Sivananda Yoga Vedanta Nataraja Society, New Delhi V. ITO (E), New Delhi

ITA 311/DEL/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0187 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 16-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 15-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR CHOPRA
• Assessee Lawyers: SEKHON
• Keywords: Business income; Charitable institution
• Section: 80G; 12A; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-2 NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY ACCOUNTANT MEMBER ITA NO: 311/DEL/2015 ASSTT. YEAR : - 2010-11 SIVANANDA YOGA VEDANTA VS. ITO (E), NATARAJA SOCIETY, TRUST WARD II, A-41, KAILASH COLONY, NEW DELHI NEW DELHI (PAN AAATS4266N) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.S. SEKHON, CA RESPONDENT BY :SHRI MANOJ KUMAR CHOPRA, SR. DR DATE OF HEARING :16.7.2015 DATE OF PRONOUNCEMENT : O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY ASSESSEE DIREC TED AGAINST THE ORDER OF THE CIT(A) XXI, NEW DELHI, DATED 7.11.2014 FOR THE ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS :- 1) THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING TH E ADDITION OF RS. 13,65,365/- AGAINST THE RETURNED INCOME OF RS. NIL 2) THAT THE ORDER OF THE LD. CIT(A) IS BAD IN LA W AND ON THE FACTS OF THE CASE. 2. THE BRIEF FACTS OF THE CASE AS STATED IN THE ASSESSMENT ORDER ARE AS UNDER :- INCOME FROM MEMBERSHIP FEE RECEIVED, DONATION, REC EIPTS OF YOGA LITERATURE AND PUBLICATION, YOGA COURSES FEE ETC. THE SOCIETY REGISTERED U/S 12A OF THE I.T. ACT VIDE ORDER NO. DIT(E)/2005-06/S-2217/98/2132 DATED 24.10.2005 AND ASSESSEE IS ITA NO. 311/DEL/2015 SIVANANDA YOGA VEDANTA VS. ITO 2 ALSO APPROVED U/S 80G OF THE I.T. ACT, VIDE ORDER N O. DIT(E) 2008- 09/S-2219/98/1934 DATED 16.10.2008. THE PERUSAL OF INCOME AND EXPENDITURE ACCOUNT FOR T HE PERIOD UNDER CONSIDERATION SHOWS THAT THE ASSESSEE HAS DECLARED RECEIPTS ON ACCOUNT OF RECEIPTS FROM YOGA LITERATURE AND PUBLIC ATION AMOUNTING RS. 10,83,688/- RECEIPTS OF MASSAGE AYURVEDIC AND HERBA L PRODUCTS AMOUNTING RS. 7,18,954/-, CONTRIBUTION FROM SYV CEN TRES 17,09,018/-. MEMBERSHIP FEE RS. 2,67,210/-, DONATIONS RS. 2,65,0 14/- AND YOGA COURSE FEE AMOUNTING RS. 48,06,264/-. SINCE THE ASS ESSEE HAS CLAIMED ITS ACTIVITIES AS CHARITABLE, THE ASSESSEE WAS AS KED VIDE THIS OFFICE SHOW CAUSE NOTICE DATED 20.12.2012, AS TO WHY THE A CTIVITY CARRIED OUT DURING THE YEAR SHOULD NOT TREATED UNDER THE LIMB ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND RECEIPT SHOWN IN THE I & E A/C SHOULD NOT BE TREATED AS BUSINESS RECEIPTS AS PER T HE AMENDED PROVISIONS TO SECTION 2 (15) OF THE I.T. ACT. 3. THE AO REJECTED THE CLAIM OF ASSESSEE FOR EXEM PTION U/S 11 OF THE ACT ON THE GROUND THAT THE ASSESSEE SOCIETY IS DIRECTLY HIT BY THE AMENDED PROVISO OF SECTION 2(15) OF THE ACT. THE SPECIFIC CHARGE OF THE AO IS AS FOLLOWS :- 2. FURTHER, DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, IT IS NOTED FOR THE RECEIPTS SHOWN IN THE INCOME & EXPENDITURE A/C FURNISHED FOR THE PERIOD ENDING 31.3.2010 THAT THE NATURE OF FOLLOWING RECEI PTS APPEARS TO BE COMMERCIAL IN NATURE. SL. NO. HEADS AMOUNT (IN RS.) 1. RECEIPTS OF YOGA LITERATURE AND 1,083,688/- PUBLICATION RECEIPTS OF MASSAGE, AYURVEDIC 2. AND HERBAL PRODUCTS 718,954/- 3. YOGA COURSE FEE 4,806,264/- IN THIS CONNECTION, YOUR KIND ATTENTION IS INVITED TO THE AMENDED PROVISIONS OF SECTION 2(15) OF THE INCOME TAX ACT , 1961, WHICH DEFINES CHARITABLE PURPOSE AS UNDER :- ITA NO. 311/DEL/2015 SIVANANDA YOGA VEDANTA VS. ITO 3 CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, E DUCATION, 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: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES T HE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COM MERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIV E OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY:] [PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THE REIN IS (TEN LAKH RUPEES) OR LESS IN THE PREVIOUS YEAR.] IN VIEW OF ABOVE, IT APPEARS THAT THESE RECEIPTS AR E COMMERCIAL IN NATURE AND ACTIVITIES CAN BE COVERED UNDER FOURTH LIMB OF THE DEFINITION U/S 2(15) I.E. ADVANCEMENT OF ANY OTHER PUBLIC UTILITY. AS PER THE PROVISIONS OF AMENDED SECTION 2(15), ADVANCEMENT OF ANY OTHER OBJ ECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IS IN VOLVES THE ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COM MERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION IF AGGREGATE RECEIPT EXCEEDS RS. 10.00 LAKHS DURING THE YEAR IRRESPECTIVE OF THE NAT URE OF USE OR APPLICATION OF SUCH RECEIPT/INCOME. 4. THE A.O HELD THAT THE NORMAL CHARACTERISTICS O F RECEIPT ARE NON-CHARITABLE AND RELATE TO BUSINESS ACTIVITIES AS NOTED IN PARA 5 OF THE ASSESSMENT ORDER WHICH IS REPRODUCED BELOW :- 5. IN VIEW OF THE ABOVE, ASSESSEES SOCIETY IS DI RECTLY HIT BY THE AMENDED PROVISO TO SECTION 2 (15) AND NOT FOUND TO BE CHARI TABLE FOR CLAIMING EXEMPTION UNDER SECTION 11 AND 12 OF THE IT ACT. FROM THE FAC TS MENTIONED IN PARA 4 ABOVE THE ASSESSEE IS HAVING RECEIPT FROM YOGA LITERATURE AND PUBLICATION AMOUNTING RS. 10,83,688/-, MASSAGE AYURVEDIC AND HERBAL PRODUCTS AMOUNTING RS. 7,18,954/-, CONTRIBUTIONS FROM SYV CENTRES 17,09,018/-, AND YOG A COURSE FEE AMOUNTING RS. 48,06,264/-. THE NATURE AND CHARACTERISTICS OF THES E RECEIPTS ARE NON CHARITABLE AND CO-INSIDE WITH THE CHARACTERISTICS OF COMMERCIA L I BUSINESS NATURE AS IT IS CLEAR ITA NO. 311/DEL/2015 SIVANANDA YOGA VEDANTA VS. ITO 4 AND EVIDENT THAT THE SERVICES RENDERED, THE COURSES CONDUCTED AND THE LITERATURE SOLD OUT BY THE ASSESSEE ARE IN LIEU OF MONEY WHICH MAY BE TERMED AS FEE UNDER VARIOUS HEADS. IN VIEW OF THESE HEADS THE GENERATIO N OF INCOME CLEARLY INDICATES THAT THE SOCIETY IS PURELY A COMMERCIAL ENTITY IN V IEW OF THE AMENDED PROVISO OF SECTION 2 (15) OF I.T. ACT. 5. ON APPEAL, THE FIRST APPELLATE AUTHORITY CON SIDERED THE ARGUMENT OF THE ASSESSEE THATS IT INVOLVES IN RUNNING OF A NUMBER OF YOGA CENTRES FOR THE BENEFIT OF PEOPLE AT LARGE AND AS SUCH THIS IS CHARITABLE ACTI VITY AND HELD THAT THE ASSESEE FALLS WITHIN THE MISCHIEF OF PROVISO OF LAST LIMB OF SEC TION 2(15), WHICH IS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. AGG RIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THR OUGH THE MATERIAL PLACED ON RECORD. ON CAREFUL CONSIDERATION OF FACTS AND CIRCU MSTANCES ,WE HOLD AS FOLLOWS :- THE HONBLE DELHI BENCH OF THE TRIBUNAL I N THE CASE OF DIVYA YOG MANDIR TRUST, HARIDWAR VS. ASSESSEE IN ITA NO. 387/DEL/201 3, B BENCH NEW DELHI, ASSTT. YEAR 2009-10, ORDER DATED 27.8.2013 HELD AS FOLLOWS :- IMPARTING EDUCATION' 6.5. THE QUESTION NOW IS AS T O WHETHER THE APPELLANT TRUST FALLS WITHIN THE PURVIEW OF PROVIDING 'IMPART ING EDUCATION'. THE GRIEVANCE OF THE APPELLANT IS THAT THE AUTHORITIES BELOW HAVE FAILED TO APPRECIATE THAT THE PROPAGATION OF YOGA BY WAY OF C ONDUCTING 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 T HE 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 TH E 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 TR UST HAS MADE INTER- TRUST DONATIONS TO PATANJALI YOG PEETH TO SUPPORT THEIR E NDEAVORS OF IMPARTING YOGA EDUCATION BY MEANS OF ORGANIZING YOG SHIVIRS/C AMPS ACROSS THE COUNTRY ON DAILY /WEEKLY/MONTHLY BASIS IN A SYSTEMIZED ORGA NIZED MANNER IN ORDER TO PROVIDE MEDICAL RELIEF TO PEOPLE WHO CANNOT AFFORD ITA NO. 387/DEL/2013 MODERN MEDICAL METHOD OR HAVE BEEN SUBJECTED TO ILL EFFECTS OF MODERN MEDICINE. IT WAS SUBMITTED THAT IMPARTING OF YOGA T RAINING THROUGH WELL ITA NO. 311/DEL/2015 SIVANANDA YOGA VEDANTA VS. ITO 5 STRUCTURED YOGA SHIVIIRS/ CAMPS ALSO FALLS UNDER TH E 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 TH E SAID SECTION. DURING THE COURSE OF HEARING THE APPELLANT WAS DIRECTED TO PRO VIDE COMPLETE DETAILS OF THE PATANJALI BHARTIYA AYURVIGYAN AVAM ANUSANDHAN S ANSTHAN AT HARIDWAR FOR IMPARTING EDUCATION IN THE FIELD OF AYURVEDA WH ICH STARTED OPERATIONS W.E.F. 20.7.2009. IN COMPLIANCE THE LD. AR SUBMITTE D THAT DURING THE YEAR THE APPELLANT HAD APPLIED SUBSTANTIAL AMOUNT ON CONSTRU CTION OF THE AYURVEDA MEDICAL COLLEGE WHICH IS AFFILIATED TO THE UTTARAKH AND TECHNICAL UNIVERSITY. IT WAS SUBMITTED THAT AYURVEDA MEDICAL COLLEGE SET UP BY THE APPELLANT WAS APPROVED AND DULY RECOGNIZED BY THE DEPARTMENT OF A YURVEDA, YOGA & NATUROPATHY, UNANI, SIDDHA AND HOMOEOPATHY (AYUSH) VIDE NOTIFICATION DATED 20.7.2009, A COPY THEREOF HAS BEEN MADE AVAILABLE A T PAGE NO. 805 AND 806 OF THE SUPPLEMENTARY PAPER BOOK -11. DEPARTMENT OF AYUSH IS A BODY SET UP BY THE MINISTRY OF HEALTH & FAMILY WELFARE, GOVT. O F INDIA WITH THE PRIMARY OBJECTIVE OF REGULATING AND UPGRADING THE EDUCATION AL STANDARDS, QUALITY CONTROL AND STANDARDIZATION OF DRUGS, IMPROVING THE AVAILABILITY OF MEDICINAL PLANT MATERIAL, RESEARCH AND DEVELOPMENT AND AWAREN ESS GENERATION ABOUT THE EFFICACY OF AYURVEDA, YOGA AND NATUROPATHY, UNA NI, SIDDHA AND HOMOEOPATHY SYSTEMS OF MEDICINES. FOR THE PURPOSE O F RECOGNIZING AND GRANTING PERMISSION FOR ESTABLISHMENT OF MEDICAL CO LLEGES, THE DEPARTMENT OF AYUSH MANDATES FULFILLMENT OF CERTAIN MINIMUM STAND ARD AND REQUIREMENTS AS PRESCRIBED UNDER THE INDIAN MEDICAL CENTRAL COUN CIL 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) ITA NO. 387/DEL/2013 AND INDOOR PA TIENT DEPARTMENT (IPD) FACILITIES. LD. CIT(DR) ON THE OTHER HAND HAS PLACE D RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW, AS DISCUSSED ABOVE. 6.5.1. THE EXPRESSION 'EDUCATION' HAS NOT BEEN DEFI NED UNDER THE PROVISIONS OF INCOME TAX ACT . THE HON'BLE SUPREME COURT IN THE CASE OF LOK SHIK SHANA TRUST (SUPRA), RELIED UPON BY THE LD. AR, HAS BEEN PLEASE D 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 A ND 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) HA S BEEN PLEASED TO HOLD THAT SINCE THE ASSESSEE SOCIETY WAS TEACHING AND PROMOTI NG ALL FORMS OF MUSIC AND DANCE, WESTERN, INDIAN OR ANY OTHER AND WAS RUN LIK E ANY SCHOOL OR EDUCATIONAL INSTITUTION IN A SYSTEMIC MANNER WITH R EGULAR CLASSES, THE SAME THEREFORE MEET THE REQUIREMENT OF AN EDUCATIONAL IN STITUTION WITHIN THE MEANING OF SECTION 1O(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 TRA NSCENDENTAL MEDITATION (TM) HAS HELD THAT IRRESPECTIVE OF THE FACT THAT TH E ASSESSEE HAS ITS OWN ITA NO. 311/DEL/2015 SIVANANDA YOGA VEDANTA VS. ITO 6 PRESCRIBED SYLLABUS, TRAINED TEACHERS, BRANCHES ALL OVER INDIA TO SPREAD SYSTEM OF TRANSCENDENTAL DEEP MEDITATION AMONG PEOPLE IN A LL 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 TH E CONCLUSION THAT ANY FORM OF EDUCATIONAL ACTIVITY INVOLVING IMPARTING OF SYSTEMATIC TRAINING IN ORDER TO DEVELOP THE KNOWLEDGE, SKILL, MIND AND CHA RACTER OF STUDENTS, IS TO BE REGARDED AS 'EDUCATION' COVERED U/S 2(15) OF THE AC T. IN VIEW OF THESE DECISIONS WE HOLD THAT IMPARTING OF YOGA TRAINING T HROUGH WELL STRUCTURED YOGA SHIVIR / CAMPS ALSO FALLS UNDER THE CATEGORY O F IMPARTING EDUCATION WHICH IS ONE OF THE CHARITABLE OBJECTS DEFINED U/ S 2(15) OF THE ACT. THE ITA NO. 387/DEL/2013 APPELLANT'S ACTIVITIES ARE THUS NO T HIT BY THE PROVISO INSERTED IN THE DEFINITION OF CHARITABLE PURPOSE IN SECTION 2(15) OF THE ACT. 7. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE HOLD THAT THE ASSESSEE IS IN THE FIELD OF EDUCATION AND HENCE ENTITLED TO EXEMPTION U/S 2( 15) OF THE ACT AND IS NOT HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2015. SD/- (J. SUDHAKAR REDDY) ACCOUNTANT MEMBER DATED: THE 29 TH JULY, 2015 VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR SL. NO. DESCRIPTION DATE ITA NO. 311/DEL/2015 SIVANANDA YOGA VEDANTA VS. ITO 7 1. DATE OF DICTATION BY THE AUTHOR 28.7.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 29.7.2 015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER