under the “Vanprasth Ashram Scheme” as on date is provided as under for your goodself’s kind consideration:

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 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 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 primarily undertaken 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.

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. 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 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 of systematic training in order to develop the knowledge, skill, mind and character of students, is to be regarded as 'education' covered under section 2(15). Thereby, imparting of yoga training through well structured yoga shivir/camps was held to fall under the category of imparting education which is one of the charitable objects defined under section 2(15). The pertinent observations of the Tribunal in this regard are reproduced as under:

“6.4.6 In view of above discussions especially the recognition of yoga as a recognized system of medicine as per section 2 (h) of Clinical Establishment (Registration and Regulation) Act 2010 and the complete information made available by the ayush on its website we find no hesitation in coming to the conclusion that yoga can be safely accepted as a system fit into the definition of 'medical relief'. Yoga as a science is a well recognized system of medicine, which has therapeutic effects in treating various serious ailments. The predominant objective of the appellant trust as it is apparent from its objects, remained to provide medical relief through ayurveda and propagation of yoga for the purpose of treating/curing various diseases.

6.5.1 The expression 'education' has not been defined under the provisions of Income Tax Act. The Hon'ble Supreme Court in the case of Lok Shikshana Trust (supra), relied upon by the Ld. AR, has been pleased to explain the meaning of the word 'education' in the context of section 2(15) of the Act. As per this decision the education is the process of training and developing the knowledge, skill, mind and character of students by schooling by way of systematic instruction, schooling or training. The Hon'ble Delhi High Court in the case of Delhi Music Society v. DGIT (supra) has been pleased to hold that since the assessee society was teaching and promoting all forms of music and dance, western, Indian or any other and was run like any school or educational institution in a systemic manner with regular classes, the same therefore meet the requirement of an educational institution within the meaning of section 10(23C)(vi) of the Act. In the case of ITO v. SRM Foundation of India (supra) the Delhi Bench of the Tribunal, where the assessee was" engaged in spreading the system of transcendental meditation (TM) has held that irrespective of the fact that the assessee has 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 u/s 10(72) of the Act. We thus come to the conclusion that any form of educational activity involving imparting of systematic training in order to develop the knowledge, skill, mind and character of students, is to be regarded as 'education' covered u/s 2(15) of the Act. In view of these decisions we hold that imparting of yoga training through well structured yoga shivir/camps also falls under the category of imparting education which is one of the charitable objects defined u/s 2(15) of the Act. The appellant's activities are thus not hit by the proviso inserted in the definition 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 of providing medical relief through Pranayam and Yoga and also to impart education in the field of yoga, would fall under the category of providing ‘medical relief’ and ‘imparting education’ as provided under section 2(15) of the Act, meaning thereby that the proviso to section 2(15) of the Act would not apply. “

7. The ld. CIT [DR], on the other hand, placed reliance on the orders of the authorities below with further submission that under the facts of the case of the assessee it falls under the sixth limb of the definition of charitable purpose given under section 2(15) of the Act i.e. advancement of any other object of general public utility and was thus covered within the mischief to proviso of section 2(15) of the Act. The transactions indulged by the assessee are in the nature of business or commerce which are similar to private commercial concern in the market. The objectives of the assessee being propagation of Yoga does not qualified as “medical relief or imparting of education but falls in the recibery category of advancement of any other object of general public utility. It undertook commercial activities in relation to construction of cottages under the “Vanprastha Ashram Scheme”. The assessee has also violated the provisions of section 13 of the Act by providing benefit to persons specified in sub-section (3) as it has provided benefits to trustees and elated persons. He submitted that assessee had received anonymous donations as defined in section 115BBC of the Act. The ld. CIT [DR] pointed out that as per details available on record, Swami Ramdev Ji is not assessed to Income Tax. Acharya Bal Krishna Ji is Director of / having interest in 34 companies / LLPS and assessed at Haridwar. Swami Muktanand Ji is Director of / having interest in 13 companies / LLPS and assessed at Haridwar. He submitted that the trust was created with corpus of Rs. 25,000/- and on 31.03.2009 the 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 of income and investment of the trust income / receipts.

7.1 The ld. CIT [DR] submitted further that Divya Yog Mandir Trust, Bharat Swabhiman Trust, Acharyakul Shishka Sansthan all are having common trustees. He submitted that special audit under section 142(2A) was ordered by the Revenue on 29.12.2011 and auditors had submitted its special audit report on 27.06.2012 making several adverse observations on the constitution and activities of the trust. In this regard he referred page Nos. 5 to 10 of the paper book. He submitted that there are over-riding powers in the hands of the life President i.e. Swami Ramdev Ji. Yog training is the core activity that has resulted in revenue generation for the trust during the relevant year. The relevant objects do not specify that the said activity is to be carried on no profit no loss basis. In actual practice, the said activity has resulted in creation of huge surplus for the trust. Raising of funds, accepting donations and gifts to realize activities for profit to do business and arrangement of loans from different financial institutions, loans from bank and mortgaging the asset to repay the loan are such activities which do not rule out carrying on the activities of profit. The trust deed does not set out the 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 and the whole of the world and the trustees, in their discretion, having not been prohibited from applying income for charitable purpose either in India or abroad, question arises as to whether the trust is entitled to tax exemption even though income utilized outside India is not of a very significant amount.

7.2 As per the terms of clause 15(1)(i) of the trust deed annual general meeting is not convened atleast once in a year. He submitted that during the relevant year 618 accounts in the name of samitees at various places appeared in the books of accounts of the trust which were all reduced to NIL on 31.03.2009 by treating the amount of Rs. 2.1 crores receivable from them as expenditure in contravention of accounting principle. The trust had used the logo of Divya Yog Mandir Trust as its logo, which is indicative of interdependence between the two trusts. On the donation coupons issued by the trust against non-residential camps, though number of the order under section 80G was mentioned, it was found to be without date, which indicate that the assessee’s documentation is not proper.

7.3 The ld. CIT [DR] submitted that the trust deed contains no provisions for election and Swami Shankar Dev Ji on account of having non attended four consequentive meetings of the board of trustees, the said patron has been removed from the board of trustees. He also showed his doubts that the assessee was following the conditions laid down by the Government while giving registration under section 12A of the Act. From the approval granted to the assessee under section 12A of the Act it can be observed that no specific limb of section 2(15) has been mentioned by the competent authority. It is also observed from the objects of the assessee trust that many of them relate to the last limb of section 2(15) i.e. general public utility. In addition to these are the objects of Vanprastha Ashram for which assessee had reflected the amounts so received under the corpus fund. The perusal of the objects of the Vanprastha Ashram reflect that the project is (i) for enjoyment experiencing personal and pleasure invironment and (ii) on anti corruption /black money issues. These are the main objects bvased on which the whole scheme had been started. The ld. CIT [DR] submitted that these objects may be a personal agenda 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 a decision taken only once and the exemption is not granted or renewed every year. The exemption is available only after the Assessing Officer is satisfied with the genuineness of the activities in each financial year and all the provisions of law abutting thereupon. Accordingly the Assessing Officer has analysed the activities of the assessee for the assessment year under consideration and then has arrived at the conclusion that under which limb the activities of assessee fall i.e. general public utility.

7.5 The ld. CIT [DR] in the written synopsis made on behalf of the Department has reproduced the following ir-regularities in the books of accounts pointed out by the special auditor in their audit report :-

“ (i) Instances of difference in voucher Numbers as per Physical Records and Computerized 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 significant accounting policies forming integral part of the balance sheet as on 31.03.2009 states that books of accounts are maintained on Mercantile basis. The auditor on examination found that non maintenance of books of account strictly in accordance with declared mercantile method of accounting. The method of accounting has been done on Mixed basis and accounting is complex;

(iv) During the course of Special Audit, alternation in books of accounts;
(v) Accounting of interest of Rs. 1084 before the date of accrual. An amount of interest of Rs. 1084/- was credited on 16.09.2009 in account No. 003002000005555 with Indian Overseas Bank, was found to be recorded in books of account already closed on 31.03.2009;
(vi) Booking of expenditure of earlier year in the current year.
(vii) Booking of the income of earlier year in the current year.
(viii) Extra receipt found for which no entry in books of account found.
(ix) Adequate evidences. mode and manner in which the accounts are finally presented confirm that books of account were not primarily and regularly maintained.
(x) Instances were seen where income/donation was not found to have been recorded in book of account.
(xi) Many evidences found where complete and correct accounting of receipts and expenses in the books of 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.
(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. Vidyawanti Labhuram Foundation for Science Research & Social Welfare ITAT Jodhpur Bench (2012) 20 Taxman.com 793 (Jodh.);
(iv) Aditanar Educational Institution V. Additional Commissioner of Income 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.);
(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 not applicable in the provisions of Income Tax Act and hence acceptance of the returns of income for earlier two years in the case of assessee does not give any right of similar acceptance to the assessee for the year under consideration. He submitted that due to insertion of proviso to section 2(15) with effect from 1.04.2009 the Revenue has adopted new approach as per the said provision. He submitted further that facts in the case of the present assessee are different from those in the case of Divya Yog Mandir Trust, decided by the cornet bench of the Tribunal earlier. The recent amendment by insertion of “Yog” with effect from 1.04.2015 makes it clear that before 1.04.2015 “’yoga was not part of section 2(15) definition. He submitted that Yog, Auverdic college etc. are not coming under the definition of “medical relief”. He submitted that charges are different for different types of people in Vanprastha Ashram accommodation. He pointed out that the land is owned by person defined under section 13(3) of the I. T. Act. The assessee had benefitted Acharya Bal Krishan Ji. In Dynamic Buildcon Pvt. Ltd., Acharya Bal Krishan Ji was holding 99% shares and the very object therefrom inferred that it was to benefit him. He submitted that bikes were purchased in the name of Acharya Bal Kishan Ji and it was transferred subsequently in assessee’s name as an after-thought.

8. The ld. AR re-joined with these submissions that the insertion of proviso to section 2(15) with effect from 1.04.2009 does not affect the object of the assessee as held by the cornet bench of the Tribunal in the case of Divya Yog Mandir Trust (supra) and referred page No.1024 of the paper book dealing with an identical issue under almost similar set of facts. The ld. AR made a statement at the Bar that the assessee has not incurred any expenditure outside India nor has it carried out any business. The registration given under section 12-A of the Act was continuing during the year under consideration and it is still continuing. Thus, character of the assessee being charitable per se cannot be doubted. He pointed out that it is an established position of law of the land that assessee can be owner of the building constructed by it, even if land is owned by others.

8.1 In rejoinder, the ld. AR submitted that the ld. CIT (Appeals) has failed to appreciate that the Revenue had in the past years, consistently accepted the activities of the assessee as being in the nature of medical relief, education and relief to the poor. He has also erred in relying upon erroneous findings given in the special audit report furnished under section 142(2A) while confirming the order of the Assessing Officer in denying exemption under sections 11/12 of the Act.

8.2 The ld. AR on queries raised by the Bench responded that assessee trust is not running shops or distribution of products and for those shoppings and distribution and selling of products, as on commercial basis different entity is there 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 that to examine as to whether the character of an assessee is charitable or not, the predominant objects of it are to be examined to define its character. There is no dispute in the present case that (a) providing medical relief through Yoga / Pranayam; (b) imparting education in the field of Yoga; and (c) providing relief to the poor are pre-dominant objects of the assessee which the assessee had been carrying out over the years since it was set up in the year 2005. It is also an undisputed fact that the assessee was registered under section 12A vide order dated 14.03.2001 and approved under section 80G(5)(vi) of the Act vide order dated 27.08.2007 and during the year it was enjoying the registration and approval under the above provisions and still enjoying. Of course, principle of res judicata are not applicable in the cases under the provisions of Income Tax Act, 1961, but as per the established position of law, the Revenue is required to maintain consistency in its approach on an identical issue under similar facts of the case in the subsequent assessment years.

9.1 In earlier years under the similar set of facts the benefit of exemption under sections 11 and 12 of the Act has been undisputedly allowed to the assessee. During the year the Assessing Officer has took a different stand, as per the ld. CIT [DR] it was due to insertion of proviso to section 2(15) of the Act with effect from 1.04.2009, that the assessee is not eligible for the benefit of exemption available under sections 11/12 of the Act, since as per the Assessing Officer the ld. CIT (Appeals) the propagation of Yoga does not qualify as “medical relief” or “imparting of education”, but falls in the residuary category of “enhancement of any other object of general public utility”. The authorities below remained of the view that the assessee is not charitable since substantial powers have been conferred on the settler or the trust and also alleged that the appellant has violated the provisions of section 13 of the Act by providing benefit to persons specified under sub-section (3) thereto.

9.2 Now the first question before us as to whether propagation of Yoga by the assessee qualifies as a medical relief or imparting of education or not or does it fall in the residuary category of “advancement of any other object of general public utility”. An identical issue under the almost similar set of facts has been dealt with by the coordinate bench of the Tribunal in the case of Divya Yog Mandir Trust Vs. ICIT, ITA. No. 387/Del./2013 assessment year 2009-10 vide its order dated 27.08.2013. The relevant para Nos. 6.4.1 to 6.4.6 are being reproduced hereunder for a ready reference :-

“Medical Relief” through yoga
6.4.1. While examining the issue as to whether medical relief can be given through yoga on the basis of above submissions made by the parties we find that in the Clinical Establishment (registration and regulation) Act 2010, the legislature has defined “recognized system of medicine” in Section 2 (h ) of the said Act . As per this definition “(h) recognized system of medicine means allopathy, yoga, naturopathy, ayurved, homeopathy, siddha and unani system of medicines or any other system of medicine as may be recognized by the Central Government.” This bill was introduced by the Central Government in the year 2007 to provide for registration and regulation of all clinical establishment in the country with a view to prescribe the minimum standards of facilities and services provided by them. A copy of this Act has been made available at page Nos. 161 to 163 of the paper book.

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

“9.8 The committee is of the opinion that yoga is one stream of education, which will make a permanent and positive impact on a students life. Yoga has been gaining immense popularity due to the short term as well as long term benefits that it provides. Yoga helps one to achieve all round development. Considering the immense potential of this ancient knowledge of India, the Committee recommends that yoga be made compulsory for all school going children in the country.

ACTIION TAKEN
The National Curriculum Framework in School Education – 2005 prepared by the National Council of Education Research and Training provides for Health and Physical Education as a compulsory subject from primary to secondary stage as an optional subject at higher secondary stage. Yoga is one of the core components of Health and Physical Education.”

6.4.3. On the contrary the Ld. CIT(A) for the purpose of determining whether yoga can be classified as a form of medical relief has placed reliance on the determination of the term “medical” as provided in Major Law Laxicon by P Ramanatha Aiyar (2010 edition) as per which “ pertaining to 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 of healing any disease constitute a medical relief and the same need not be restricted to conventional method of treatment. Ld. CIT(A) at page 15 of the first appellant order has also selectively quoted from the website of department of Ayush (Ministry of Health and Family Welfare) to come this conclusion that yoga is a discipline appears to address more the issues of spiritual well being rather address the problems associated with the more wordly “medical relief” and exercises forming part of the yoga system would at the best have indirect salutary benefit on the health of an individual. He held that yoga is a spiritual system more than a curative system for alleviating or even curing various ailments. It is not seen as a specific remedy for physical ailment at par with medical system like allopathy or even ayurveda. In this regard the Ld. CIT(A) has placed reliance on the decisions in the cases of Kasyap Ved Research Foundation vs. CIT 131 ITD 370 (Cochin) and CIT vs. Rajneesh Foundation, 280 ITR 533 (Bom). A complete information on yoga available on the website of the Ayush i.e,. ‘Httpp://www.Indiamedicine.nic.in’ has been made available by the assessee at page Nos. 639 to 655 of the supplementary paper book No. 1 and at page No. 757 to 793 of the supplementary paper book No. 2 filed by the assessee. The Ld. AR has drawn our attention also on the following information on yoga available on the aforesaid website :
"Yoga

The concepts and practices of Yoga originated in India about several thousand years ago. Its founders were great Saints and Sages. The great Yogis presented rational interpretation of their experiences of Yoga and brought about a practical and scientifically sound method within everyone's reach. Yoga today, is no longer restricted to hermits, saints, and sages; it has entered into our everyday lives and has aroused a worldwide awakening and acceptance in the last few decades. The science of Yoga and its techniques have now been reoriented to suit modern sociological needs and lifestyles. Experts of various branches of medicine including modern medical sciences are realising the role of these techniques in the prevention and mitigation of diseases and promotion of health.

Yoga is one of the six systems of Vedic philosophy. Maharishi Patanjali, rightly called "The Father of Yoga" compiled and refined various aspects of Yoga systematically in his "Yoga Sutras" (aphorisms). He advocated the eight folds path of Yoga, popularly known as "Ashtanga Yoga" for all-round development of human beings. They are:- Yama, Niyama, Asana, Pranayama, Pratyahara, Dharana, Dhyana and Samadhi. These components advocate certain restraints and observances, physical discipline, breath regulations, restraining the sense organs, contemplation, meditation and samadhi. These steps are believed to have a potential for improvement of physical health by enhancing circulation of oxygenated blood in the body, retraining the sense organs thereby inducing tranquility and serenity of mind. The practice of Yoga prevents psychosomatic disorders and improves an individuals resistance and ability to endure stressful situations." (emphasis supplied)

6.4.4. In the above said information it has been observed that experts of various branches of medicine including modern medical sciences are realizing the role of these techniques in the prevention and mitigation of diseases and promotion of health. It has been further observed that these steps are believed to have a potential for improvement of physical health by enhancing circulation of oxygenated blood in the body, retraining the sense organs thereby inducing tranquility and serenity of mind ; the practice of yoga prevents psychosomatic disorders and improves an individual’s resistance and ability to endure stressful situations. Even in the extracts of the information available on the website of Ayush reproduced by the Ld. CIT(A) at page 15 of the first appellate order in the definition of yoga it has been stated that yoga is a discipline to improve or develop one’s inherent power in a balanced manner. It offers the means to attain complete selfrealisation.

As per literal meaning of Sanskrit word ‘yoke” it has been noted that the yoga can be defined as a means of uniting the individual spirit with the universal spirit of God and according to Maharishi Patanjali, yoga is the suppression of medications of the mind. The information given under the head “yoga as soul therapy” has also been extracted by the Ld. CIT(A) as per which all parts of yoga (japa, karma, bhakti) have healing potential to shelter out the effects of pains. It has been further noted therein that one especially needs proper guidance from an accomplished exponent, who has already treated the same track to reach the ultimate goal. If we read these informations available on the website of Ayush in its totality we find it difficult to concur with the view of Ld. CIT(A) that yoga as a system does not fit into the definition of medical relief as mentioned in section 2(15) of the Act. The very observation of Ld. CIT(A) in this regard at page No. 16 of the first appellate order that yoga is a discipline appears to address more the issues of spiritual well being rather than address the problems associated with the more wordly ” medical relief” itself suggests that the Ld. CIT(A) remained of the view that yoga as a discipline addresses the problems associated with the medical relief but it address more the issues of spiritual well being. Thus he has not completely disagreed with the submission of the assessee that yoga as a discipline addresses medical relief also. So far as the decisions relied upon by the Ld. CIT(A) to arrive at a conclusion that yoga as a system does not fit into the definition of medical relief are concerned, we find that these are having distinguishable facts and issues hence are not helpful to the revenue. In the case of Kasyapa Veda Research Foundation vs. CIT (supra) it has been observed by the Cochin Bench that yoga is an ancient Indian science of meditation. There is no dispute on it. But only on the basis of such observations which is one of the aspects of the yoga it cannot be arrived at a conclusion that yoga as a system does not clearly fit into the definition of “medical” which in turn leads to the term “medical relief”. The issue raised before the Cochin bench of the Tribunal in this case was as to whether assessee trust forms for propagating of Vedas was entitled to registration u/s 12A in the status of a religious and charitable trust. Likewise the decision of Hon’ble Bombay High Court in the case of Rajneesh Foundation (supra) is not relevant as 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 u/s 11/12 of the Act. The decision was referred in the context of classifying ’meditation’ as a charitable objectives for the purpose of section 2(15) of the Act. The Hon’ble High Court has adjudicated only upon the issue of classification of ‘meditation’ , ‘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. In the said decision the Hon’ble High Court has however also been pleased to observe that not only in India but in the western countries also meditation and yoga are being accepted as a great source of physical and mental health. Meaning thereby that yoga is a source for medical relief. For a ready reference the relevant extract of the said decision is being reproduced hereunder :-

Admittedly, main thrust of the respondent is on meditation and nobody can dispute that in India meditation has been very important source for physical, mental and spiritual ~ well-being of the human beings. Cognizance has to be taken that the meditation and Yoga I are becoming more and more popular among the Indians who are now becoming conscious about their physical, mental and spiritual health. Not only in India, meditation and Yoga are being accepted in the Western Countries also as a great source for physical and mental health and spiritual attainment. When a large number of people feel that meditation is a great source for physical, mental and spiritual wellbeing, it must be held to be an activity for the advancement of general public utility".
(emphasis supplied)

6.4.5. Ld. AR has also referred the survey report of US National center for complementary and alternative medicine (NCCAM) based on survey conducted in December, 2008, made available at page Nos. 193 to 196 of the paper book (assessee) as per which yoga has been recognized as 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 of conventional medicines. NCCAM found that yoga was the sixth most commonly used alternative therapy in the USA during 2007, with 6.1% of the population participating. The said study states yoga has been used as supplementary therapy for diverse conditions such as cancer, diabetes, asthama and AIDS and the scope of medical issues where yoga is used as a complementary therapy continues to grow.

A reference of the publication “yog in synergy with medical science: written by an ayurved acharya associated with the appellant, has also been made, relevant extracts of which ahs been made available at page Nos. 555 to 633 of the supplementary paper book (appellant). This publication has been documented on the basis of clinical tests conducted showing the clinical effect of yoga on the participants in various yoga camps. As discussed above the Ld. CIT (DR) has basically placed reliance on the orders of the authorities below asserting that yoga is a way of meditation rather than a way of medication to qualify for ‘medical relief’. A reference of contents of page No. 638 of the paper book has also been made to support his submission that in September, 2012. the Harvard University of USA came forward to introduce yoga and ayurved subject in their university in collaboration with Swami Ramdevji in the wake of dreadful diseases being cured by Swamiji’s Pranayam and his ayurved medicines.

6.4.6. In view of above discussions especially the recognition of yoga as a recognized system of medicine as per section 2 (h) of Clinical Establishment (Registration and Regulation) Act 2010 and the complete information made available by the ayush on its website we find no hesitation in coming to the conclusion that yoga can be safely accepted as a system fit into the definition of ‘medical relief’. Yoga as a science is a well recognized system of medicine, which has therapeutic effects in treating various serious ailments. The predominant objective of the appellant trust as it is apparent from its objects, remained to provide medical relief through ayurveda and propagation of yoga for the purpose of treating / curing various diseases. “

9.3 Besides above we want to add further that there are several pathies and methods by which the medical relief is achieved. These pathies are allopathy, homeopathy, neaturopathy, Ayurvedic, Unani, Yoga etc. and a person suffering from any disease including chronic diseases approaches these pathologies and method for the relief and for such person the pathy or method from which he gets relief is the medical relief from the method or pathy followed by him. In other words, the ultimate goal of all these pathies and methods is to achieve relief and certainly Yog is the one of such method or pathy. There is no dispute that in case of certain diseases certain pathy or method is more helpful and other pathy or other method is helpful for the relief in the other type of sufferings. Now it is well established fact that the practice of yoga gives positive reliefs in the cases of asthma, migraine, hyper tension, stress etc. Other examples are also there wherein following of Yoga has 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, 2015 with effect from 1.04.2016 has removed all the doubts that propagation of yoga itself is a charitable purpose to make the assessee eligible for claiming exemption under sections 11/12 of the Act.

9.4 We thus following the above decision in the case of Divya Yog Mandir Trust (supra) hold that Yoga also gives ‘medical relief‘ and thus also falls under the definition of charitable purpose. The authorities below were thus not right in denying claimed exemption under section 11/12 of the Act on the basis that propagation of yoga does not give medical relief and thus not fall under “charitable purpose” defined under section 2(15) of the Act and it falls in the residuary category of “advancement of any other object of general public utility” within the proviso to section 2(15) of the Act.

9.5 Now the question before us is as to whether propagation of yoga also falls under “imparting of education” to bring it eligible for the exemption under the definition of “charitable purpose” under section 2(15) of the Act. The coordinate bench of the Tribunal has also dealt with this issue in detail in the case of Divya Yog Mandir Trust Vs. JCIT (supra) the relevant para Nos. 6.5 and 6.5.1 are reproduced hereunder : ‘Imparting Education’

6.5. The question now is as to whether the appellant trust falls within the purview of providing
“imparting education”.

The grievance of the appellant is that the authorities below have failed to appreciate that the propagation of yoga by way of conducting yoga classes on a regular basis and in a systemized manner also falls under the category of ‘imparting of education’ as provided u/s 2(15) of the Act. Reliance has been placed on several decisions, which we will discuss hereunder. The contention of the Ld. AR remained that the predominant object of the appellant trust are to provide practical and theoretical training in the field of yoga, which would ultimately provide medical relief to the society at large. It was submitted that in pursuance of the said objective the appellant trust has made intertrust donations to Patanjali Yog Peeth to support their endeavors of imparting yoga education by means of organizing yog shivirs/camps across the country on 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. It was submitted that imparting of yoga training through well structured yoga shiviirs/camps also falls under the category of imparting ‘education’ one of the charitable objects defined u/s 2(15) of the Act and accordingly the appellant’s activities are not hit by the proviso inserted in the definition of charitable purpose as contained in the said section. During the course of hearing the appellant was directed to provide complete details of the Patanjali Bhartiya Ayurvigyan Avam Anusandhan Sansthan at Haridwar for imparting education in the field of ayurveda which started operations w.e.f. 20.7.2009. In compliance the Ld. AR submitted that during the year the appellant had applied substantial amount on construction of the ayurveda medical college which is affiliated to the Uttarakhand Technical University. It was submitted that ayurveda medical college set up by the appellant was approved and duly recognized by the Department of Ayurveda, yoga & naturopathy, unani, siddha and homoeopathy (AYUSH) vide notification dated 20.7.2009, a copy thereof has been made available at page No. 805 and 806 of the supplementary paper book –II. Department of Ayush is a body set up by the Ministry of Health & Family Welfare, Govt. of India with the primary objective of regulating and upgrading the educational standards, quality control and standardization of drugs, improving the availability of medicinal plant material, research and development and awareness generation about the efficacy of ayurveda, yoga and naturopathy, unani, siddha and homoeopathy systems of medicines. For the purpose of recognizing and granting permission for establishment of medical colleges, the department of AYUSH mandates fulfillment of certain minimum standard and requirements as prescribed under the Indian Medical Central Council Act 1970 (IMCC Act). One of the primary conditions laid down in the IMCC Act for the grant of recognition is the existence of a medical hospital attached to the ayurvedic college with the prescribed bed strength alongwith outdoor patient department (OPD) and Indoor patient department (IPD) facilities. Ld. CIT(DR) on the other hand has placed reliance on the orders of the authorities below, as discussed above.

6.5.1. The expression ‘education’ has not been defined under the provisions of Income Tax Act. The Hon’ble Supreme Court in the case of Lok Shikshana Trust (supra), relied upon by the Ld. AR, has been pleased to explain the meaning of the word ‘education’ in the context of section 2(15) of the Act. As per this decision the education is the process of training and developing the knowledge, skill, mind and character of students by schooling by way of systematic instruction, schooling or training. 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 was teaching and promoting all forms of music and dance , western, Indian or any other and was run like any school or educational institution in a systemic manner with regular classes, the same therefore meet the requirement of an educational institution within the meaning of section 10(23C)(vi) of the Act. In the case of ITO vs. SRM Foundation of India (supra) the Delhi Bench of the Tribunal, where the assessee was engaged in spreading the system of transcendental meditation (TM) has held that irrespective of the fact that the assessee has 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 u/s 10(22) of the Act. We thus come to the conclusion that any form of educational activity involving imparting of systematic training in order to develop the knowledge, skill, mind and character of students, is to be regarded as ‘education’ covered u/s 2(15) of the Act. In view of these decisions we hold that imparting of yoga training through well structured yoga shivir / camps also falls under the category of imparting education which is one of the charitable objects defined u/s 2(15) of the Act. The appellant’s activities are thus not hit by the proviso inserted in the definition of charitable purpose in section 2(15) of the Act.”

9.6 We thus following the above decision hold that propagation of yoga as pre-dominant objective in the case of present assessee very much falls within the definition of “charitable purpose” provided under section 2(15) of the Act as it is also “imparting of education”. There is no dispute that the assessee has been 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.

(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 deal with in the succeeding paragraphs, but as per un-rebutted submission of the assessee, it is also pertinent to mention over here that the issuance of donation coupons in the domination of Rs.NIL (i.e. free), Rs. 100/-, Rs. 500/-, Rs. 1,100/- and Rs. 21,00/- to various voluntary donors who attend the yoga camps, which is nothing but small donations given by the voluntary donors, who attend the Shivir/camp. The ld. CIT (Appeals) has referred to donation coupons without appreciating that Yoga Shivir/camp is open to all and not merely restricted to persons who volunteer to donate to the charitable cause of the assessee. It may also be pointed out that the assessee has applied substantial amount in setting up of “Patanjali University”, a Deemed University set up under the University of Patanjali Act, inter-alia, for having courses in M.A. {Yoga Science}, M.Sc. (Yoga Science), B.A. (Yoga Science) Post Graduate Diploma in Panchkarma, Post Graduate Diploma in Yoga Science and Post Graduate Diploma in Yoga Health and Cultural Tourism. It has also been informed that the university has become operational on September, 2009. The finding of the authorities below that propagation of Yoga by the assessee does not qualify as medical relief or imparting of education is thus held as not justified.
9.8 The other allegations on the basis of which the authorities below have denied exemption are that the assessee during the year had undertaken commercial activities by receiving certain contributions under the scheme for construction of cottages at Patanjali Yogpeeth–II known as “Vanprastha Ashram” which tantamount to providing “services to contributors” and is in the 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 the submissions made by the parties as well as material available on record. The reason being that during the year assessee had not undertaken any activities in relation to the construction of cottages nor provided any kind of service / facility under the “Vanprastha Ashram Scheme”. The construction of cottages under the said scheme as per the unrebutted submission of the ld. AR, commenced only in assessment years 2010-11 and cottages were inaugurated on 4.04.2011 in assessment year 2012-13. It remained the submission of the assessee that “Vanprastha Ashram” at Patanjali Yogpeeth-II was proposed to be constructed by the assessee in furtherance of its charitable objectives of providing medical relief through Yoga and to impart Yoga training /education. It was submitted that assessee did not charge any fee / rent from the general public for uses of such cottages constructed under Vanprastha Ashram Scheme. The cottages are allotted to general public on the basis of availability i.e. on first come first served basis and no other conditions are stipulated for uses of such cottages.

9.9 We also agree with the submission of the ld. AR that “business refers to real, substantial, organized course of activity for earning profits as “profit motive is essential requisite for conducting business. This view is fully supported 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 a symbolance of trade, an attribute of commercial activity and an expectation to earn income over a reasonable period. The Tribunal further held that the expression “trade” and “commerce” are narrower in scope than the expression “business”. The expression “trade” or “commerce” signify economic/commercial activity with the motive of earning profit. The three words viz. “trade”, “commerce” and “business”, connote and indicate a series of organized activities primarily undertaken on commercial lines for profit motive. We have discussed the facts of the present case in the preceding paragraphs as well as the predominant objects of the assessee in detail supported with activities done by it from which no inference can be drawn that assessee is in trade, commerce and business. The Hon’ble Supreme Court in the case of ACIT Vs. Surat Art Silk Cloth Mfg. Association 121 ITR 1 (SC) has been pleased to hold that where an activity was not pervaded by profit motive, but was carried on primarily for serving the dominant charitable purposes, it would not be correct to describe 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. The above view expressed by us on the basis of the fact of the prevent case is thus fully supported by the ratio laid down in this decision of the Hon’ble Supreme Court. 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 a charitable institution and it cannot be affected by the proviso to section 2(15) of the Act as wrongly held by the authorities below in the present case. The decisions relied upon by the ld. CIT [DR] in the cases of Shah Trust Vs. Director of Income-tax (Exemption) (supra); Municpal Corporation of Delhi Vs. Children Book Trust (supra); Aditanar Educational Institution Vs. ACIT (supra) etc. having distinguishable facts are not applicable in the present case and also because there is no dispute about the ratio laid down therein, but the question is whether it is applicable in the facts of the present case. In the case of Disha Trust Vs. Director of Income-tax (Exemption) (supra) the ld. Director of Income-tax (Exemption) had not examined the objects of the trust for granting registration under section 12AA of the Act, but went on wrong premises that the assessee trust has not started its activities and the objects are mixed. The matter was set aside with direction that in the process the ld. Director of Income-tax (Exemption) shall analyse the objects of the assessee trust and determine whether the object would fall within the purview of section 2(15) of the Act and if so, under which 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 to hold that merely imparting of education will not be regarded as charitable object, but it must involve public benefit. It rather supports the case of present assessee before us as imparting of education i.e. practice of yoga involves public benefit as discussed above. Similarly in the case of Aditanar Educational Institution Vs. ACIT (supra) the Hon’ble Supreme Court has been pleased to hold that an educational society or a trust or other similar body running an educational institution solely for educational purposes and not for purpose of profit could be regarded as “other educational institutions” coming within section 10(22) of the Act. No such issue is involved in the present case before us. In view of above findings, the ground Nos. 1 to 6 are decided in favour of the assessee appellant and in turn these grounds are allowed.

Ground Nos. 7, 7.1 and 7.2 :

10. In ground Nos. 7, 7.1 and 7.2, the assessee has questioned the validity of allegations made by the authorities below while denying the claimed exemptions under sections 11/12 of the Act.

10.1 The authorities below have alleged that the assessee had violated the provisions of section 13 of the Act on several accounts like on account of services being made available to M/s. Vedic Broadcasting Ltd., on account of giving interest free loan and advance to M/s. Dynamic Buildcon Pvt. Ltd., and on account of investment in modes other than specified in section 11(5). In support of the grounds the ld. AR has made following submissions: In addition to the aforesaid contentions, the assessing officer has, in the impugned assessment order, denied the exemption claimed by the assessee under sections 11/12 alleging that the 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 religious institution, any income thereof-

(i) if such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or
(ii) if any part of such income or any property of the trust or the institution (whenever created 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 religious institution, 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) of section 11; or

(ii) any funds of the trust or institution invested or deposited before the 1st day of March, 1983 otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 continue 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) of section 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) of sub-section (1), the income or the property of the trust or institution or any part of such income or property shall, for the purposes of that clause, be deemed to have been used or applied for the benefit of a person referred to in sub-section (3),-
……..……” (emphasis supplied)

On perusal of the aforesaid provisions of section 13(1)(c) of the Act, it would kindly be appreciated that the said section bars:

(a) the terms of the trust or the rules governing the institution to provide any income/part of income to enure for the direct or indirect benefit of any person referred to in subsection (3); or

(b) any income or any property of the trust or the institution being actually used/ applied during the previous year for the direct or indirect benefit of any person referred to in sub-section (3).

Apart from the aforesaid general prohibition, sub-section (2) of section 13 of the Act provides 8 specific instances by way of clauses (a) to (h) thereto, where income or property of the trust or the institution is deemed to be used/ applied for the direct or indirect benefit of any person referred to in sub-section (3).

There can, it is submitted, be no dispute that the 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. 37 to 49 of the submission made by the assessee. The ld. AR contended that the ld. CIT (Appeals) has summarily concluded that the assessee has violated the provisions of section 13 of the Act without disposing off the specific objections raised by the assessee against the various allegations leveled by the Assessing Officer in the impugned assessment order.

10.3 Without prejudice to above, the ld. AR also made following submission available at page Nos. 37 to 49 of the submission made on behalf of the assessee :

Absolute Denial of exemption not warranted

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 trust wholly for charitable or religious purposes, or which is of the nature referred to in subclause (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 not exempt under section 11 or section 12, as if the relevant income not so exempt were the income of an association of persons :

Provided that in a case where the whole or any part of the relevant income is not exempt 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 relevant income 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 part only for charitable or religious purposes or is of the nature referred to in sub-clause (iia) of clause (24) of section 2 or is of the nature referred to in sub-section (4A) of section 11, and either the relevant income applicable to purposes other than charitable or religious purposes (or any part thereof) is not specifically receivable on behalf or for the benefit of any one person or the individual shares of the beneficiaries in the income so applicable are indeterminate or unknown, the tax chargeable on the relevant income shall be the aggregate of-

(a) the tax which would be chargeable on that part of the relevant income which is applicable to charitable or religious purposes (as reduced by the income, if any, which is exempt under section 11) as if such part (or such part as so reduced) were the total income of an association of persons; and

(b) the tax on that part of the relevant income which is applicable to purposes other than charitable or religious purposes, and which is either not specifically receivable on behalf or for the benefit of any one person or in respect of which the shares of the beneficiaries are indeterminate or unknown, at the maximum marginal rate
………………………………………” (emphasis supplied)

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-tax Act, which provides for taxation of the entire income received by trusts at the maximum marginal rate is applicable only in the case of private trusts having profits and gains of business. So far as the public charitable and religious trusts are concerned, their business profits are not exempt from tax, except in the cases falling under clause (a) or clause (b) of section 11(4A) of the Income-tax Act. As the maximum marginal rate of tax under the new proviso to section 164(2) applies to the whole or a part of the relevant income of a charitable or religious trust which forfeits exemption by virtue of the provisions of the Income-tax Act in regard to investment pattern or use of the trust property for the benefit of the settlor, etc., contained in section 13(1)(c) and (d) of that Act, the said rate will not apply to the business profits of such trusts which are otherwise chargeable to tax. In other words, where such a trust contravenes the provisions of section 13(1)(c) or (d) of the Act, the maximum marginal rate of income-tax will apply only to that part of the income which has forfeited exemption under the said provisions.” (emphasis supplied)

In this regard, your Honours kind attention is invited to various judgments/decisions wherein it has been held that instances of violation of any provision of section 13 could not result in 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 to section 11 of the Act. Section 13 treats only the difference between the adequate rent chargeable for the building and the actual rent charged by an assessee as attracting the provisions of section 13 of the Act. In other words, the benefit of section 11 could not be available only to the extent of application of the property or income of the trust directly or indirectly for the benefit of persons referred in sub-section(3) of section 13 of the Act. The benefit of section 11 could not be totally denied. The question that arises for consideration is as to whether the rent charged by the assessee from its sister concern 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.

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 stated in sections 11 and 12 providing certain benefits to the assessee would not be available on the amounts which have been extended directly or indirectly for the benefit of any person referred to in sub-section (3) of section 13 of the Act, meaning thereby, if an assessee 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 purpose of fulfillment of objects of the society and benefit of sections 11 and 12 would not be available to the assessee on those amounts. Thus, section 13(3)(1)(c)(ii) is analogous to section 40A(2)(a) and section 13(3) is an analogous to sub-clause (b) of section 40A(2) of the Act. Learned CIT (Appeals) has rightly observed that restriction is applicable to those amounts which have been applied directly or indirectly for the benefit of any person referred to in sub-section (3) of the Act. It will not lead to any conclusion that assessee would loose its charity status. In other words, if a small amount is to be disallowed that would not disqualify to enjoy the status of charity. Thus, we do not find any merit in ground Nos. 2 and 3 raised by the revenue.

12. Let us examine whether assessee has extended any undue benefit directly or indirectly to 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, we find that a similar salary was paid in assessment years 2005-06 to 2007-08. In assessment years 2005-06 and 2006-07, Assessing Officer made the disallowance and the ITAT has upheld the deletion of disallowance. Thus, the issue is squarely covered by the order of the ITAT. As far as the salary paid to Mr. Joseph John is concerned, we find that the salary of Rs. 55,000 per month has been paid. Assessing Officer disallowed the salary to the extent of 2/3rd. We find that Learned CIT (Appeals) has considered the order of the ITAT in assessment years 2003-04 to 2006-07 wherein salary in the case of Mr. Joseph John has been partly disallowed. It was brought to our notice that in assessment year 2007-08, Assessing Officer has allowed the total salary paid to Mr. Joseph John and the salary was @ Rs. 55,000 per month. We further find that in this year, Assessing Officer has independently not brought any evidence which can show how much salary a person having qualification equivalent to Mr. Joseph John could fetch in the open market. What are the rates of salary paid by other institution to a person who is teaching as well as managing the school. We have noticed the duties performed by Shri Joseph John. Assessing Officer is harboring upon the evidence collected by the Assessing Officer in assessment year 2003-04. He has made reference to the salary of the staff in those years. With effect from 01.01.2006, Government of India has notified the 6th Pay Commission which resulted into a handsome enhancement in the salary of the employees including the government teaching staff and the salaries have almost enhanced by 30% to 40%. If the increase in the salary of Shri Joseph John allowed to him by the ITAT in 2004-05, is being looked into with this angle also then sum of Rs. 55,000 would not be on a higher side. 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 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 the assessee received certain shares and bonds of small values, which statedly came into its possession on account of death of the inmates. Since there was no manifest transfer of the shares and bonds to the assessee, the same were not taken into account in the books of account. The shares were of small value and some were in odd lots which could not be disposed of immediately and, therefore, they continued to remain in possession of the assessee. Some of the securities were got transferred in the name of the assessee. That, however, does not mean that the assessee manifestly became owner of the shares. The shares and bonds belonged to the deceased intimates which normally would have gone to their legal heirs who were not traceable. This was the reason for non-entering the shares etc. in the books. The bonds and shares were also not saleable immediately. In these circumstances, the assessee could not be taken to be the de jure owner of the shares. Although, the word used is "held", we are of the view that this word implies ownership of the assessee to the exclusion of all others, which is not the case here. In these circumstances, we are of the view that total denial of exemption u/s 11(1)(a) on the ground that the shares were held by the assessee will be against even the language of the provision. The Ld. CIT(A) has reached more or less on the same conclusion by mentioning that infringement, if any, was technical, which should be ignored by applying the rule of purposive construction. We tend to agree with him on the facts of the case. In such circumstances, what can be done is that income derived from the shares, if taken into account in the books, may be brought to tax. However, we agree with the Ld. CIT(A) that there cannot be a complete denial of the exemption u/s 11(1)(a). Thus, ground Nos. 1 and 2 are dismissed” (emphasis supplied)

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

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

Further reliance in this regard, is placed on the decision of the Third Member of the Tribunal in the case of Manockjee Cowasjee Petit Charities vs. DIT(E): 148 TTJ 181 (Mum.), wherein it was held that once registration is granted to trust or institution but later on it is found by Assessing Officer during course of assessment proceedings that income of charitable trust is applied directly or indirectly for benefit of persons referred to in section 13(3), then he has ample 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 order registration of the trust where he is satisfied about the objects of the trust and the genuineness of its activities. So long as the objects of the trust are charitable and the activities are in advancement of such objects, the registration cannot be refused. Once registration is granted to trust or institution but later on it is found by the Assessing Officer during the course of assessment proceedings that the income of charitable trust is 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 adequately provides that, after the death of the settlor, the income from the trust property is to be used for charitable purposes, which are covered under section 2(15) of the Act. This shows that the objects of the trust, after the death of settlor, were fully charitable. The assessee 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 a single paisa was applied for the benefit of any lineal descendants of the father of the settlor. The Commissioner, despite the availability of audited accounts before him for the last three years, failed to point out any single instance in which the income of the trust was not utilized for the charitable purposes set out in the trust deed or the money was applied for the lineal descendants of the father of the settlor. Even if any amount is actually spent on the relatives of the settlors, then there is section 13(3) enabling the Assessing Officer to refuse exemption under section 11 read with section 13 to that extent and that too in the year in which such amount is spent. It cannot be a reason to refuse registration under section 12AA. As such it is noticed that both the conditions under section 12AA warranting the registration of the trust, are fully satisfied in the present 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 socalled alleged payments/benefits to the interested persons as application of income for charitable purposes.

11. The ld. CIT [DR], on the other hand, placed reliance on the orders of the authorities below. He submitted that there is apparent violation of provisions of section 13(1)(c ), 13(1)(d) and other provisions laid down under section 13 of the Act on the basis of which the authorities below were justified in denying the claimed exemption under section 11/12 of the I. T. Act to the assessee. These violations have been done by the assessee on account of services worth Rs. 96,00,000/- made available to M/s. Vedic Broadcasting Ltd. as per para No.7.5(a) of the assessment order; on account of giving interest free in direct advances of 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/- and Rs. 7,09,560/- made in modes other than specified in section 11(5) of the Act mentioned in para Nos. 7.5(c) and 7.5(d) of the assessment order. These allegations also include purchase of land from United Infracon, purchase of land from M/s. Sri Niramaya Properties and Mr. Pawan Sharma, construction on the land owned by Swami Muktanand Ji, construction of Patanjali Yogpeeth-II not owned by the assessee; payment to Divya Yog Mandir Trust, Motorcycle purchased was not registered in the name of the assessee trust and payment of advances etc.

12. After considering the submissions of the parties in view of the material available on record, we find that the assessee has tried its best to dislodge each and every allegation made by authorities below with specific explanation. For a ready reference a chart made in this regard by the assessee is being reproduced hereunder :-

12.1 In absence of rebuttal of the above explanation made by the assessee and even on the verification of its merits, we find that allegations of violation of provisions of section 13 of the Act made by the authorities below are erroneous and legally unsustainable. The allegations are based on incorrect appreciation of the facts of the caseand the position of law. On the basis of those unsustainable allegations the action of the Assessing Officer in assessing the income of the assessee treating it to be a non-charitable is not tenable in law. We find that the ld. CIT (Appeals) has also summarily concluded that the assessee has violated the provisions of section 13 of the Act without judiciously disposing off the specific objections raised by the assessee meeting out the various allegations leveled by the Assessing Officer in the assessment order. In view of these observations, we conclude that the allegations leveled by the authorities below are not tenable and hence their action of denial of exemption on the basis of violation of the provisions laid down under section 13 of the Act is held as not justified. In result, the ground Nos.7, 7.1 and 7.2 are allowed.

13. Ground Nos. 8 to 10: In ground No. 8, the assessee has questioned the validity of finding of the ld. CIT (Appeals) that the assessee had undertaken activities outside India in violation of provisions of section 11(1)(a) of the Act. In ground Nos. 9, 9.1 and 9.2, the assessee has questioned the validity of additions of Rs. 44,25,01,268/- made on account of corpus donations received by the assessee. In ground No. 10, the finding of the ld. CIT (Appeals) that the voluntary contribution received by the assessee, including donations received through yoga camps and yoga samities were not eligible for exemption has been questioned.

13.1 In support of the above grounds, the ld. AR has furnished following submissions :

Without prejudice to the primary contention that the assessee is eligible to claim exemption under sections 11/12 of the Act, it is further submitted that, in the impugned order, the assessing officer has made addition aggregating to Rs. 44,25,01,268/- on account of corpus donations received by the assessee in the assessment year under consideration, by holding that corpus donations also constitutes ‘income’ of the trust and 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:

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.

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 charitable trust would be income in the hands of the recipient trust. The recipient trust would be free to spend the money or expend the property as it liked in furtherance of its objects. But, in the instant cases, the donor trust attached specific conditions to the donation. These were: (i) that the donation did constitute the corpus of the donee trust or be held as an accretion to the corpus of the donee trust; (ii) that no part of the donation be utlizied by the donee trust for its objects ; (iii) that no part of the donation be sold without the prior permission of the donor trust ; and (iv) if such permission were granted, the sale proceeds be treated as part of the endowment fund or corpus of the donee trust. The donee 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 compared to the normal gift of shares by one charitable trust to another.

The words "such contributions" in sub-section (2) of section 12, refer to contributions which constitute income of the recipient trust. It would, therefore, appear that "any income" of a trust derived from voluntary contributions made to a trust by another trust or charitable institution or religious institution to which the provisions of section 11 apply will be deemed to be income derived from property for the purpose of that section in the hands of the recipient trust or institution. The section relates to "any income" of the trust and not to the capital or endowment of the trust.

In the instant cases, the voluntary contributions did not constitute income in the hands of the recipient trust. The conditions imposed on the voluntary contributions ensured that they were to be part of the capital or corpus of the donee trust. These voluntary contributions 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 charitable trust would be deemed to be income derived from property unless they contain a specific direction that they shall form a part of the corpus of the recipient trust. Therefore, such capital contributions can be retained by the donee trust as corpus without attracting any income-tax liability.

Therefore, the voluntary contributions to the capital assets were to be excluded from the taxable income of the assessee-society.” (emphasis supplied)

In the case of Trustees of Kilachand Devchand Foundation vs. CIT: 172 ITR 382, the Bombay High Court held that the provisions of sub-section (2) of section 12 of the Act applied to such contributions as were referred to in sub-section (1) thereof. Sub-section (1) referred to contributions which were voluntary contributions and applicable solely to charitable or religious purposes. It was held that Donations of a capital nature might be voluntary, but could not, however, be applied to charitable or religious purposes. It is the income thereof that must be so applied. A contribution made expressly to the capital or corpus of a trust, though voluntary, does not, therefore, fall within the purview of section 12(2) of the Act. Accordingly such contributions could not be deemed to be income derived from property for the purposes of section 11 of the Act, and the 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 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 assesseetrust for the purpose of construction of wadi and it was the case of the assessee all throughout that since the said amount was received towards corpus of the trust and for a specific purpose, it would not form part of the income of the trust and the said amount was exempt looking to the provisions contained in section 12. On a plain reading of section 12, it is obvious that any voluntary contribution which is made with a specific direction that it shall form part of the corpus of the trust or institution would not be deemed to be the income derived from the property held under trust wholly for charitable or religious purposes. In view of the above, the Tribunal was justified in holding that the donation received by the assessee-trust which was not utilized for the object 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 “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.

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 the authorities below. He submitted that under the provisions of section 11(1), income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust is excluded from the total income of the assessee. But the Income Tax Act does not define as to what constitute a “corpus” or as to under what circumstances a contribution can be termed as “corpus contribution”. In simple words, corpus contribution is a contribution made with a specific direction from donor that a particular donation shall form part of corpus and that shall form part of the capital and income therefrom is used in accordance with directions. He submitted that as per the provisions of the Income Tax Act, no assessee trust or institution can claim application in respect of any corpus fund withdrawn by it. As per the scheme of section 11 an income derived from property hailed under trust is exempt when it is applied or accumulated as per the provisions of the Act. Therefore, the application has to be out of current income because provisions of section 11 to 13 only provide for exempting the current income if it is applied or accumulated as per the Rules provided in section 11. The corpus donation is exempt and is not subject to any rules of application and accumulation provided in various sub-sections and clauses of section 11 of the Income Tax Act. The corpus donation is only required to be invested as per section 11(5) and in the event of violation of section 13(1)(d) read with section 11(5), the trust would lose exemption for the relevant assessment year. Thus, voluntary donations are income of the trust and have to be routed through income and expenditure account and not through balance sheet. If such year-marked donations are directly taken to the balance sheet, then the treatment is wrong. On the basis of assessment order, the ld. CIT [DR] submitted that corpus fund of Rs. 88.73 lakhs received under Vanprastha Ashram Scheme in return of certain facilities cannot be called to be voluntary donation. Corpus donation of Gurgaon land at Rs. 30,00,000/- of which full market value was not shown as income in the accounts. Similar treatment has been given to the corpus donation of land at Shantarshah at Rs. 34.43 lakhs as well as corpus donation of vehicle Tata Sumo of Rs. 6,52,493/- for which full market value was not shown as income in the accounts. He placed reliance on the following decisions:

(i) Vidyawanti Labhoo Ram Foundation for Science Research & 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..)
(iv) R.B. Sri Ram Religious & Charitable Trust Vs. CIT 233 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 Trust 43 Taxman.com 300 (Del.);

15. Having gone through the decisions relied upon by the parties, we are of the view that the ratio laid down in these decisions are applicable on the basis of the facts of the present case. In the case of CIT Vs. Eternal Science of Man’s Society (supra) the Hon’ble High Court of Delhi has been pleased to hold that any receipt of capital nature could notbe treated as income and hence it was outside the purview of section 12 of the Act. It was held that 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 the hands of receipient society. In the case of Trustees of Kali Chand Dev Chand Foundation Vs. CIT (supra) the Hon’ble Bombay High Court held that the provisions of section 12(2) of the Act are applied to such contributions as were referred to in subsection (1) to section 12 of the Act. Sub section (1) referred to contributions which were voluntary contributions and applicable solely to charitable or religious purposes. It was held that donations of a capital nature might be voluntary, but could not, however, be applied to charitable or religious purpose. It is the income thereof that must be so applied. A contribution made expressly to the capital or corpus of a trust, though voluntarily, does not, therefore, fall within the purview of section 12(2) of the Act. Accordingly, such contributions could not be deemed to be income derived from property for the purpose of section 11 of the Act and provisions of the said section would not apply. Again the Hon’ble Allahabad High Court in the case of Dwarka Dheesh Charitable Trust Vs. ITO (supra) has held that voluntary contributions made with a specific direction 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 the meaning of section 12(1) of the Act and such contributions are not within the purview of sub section (2) thereto. Therefore, such donations cannot by themselves be deemed to be income from property held under trust within the meaning of section 11 of the Act. In the case of CIT Vs. Sthanakavasi Vardhman Vanik Jain Sangh (supra) before the Hon’ble Gujarat High Court, the assessee, a public charitable trust received certain amounts towards construction towards a wardi 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 ld. CIT (Appeals) deleted the addition on the ground that the amount had been received by the assessee with a specific direction for construction of wardi and, hence, the same should form part of the corpus of the trust. The Tribunal confirmed the first appellate order. On further appeal, the Hon’ble High Court upheld the decision of the Tribunal with this finding that on a plain reading of section 12, it is obvious that any voluntary contribution which is made with a specific direction that it shall form part of the corpus of the trust or institution would not be deemed to be the income derived from the property held under trust wholly for charitable or religious purposes. Further in the case of DIT (Exemption) Vs. Jaipur Golden Charitable Clinical Laboratory Trust (supra) where the assessee trust, running a hospital had received donation from consulting doctors working in the 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. In view of these ratios, when we examine the facts of the present case, we find that the Assessing Officer was not justified in making the additions aggregating to Rs. 44,25,01,268/- on account of corpus donations received by the assessee in the assessment year under consideration by erroneously holding that the corpus donations also constitute “income” of the trust and accordingly were not eligible for exemption under sections 11/12 of the Act. The donations in questions were received from Divya Yog Mandir Trust for construction of Patanjali Yogpeeth-II, in relation to Vanaprastha Ashram, disaster relief fund and in the University of Patanjali.

15.1 Besides, the assessee had also received corpus donation in the form of immovable property which was recorded at NIL value in the books of the assessee. The Assessing Officer, however, added the amount of Rs. 64,43,500/- on account of such immovable property on the basis of its estimated market value. There is no dispute that the aforesaid donations were received by the assessee with the specific direction, to be utilized for a specific cause and was not for attaining/achieving the general object of the assessee trust. The donations in question formed part of the corpus of the trust and thus, such donations are per se capital receipt not liable to tax irrespective of the fact that whether the receiving trust is eligible for exemption or not. We concur with the contention of the ld. AR that in terms of section 2(24)(iia), voluntary donations received, inter alia, by a charitable trust/institution are by legal fiction treated as income and is thereafter, excluded from total income in accordance with the provisions of sections 11/12 of the Act. Such voluntary contributions 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 or not for exemption. We hold accordingly. In para No. 7.5(k) of the assessment order, the Assessing Officer has alleged that assessee had undertaken various activities outside India which was in violation of provisions of section 11(1)(c) of the Act. We, however, find that the Assessing Officer has not brought anything on record to substantiate the aforesaid allegation nor has he quantified the amount of expenditure incurred in relation to such activities undertaken outside India. The Hon’ble High Court of Delhi in the case of Nasscom (supra) relied upon by the ld. CIT (Appeals) while upholding the action of the Assessing Officer, held that amount spent outside India could not be allowed as application of income. In absence of establishing the allegation made and upheld by the authorities below, we are of the view that the Assessing Officer was not justified in denying the exemption on the basis that assessee had undertaken various activities 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 exemptions under sections 11/12 of the Act treating the voluntary contributions received towards 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 capital receipt not liable to tax and the allegation that there was various activities undertaken by the assessee outside India in violation of provisions of section 11(1)(c) of the Act does not stand. The above cited decisions relied upon by the ld. CIT [DR] are not helpful to the Revenue. There is no dispute on the ratio laid down therein, the only question is as to whether those decisions are helpful to the Revenue under the facts of the present case or not. In the case of ITO Vs. Smt. Vidyawanti Labhoo Ram Foundation for Science Research & Social Welfare (supra) it has been held that a voluntary contribution would qualify to form a part of income of recipient trust. However, only exception is where such income is directed to form part of corpus of trust or institution and it is in that case, in view of specific provision of section 11(1)(d), it cannot be applied for charitable purposes and hence for claiming exemption. In the case of Little Tradition Vs. DCIT(E) (supra) it has been held that income can be applied by way of donations to other charitable institutions having similar objects. In the case of R.B. Sri Ram Religious & Charitable Trust Vs. CIT (supra) it has been held that voluntary contribution not applied for charitable purposes is not entitled to exemption under section 12 of the Act. In the case of Kanhaiya Lal Punj Charitable Trust Vs. Director of Income-tax (E) (supra) it has been held that according to sections 11 and 12 of the Act, the voluntary contribution made with specific direction that they shall form part of the corpus of the trust or institution, shall not be included in the total income of the previous year of the trust. In the case of DIT (E) Vs. Charanjeev Charitable Trust (supra) the view of the Assessing Officer that real motive of assessee was to advance its surplus moneys to APIL without charging any interest and since APIL was a prohibitive person within meaning of section 13(3), provisions of section 13(1)©(ii) were attracted with result that assessee could not be allowed exemption under section 11. As discussed above, the facts of the present case before us, do not attract denial of the claimed exemption, hence the above cited decisions by the ld. CIT [DR] are not adversely applicable in the case of the assessee. The ground Nos. 8 to 10 are thus allowed.

16. Ground No. 11 : This ground has been raised against the allegation of annoynimous 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:

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)

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 of the authorities below and referred contents of page Nos.42 and 43 of the assessment order. He submitted that Rs. 6.61 crores was received through sale of coupons from 22 Yoga camps. The assessee did not maintain the record of identity and address of the donors as prescribed under section 115BCC(3) of the Act. During the special audit the assessee admitted that the names and addresses of the participants of residential camps are available whereas names and addresses of non-residential camp are not available. He submitted that under section 12A of the Act the assessee was required to maintain the record consisting of name and address of the donors which assessee has failed to do. Similar discrepancies were there with regards to the remaining donation The Assessing Officer was, thus justified in treating donation amounting to Rs. 13.68 crores as annoynimous donation and by virtue of provision of section 13(7), provisions of section 11 and 12 will not apply to annoynimous donation. He submitted that identity of donors was also not verifiable. The assessee failed to furnish serial wise details of identity shown in receipts mentioned by the auditors in the report.

18. Having gone through the orders of the authorities below in view of the above submissions, we find that Rs. 13,68,99,745/-received was alleged as annoynimous donation under section 115BBC of the Act. It was alleged that the assessee had not maintained record consisting of name and address of the donors. The Assessing Officer observed that Rs. 6.61 crores was received through sale of coupons from 22 Yoga camps, which was organized publically as well as telecasted on TV channels. Assessing Officer further observed that Rs. 5.99 crores were received during the relevant assessment year where identity of donors was not verifiable. And the remaining Rs. 1,07,73,438/- was received from others. The Assessing Officer accordingly made addition of Rs. 13.68 crores. The explanation of the assessee remained that assessee organizes Yoga shivirs / camps for providing medical relief through Yoga and also imparting Yoga education/training. Such camps/shivirs are organized through ad-hoc committees especially set up by the assessee for organizing Yoga camps/shivirs and also through separate / independent Yoga samities spread across the country under the over-all guidance / support of the assessee. Such Yoga camps/shivirs are attended by thousand of persons across various sections of the society. Two types of camps/shivirs are normally organized viz. residential camp and non-residential camps. It was explained that during such camps voluntary donations are received by various persons 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 was further explained that in the Yoga 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/- were issued to various voluntary dodnors who attended the camps. Such voluntary donors were duly supported by the affidavits of the presidents of various Yoga camps organizing committee, which were furnished before the Assessing Officer and a reference of page Nos. 503 to 569 of the paper book filed on behalf of the assessee was made in support. It was further explained that Yoga camps are organized publically and are telecasted from time to time by various TV channels and entire recordings of Yoga camps in the form of 4 DVDs were filed before the Assessing Officer.

18.1 We find that the only allegation of the Revenue on the issue is that assessee 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 is there any dispute that the assessee had noted names and addresses of the donors. The Assessing Officer held these details maintained by the assessee are not verifiable. There is no doubt that these Yoga camps are attended by the persons in thousands still the assessee has maintained names and address communicated by the donors, but without verifying the same the Assessing Officer has summarily concluded that the said donations were in the nature of anonymous donations as defined under section 115BBC of the Act. The assessee had also furnished affidavits of organisors of ad-hoc committees through whom the assessee had organized Yoga camps made available at page Nos. 503 to 569 of the paper book, but the Assessing Officer did not bother himself to verify the same even on test-check basis. In absence of such efforts by the Assessing Officer, we are of the view that the authorities below were not justified in making and sustaining the treatment of receipt of Rs. 13.68 crores as annonymous donation. Undisputedly, in almost all donations name and address of the donors have been maintained and thus bonafide of the assessee cannot be doubted where such detail has remained to be maintained in some cases. Such donations worth Rs. 1,07,73,438/- has also not been alleged to spent on other than the objects of the assessee trust. We, thus, while setting aside orders of the authorities below in this regard, direct the Assessing Officer to accept the claimed receipt as donation. The ground No. 11 is thus allowed.

19. Ground Nos. 12 to 18 : In these grounds the assessee has questioned the validity of several allegations made by the authorities below to justify denial of exemption by them. The main allegation is about certain irregularities in the books of accounts maintained by the assessee. The ld. AR with the assistance of a tabular chart made available at page Nos. 66 to 73 of the written submissions has tried to meet out each and every allegation leveled by the authorities below. The ld. AR submitted that the application of income by the assessee in the form of acquisition of fixed assets and other capital expenditure, which were shown in the statement of utilization of income for charitable purposes, filed along with the return of income have also not been considered by the Assessing Officer. In this regard he referred page Nos. 50 to 52 of the paper book. He submitted that such expenditure was incurred by the assessee solely for the purpose of fulfillment of its charitable objectives during the year under consideration and should accordingly have been considered as application of income for charitable purposes. He placed reliance on the following decisions in support :-

1. S.RM.M.CT.N. Tiruppani Trust Vs. CIT 230 ITR 637 (SC);
2. St. Lowrance Educational Society (Regd.) Vs. CIT 197 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. UOI 327 ITR 73 (P & H);
5. Lissie Medical Institution Vs. CIT 348 ITR 344 (Ker.);

19.1 Without prejudice to the above submissions the ld. AR submitted that in case the assessee was held to be non-charitable, then the assessee appellant should have been allowed depreciation on assets in accordance with the provisions of the Act.

20. The ld. CIT [DR], on the other hand, placed reliance on the orders of the authorities below. Regarding the alleged donation of vehicle, land not owned by the assessee trust, disallowance of expenditure, disallowance of expenditure for non deduction of tax at source, donation to Gurukul Amsena, Bank interest and purchase of medicines, the ld. CIT [DR] has tried to justify the action of the authorities below in this regard.

21. Having gone through the submissions of the parties on the issues raised in ground Nos. 12 to 18 of the appeal, we find that the assessee has tried his best and has successfully met out each and every allegation made and upheld by the authorities below with the assistance of the following tebular chart :

21.1. We also agree with the submission of the assessee that application of income in the form of acquisition of fixed assets and other capital expenditure incurred solely for the purpose of fulfillment of its charitable objectives during the year should be considered as application of income for charitable purposes. Besides, the explanation of the assessee to meet out the small irregularities shown in the books of account maintained by the assessee, which are based on special audit report, cannot be out-rightly ignored especially when it is not the case of the Revenue that the out-come of it was utilized somewhere else rather than on the objects of the assessee.

21.2 We thus decide the issues raised in ground Nos. 12 to 18 questioning the validity of several allegations leveled by the authorities below and denial of exemption on those basis, in favour of the assessee. In result, the ground Nos. 12 to 18 are allowed.

22. Ground No. 19 : In this ground the assessee has questioned the validity of interest charged under section 234B of the Act, which in our view, is consequential in nature and hence does not need any independent adjudication.

23. Before parting with the order, we find it pertinent to mention over here that there may be small discrepancies here and there in the maintenance of the accounts in a proper way or other general allegations, but certainly and undisputedly, it is not the case of the Revenue that the amounts received have been spent or the donations have been used on other than the objects of the Trust. Besides, the Revenue is also required to maintain consistency in its approach on an issue on similar facts of the case in the following years. Undisputedly, in earlier years since the inception of the assessee, the Revenue has been accepting the claimed exemption, however, during the year under almost similar facts the Revenue has taken different stand by treating the assessee non-charitable, which cannot be justified. In its recent decision in the case of CIT Vs. Excel Industries Ltd. (2013) 358 ITR 295 (SC), the Hon’ble Supreme Court applying its earlier decisions in the cases of Radhasoami Satsang Vs. CIT (1992) 193 ITR 321 (SC); Godhra Electricity Company Vs. CIT (1997) 225 ITR 746 (SC) etc., has been pleased to hold that on consistent view taken in favour of assessee, the Court will not take different view without very convincing reasons. That being so, the Revenue cannot be allowed to flip-flop on 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.

The order pronounced in the open court on 09 .02. 2017.