DCIT (EXEMPTION), CIRCLE-1, BANGLORE vs. VYAKTI VIKAS KENDRA INDIA,, AHMEDABAD

PER Ms. MADHUMITA ROY - JM: The bunch of four appeals at the instance of the Revenue are directed against the orders passed by the Commissioner of Income Tax (Appeals) – 9, Ahmedabad under section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) dated 20.11.2017, 19.01.2018, 23.01.2018 for Assessment Years 2011-12, 2012-13 & 2013-14 respectively and against the order dated 17.09.2018 passed by the Learned CIT(A)-4, Ahmedabad u/s 250 of the Act for A.Y. 2014-15.

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 2 - Since common issues are involved in these appeals, the same are heard analogously and are being disposed of by a common order.

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 3 - 275/97/CIT-II dated 18.04.1997 w.e.f. 29.03.1996. The Trust is further registered u/s 80G(5)(vi) of the Act by and under the order dated 25.04.2006 issued under the signature of the Director of Income Tax (Exemption) being Memo No.DIT(E)/80G/42/W.2/2006-07. The assessee Trust is also registered under Section 35AC of the Act by and under the notification dated 23.10.2007.

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 4 - such contention of the assessee has not been accepted by the Learned Assessing Officer and relying upon the Circular No. 11 dated 19.12.2008 such claim has been denied to the assessee which has, in turn, been reversed by the First Appellate Authority. Hence the instant appeal before us.

6.1. In the said note the revenue has dealt with the positive effects of Sudarshan Kriya Yoga which is taught systematically to the public at large by the appellant trust in the entry level programmes conducted by it. The influence of Sudarshan Kriya staring from the physiological function travelling through endocrine system resulting in therapeutic implications, stimulating the antioxidant enzyme activities, including

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 5 - stress related medical disorders like chronic fatigue, chronic pain, fibromyalgia, neck and back pain, temporomandibular joint pain, cancer, diabetes, multiple sclerosis, and asthma exhaustively. It has also discussed the positive effect of Sudarshan Kriya Yoga on lipid profile, pulmonary function, hemoglobin concentration, cardiovascular and respiratory diseases. The note has concluded with the following remarks: “The ancient yogic science of breath is the science that deals with body, breath, mind, soul, and ultimately, the universe itself. Just as a thread links the kite-flier to his kite, breath is said to link the mind with the universal force. Medical science is currently rediscovering and validating many of the ancient health practices from traditional cultures worldwide. SKY is one novel practice that is undergoing extensive research to show it as an evidence-based treatment. SKY has been reported to be effective not only for treating stress and anxiety, but also for PTSD, depression, stress-related medical illness, and substance abuse, and for rehabilitation of criminal offenders.”

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 6 - g) To establish adult education centers for removal of illiteracy amongst the local public. h) To establish libraries and free reading rooms, gymnasiums, sports complex and swimming pools etc. i) To promote cultural, spiritual and intellectual interest of the people of any or all states of India by holding performance of music, fine arts, dramas and seminars. j) To organise and conduct relief works of all kinds for the poor, the orphans, the helpless and the distressed and disabled people, without any distinction of caste, creed or religion, during natural calamities or otherwise. k) To promote opportunities for the youth to organise physical, cultural, games, sport, travelling, excursion and adventure training camps. l) To protect and develop the intellectual values of students, sportsmen and all those who are rich in any cultural field and to encourage them suitably. m) To do all such other things as are incidental or conducive to the attainment of the above objectives or any them, in tune with the laws of the land. n) To form an All India Panel of illustrious men and women well versed in Vedic Sciences who would be invited to become visiting professors. o) To organise seminars and conferences on different aspects ancients literatures yoga and meditation. c; To establish training institutes as part of the training programme, where useful vocations depending on the aptitude of personalities, with special attention to the needs of poor women and children of all castes. q) To establish a library of old and valuable manuscripts on ancient sciences and other literature. r) To organize youth exchange programmes with other countries so that, there is an exchange of ideas and information leading to greater understanding among people.”

7.1. Relying upon the objects which apparently falling within the limb of education and also medical relief, the Learned AR submitted that the Learned Assessing Officer has wrongly invoked the proviso to Section 2(15) of the Act. According to him whether the purpose is the charitable purpose of the Trust will depend on the totality of the fact of the case. It was further submitted that the programmes conducted by the Trust is for the public at large and also for imparting the knowledge of the Sanatan Dharma of this Country. The appellant Trust has created to a very large number of general populations of this country without looking

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 7 - into the caste, creed of the person who participates in those programmes. The donations, received by the Trust are voluntarily contribution and that they are not fees in nature. Even the general public who have participated have contributed to this organization; there have been corporate who have also been benefited out of these programmes for their own staff, such programs are conducted at their request wherein, the appellant Trust introduced itself as an organization, which is voluntary in nature; some contributor may have treated the same as course fees and have also deducted Taxes at source on these transactions. He vehemently argued that since some of these corporates though have treated them as course fee, the same does not change the status of the Trust being charitable in nature. Such contributions have been treated in the books of accounts as voluntary contributions only.

7.2. If the predominant object is to carry out as charitable purpose and not to earn profit, the organization would not lose its charitable character merely because some profits arise from the activity as argued by the Ld AR and on this aspect he relied upon the judgment passed by the Hon’ble Supreme Court in the case of ACIT vs. Surat Art Silk Cloth Manufactures 121 ITR 124 (SC) where the Apex Court was pleased to observe that expression ‘for the purpose of profit’ implies that the predominant object should be to earn profit. Further to determine the predominant object, what is required to be examined is the objects of the society and not the quantum of surplus though such quantum may become relevant in certain circumstances.

The Learned Senior Counsel also drew our attention to the objects of Sudarshan Kriya which we would like to analysis at the relevant point. Apart from that the research finding from NIMHANS and AIIMS on the effect of the said Sudarshan Kriya on the participants had also been relied upon by him.

7.3. The Ld AR further relied upon the judgment passed by the Hon’ble ITAT, Delhi Bench in the case of Divya Yog Mandir Trust-vs-JCIT, Hardwar wherein it has

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 8 - been held that imparting of Yoga training through well-structured yoga camps falls under category of imparting education which is one of the charitable objects defined under section 2(15) and hence the activity is not hit by the proviso to section 2(15) of the Act. It is the specific submission of the Learned AR that there is an aliment of fees or charges levied by the assessee Trust but in the absence of any profit motive, the said activity cannot be characterized as a trade, commerce or business. Therefore, according to the Learned AR, mere action of charging fee for services by itself would not justify invoking of proviso to section 2(15) of the Act unless it is established that the purpose and object is profit motive. On this aspect reliance was placed on the judgment passed by the Hon’ble ITAT, Mumbai Bench in the case of Credit Guarantee Fund Trust-vs-ITO in ITA No.6282/Mum/2015.

7.4 It was further contended that charging of fees and donations received will not affect the nature of charitable purpose within the meaning of proviso to section 2(15) as has been decided recently by the Hon’ble ITAT, Delhi Bench in the case of Patanjali Yogpeeth (Nyas)-vs-ADIT(Exemption) in ITA No. 2267/Del/2013 wherein it has been further held that Yoga gives medical relief and also imparting education. The issue has been decided in favour of the assessee.

7.5. It was further argued on behalf of the assessee that there is no change in the objects or activities of the appellant during the year under consideration in comparison with the activities carried on during the previous year relevant to the A.Y. 2009-10 & 2010-11 as also in the earlier years and based on which the Registration Certificate under section 12A is continued and was affective for the year under appeal.

7.6. In the absence of any material changed, the revenue is not justified to take a different view of the matter as also submitted by the Learned AR. In this aspect he has relied upon a judgment passed by the Hon’ble Apex Court in the matter of Radhasoami Satsang-vs-CIT, reported in 193 ITR 321 (SC) as well as the judgment

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 9 - passed by the Hon’ble Apex Court in the matter of Parashuram Pottery Works Ltd- vs-ITO, reported in (1977) 106 ITR 1(SC).

7.7 As we find that according to the Learned AO as per the amended provision not only direct activities in the nature of trade commerce or business would make the assessee’s activities outside the purview of charitable purpose, but also the activity of rendering any services in relation to any trade, commerce or business would make the activities of the assessee non charitable. He has come to a finding that the objects and activities of the assessee do not fall under the first five limbs of the definition of charitable purposes as envisaged u/s 2(15) such as (i) relief to the poor, (ii) education, (iii) Medical relief (iv) preservation of monuments or places of objects of artistic or historic invents, (v) preservation of environment (including water soil forest and wild life). Ultimately, the Learned AO observed that as soon as the assessee’s case is hit by the amended provision of section 2(15) by virtue of sub Section 8 of section 13, the provision of section 11 and 12 of the Act are not applicable in order to avail exemption of its income from tax. Once the activities carried on by the assessee which are in the nature of advancement of any other object of general public utility are considered as non-charitable purposes, the income generated from such activities shall not be treated as income derived from property held under the trust within the meaning of section 11(1)(a) of the Act.

7.8. The assessment was ultimately finalized by and under an order dated 28.03.2014 holding that the activities of the assessee does not fall under clause “Education and medical relief” but last limb of proviso to section 2(15) of the Act i.e. “an advancement of general public utility”. It was further held that Sudarshan Kriya as system falls in the residuary category of education and

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 10 - medial relief. Apart from that, the exemption enjoyed by the assessee u/s 11 & 12 of the Act has been denied holding that the assessee has violated the provisions of section 13(1)(d)(i) r.w.s. 11(5) of the Act by making investment in two companies namely Unitech Ltd. and Shriram Transport Finance Co. Ltd. Further that only 50% of the donation payment in respect of three parties namely SSRS Trust, VVMVP and World alliance for youth empowerment to the tune of Rs.1,50,00,000/- has only been allowed. The balance 50% along with Rs.3,00,000/- which was donated to Divya Samaj Nirman Co. totaling to Rs.1,53,22,500/- has been disallowed and added back to the total income of the assessee. The corpus donation of Rs.16,03,22,815/- was also brought to tax by invoking the provision of section 2(24)(iia). The claim of an amount of Rs.2,28,105/- as deduction being loss on sale/write off of asset has also been denied on the premise that once the proviso of section 2(15) is applicable to the assessee, benefit u/s 11 & 12 cannot be allowed. The addition / rejection of above claim in turn was deleted by the first appellate authority in the appeal preferred by the assessee. However, the addition of Rs.3,36,416/- in respect of interest on Income Tax refund, the rejection of depreciation to the extent of Rs.89,26,569/- and the interest levied of Rs.5,63,40,61,719/- u/s 234B of the Act though was allowed finally, all for statistical purposes, has not been challenged before us by the Revenue.

7.9. In appeal, the Yoga or Sudarshan Kriya has been held to be covered under the clause “donation” and “medical relief” and not coming under the purview of the last limb of the 2(15) of the Act i.e. advancement of general public utility by the Learned CIT(A). It was further observed that the activities of the appellant are as per the objects of the appellant and the appellant trust

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 11 - has trained more number of persons than the doners in Sudharsan kriya / yoga without charging any fees.

8.1. As we find from the records that all the issues agitated before us in the appeal filed by the revenue are interlinked and the moot question involved in the matter is as to whether the activities of the appellant trust falls within the ambit and purview of providing “medical relief”, “imparting education” or in the last limb of section 2(15) of the Act being the residuary category of “advancement of any other objects of the general public utility”. In addressing the issue we need to be apprised on the objects of Sudarshan Kriya which has already been placed by the assessee before the authorities below:

“The Sudarshan Kriya incorporates specific natural rhythms of breath which harmonize the rhythms of the body and emotions and bring them in tune with the rhythms of nature. The breath connects the body and mind. Just as emotions affect our patterns of breathing, we can bring about changes in our mental and behavioral patterns by altering the rhythms of our breath. It flushes out anger, anxiety and worry; leaving the mind completely relaxed and energized. As per result of this the individuals who take refuge in substance abuse, (like alcohol, smoking drugs etc.) to reduce mental stress, and end up in loss of health and wealth, find a very effective way to put their mind at rest, thus freeing them from the dependence of substance abuse. A study conducted by NIMHANS, AIIMS and several Independent researchers have shown that the practice of Sudarshan Kriya along with other prayanam and the meditation has helped people following.

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 12 - • Reduced levels of stress (reduce cortisol - the "stress" hormone) • Stronger immunity • Reduced cholesterol • Relief from anxiety & depression (mild, moderate and severe) • Increased antioxidant protection • Enhanced brain function • Increased awareness both of self and surroundings • Improved patience • Greater energy • Improved ability to manage challenging situations • Greater mental clarity (Increased Awareness Improved Patience Increased Energy and Greater ability to deal with situations Increased Mental Clarity) Note on Yoga and Sudarshan Kriva Yoga is a noun and it could be understood as a spiritual and ascetic discipline, a part of which including breath control, simple meditation, and the adoption of specific bodily postures, is widely practiced for health and relaxation. It is believed that Maharashi Patanjali the Father of Yoga compiled and defined Yoga in his book on Yoga sutras and advocated an eight fold Yoga popularly known as the Ashtanga Yoga and they are Yama, Niyama, Asana, Pranayama, Pratyahi Dharana, Dhyana and Samadhi. These components advocate certain restraints and observance 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. What is Sudarshan Kriya : The Sudarshan Kriya incorporates specific natural rhythms of breath which harmonize the rhythms of the body and emotions and bring them in tune with the rhythm nature. The breath connects the body and mind. Just as emotions affect our patterns of breath we can bring about changes in our mental and behavioral patterns by altering the rhythms of breath. It flushes out anger, anxiety and worry; leaving the mind completely relaxed energized. Sudarshan Kriya is a technique of yoga mentioned above, predominantly concentrating on the breath regulations of an individual, which helps a person from having a stress management if practiced on a regular basis. The breath technique adopted is an integral part of Pranayama of the Ashtanga Yoga referred in the Yoga sutras. The technique referred here is Sudarshan Kriya, where the order of performance in defined in a specific manner to achieve results for the betterment of an individual."

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 13 - From the note submitted above, it can be seen that according to the appellant the unique the unique of Sudarshan Kriya developed by the appellant is closely related to breathing techniques, meditation and the various aspects of Ashtang Yog. According to the appellant the practice of Sudarshan Kriya as per various reports of medical institutions and research publication has helped the recipients of Sudarshan Kriya to reduce the stress level, increase immunity, reduce cholesterol etc. The methodology of imparting the training in Sudarshan Kriya is very well structured as it is apparent that the appellant is conducting various courses for different levels of participants progressing in the techniques of Sudarshan Kriya.

8.2 We have further gone through the analysis made by the Ld CITA on the effect of Sudarshan Kriya as also the note submitted by the assessee in this respect wherefrom it appears from the records that the prime content of the entry level programmes is the Sudarshan Kriya which admittedly reduces stress related medical illness, substance abuse and also effective even for rehabilitation of criminal offenders has already been accepted by the revenue; such admission in the written notes submitted by DR is on record before us. In our opinion it is a service that supports the mental wellbeing of a person which is admittedly not an activity of business but an activity of imparting the knowledge. We further find 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 further appears on record that pursuant to the said objective of the appellant trust, it has made inter trust 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 is also an admitted fact that the assessee trust has created a very large number of general public population of this country without making discrimination on caste or creed of the participants in those programs. Propagation of yoga as pre-dominant objective in the case of the

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 14 - appellant trust 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 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. 8.3 In a similar situation while deciding the issue as to whether the trust fall within the purview of providing “imparting education” the Hon’ble Tribunal, Delhi Benches in the matter of Divya Yog Mandir Trust-vs-JCIT, Hardwar relied upon the observation made by the Hon’ble Apex Court in the matter of Sole Trustee, Lok Shikshana Trust-vs-CIT, reported in [1975] 101 ITR 234 wherein in the context of section 2(15) of the Act, education has been explained as a process of training and developing the knowledge, skill, mind and character of students by schooling by way of systematic instruction, schooling or training. Therefore, any form of education 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 the purview of section 2(15) of the Act. In that view of the matter, yoga training through well structured yoga shivir / camps has been characterized under the category of imparting education which is, one of the charitable objects defined u/s 2(15) of the Act. The plea of the Revenue that activities of the appellant

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 15 - therein are hit by the Proviso inserted in the definition of charitable purpose in section 2(15) as thereby negated by the Hon’ble Tribunal, Delhi Bench.

8.4. Similarly, the Hon’ble Delhi High Court in the matter of Commissioner of Income Tax (Exemptions)-vs-Patanjali Yogpeeth (NYAS) reported in [2017] 87 taxmann.com 54 (Delhi) dealt with this issue as to whether propagation of yoga by way of conducting yoga classes on a regular basis or in a systemized manner falls under category of ‘imparting of education’ as provided u/s 2(15) of the Act. The issue in such appeal was finalized in favour of the assessee. The Hon’ble Court was declined to interfere with the observation made by the Learned Tribunal whereby and whereunder the Learned Tribunal observed the practice of yoga confers positive relief to certain ailments and promotes wellness and well being generally. While doing so, the Hon’ble High Court observed as follows: “3. As is evident from the above extract, the Tribunal had relied upon its ruling in DivyaYogMandir Trust v. Jt. CIT [2013] 37 taxmann.com 227/60 SOT 154 (URO)/[2015] 153 ITD 368 (Delhi - Trib.). In that decision, the judgments in KashyapVed Research Foundation v. CIT [2011] 131 ITD 370/12 taxmann.com286 (Cochin) and CIT v. Rajneesh Foundation [2006] 280 ITR 533/[2005] 148 Taxman 396 (Bom.) were relied upon. It was held that yoga was one of the six systems of Vedic philosophy developed by Maharishi Patanjali, who was characterized as "The Father of Yoga" and who had compiled and refined various aspects of the science/practice systematically in "Yoga Sutras". The Tribunal concluded upon analysis of the practice of yoga that it confers positive relief to certain ailments such as asthma, migraine, hypertension, stress, etc. and promotes wellness and well being generally. Having regard to the observations, the Court is of the opinion that the mere inclusion of yoga specifically w.e.f. 01.04.2016 did not per se imply that it came to be included as a specific charitable category on the same lines as education, medical relief, relief to the poor, etc but that dissemination of yoga or vedic philosophy or the practice of yoga or education with respect to yoga was well within the larger term "medical relief". This Court is of the opinion that no substantial question of law arises on this aspect.”

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 16 - 8.5. It is relevant to mention that the provision to section 2(15) applies only to trust/institutes falling in the last limb of the definition of charitable purposes, that too, if such trust / institutes carry on commercial activities in the nature of business trade or commerce. The said proviso does not apply to trust/institutes engaged in the charitable objects of providing relief to the poor imparting “education” and providing “medical relief”. Since the predominant objects and activities of the trust in hand before us make it clear that such objects are to provide “medical relief” and “imparting of education” to the society at large, being charitable objects defined under section 2(15) of the Act, in our considered view proviso to section 2(15) is not applicable to the instant case of the assessee.Neither Sudarshan Kriya falls within the residuary category of ‘education’ or ‘medical relief’.

8.6 It is also a fact that donations have been received which has shown as voluntary contribution including the contributions from the corporate who are benefited out of these programs for their own staff. The question arose when such contributions have been treated as course fees by such corporate and deducted TDS thereon, whether the same contributes any change in the status of the trust being charitable in nature.

8.7 During the course of appellate proceeding the assessee has provided a tabulation work with regard to the quantum of donation received and the percentage of donor thereof wherefrom it reveals that during the financial year 2010-11 i.e. Assessment Year 2011-12, the appellant trust received donations approximately from 3,57,376 donors. Over and above these donors, during the year under consideration the appellant has conducted courses for 3,81,862 delegates without collecting any donation or fees. It further reveals from the

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 17 -

tabulation sheet that more or less 70% of the donors who had received the training of SudarshanKriya have made donation of less than Rs.2000/-. 95% of the donors participated in that particular training, donated less than Rs.5000/- and only 4.32% of donors made donations more than Rs.5000/- Thus it reflects that maximum donations have been received from the persons giving donations in the range of Rs.501 to Rs.1000/-, Rs.2001 to Rs.3000/- and Rs.3001/- to Rs.4000/-. It is relevant to mention that out of the total donations of Rs.3,57,376/- only 588 donors being 0.16% of it donated Rs.25,001/- and above. These donations were received from the participants of the training programme of Sudarshan Kriya as the fact reveals from the records before us. During the appellate proceeding, the assessee trust submitted a further tabular sheet correlating the activities of the trust to the receipts thereof for the year ended 31.03.2011 which as follows: Sl. No. Range Total Donations No. of Donors % of Donors % Cumulative

1 1-200 42,08,273 26,552 7.43% 7.43% 2 201-500 2,08,71,143 56,127 15.71% 23.14% 3 501-1000 10,87,10,735 1,21,084 33.88% 57.02% 4 1001-1500 4,18,12,615 33,179 9.28% 66.30% 5 1501-2000 2,46,17,851 13,148 3.68% 69.98% 6 2001-3000 10,76,50,664 41,986 11.75% 8173% 7 3001-4000 15,96,18,534 45,288 12.67% 94.40% 8 4001-5000 2,15,47,954 4,563 1.28% 95.68% 9 5001-7000 6,07,52,130 10,521 2.94% 98.62% 10 7001-10000 2,84,72,399 3,261 0.91% 99.53% 11 10001-25000 1,64,93,278 1,079 0.30% 99.84% 12 25001 and 8,88,07,958 588 0.16% 100.00% above Grand Total 68,35,63,534 3,57,376 100.00%

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 18 - 8.8 It further appears that various courses conducted by the appellant trust specially part-1 and part-2 and the Apex course have a direct nexus and/or co- relation with the objects of the trust before us.

It is also relevant to mention that such contributions have been treated in the books of accounts of the trust as voluntary contributions. Therefore, whether it contributes any change in the character of the trust being charitable in nature has to be looked into and in this regard we would like to discuss certain Judicial pronouncements starting from the Hon’ble Tribunal to the Apex Court. While deciding this issue, as to whether the activities of the trust can be characterised as trade, commerce or business particularly, when there is an element of fees or charges levied by the trust, in the matter of Divya Yog Mandir Trust-vs-JCIT the Hon’ble Delhi Bench, ITAT held in favour of the assessee because of this particular reason that there was no aliment of any profit motive in charging such fees from the participant. Similarly in the matter of Credit Guarantee Fund Trust-vs-ITO in ITA No.6282/Mum/2015 the question put before the Hon’ble ITAT, Mumbai Bench that when certain fee, charges have been levied for the activities rendered to the beneficiaries whether it should be seen as ‘trade, commerce or business’. The Hon’ble Tribunal held that mere action of charging fees for services, by itself, would not justify invoking of the proviso to section 2(15) of the Act unless it is established that the purpose and object is profit motive. Ultimately, the issue was decided in favour of the assessee in the absence of any aliment of profit motive activities of the appellant-trust.

8.9 This issue further appeared before the Hon’ble Delhi High Court in the case of CIT(Exemptions)-vs-Patanjali Yogpeeth (NYAS). In that case the

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 19 - assessee received the amount from certain subscribers / donors in yoga camps who have provided corresponding benefits as appose to others. The Hon’ble Court held that the same could not be the basis for holding that membership fee was not a donation and had to be treated as income liable to tax and therefore the Tribunal’s findings in favour of the assessee has not been interfered with. Further that, the Hon’ble Supreme Court in the case of ACIT- vs-Surat Art Silk Cloth Manufacturers reported in 121 ITR 124 (SC) has been pleased to observe that expression ‘for the purpose of profit’ implies that the predominant object should be to earn profit. Further to determine the predominant object, it is required to examine the object of the society and not quantum of surplus though such quantum may become relevant in certain circumstance. With the essence of inspiration from the ratio laid down by the Hon’ble Apex Court in the aforesaid judgment conclusion can be drawn that the contribution on which TDS have been deducted amounting to Rs.4.5 crores being 6.6% of the total contribution Rs.68 crores, the appellant cannot be said to be a profit making organization when the pre-activity is entirely charitable in nature which has been rightly taken care of by the Learned CIT A and hence we confirm the same. In the result revenue’s appeal is dismissed .

9.1. Heard the parties, perused the records. The brief facts leading to this case is this that while scrutinizing the financial statement and TDS certificate it came to the knowledge of the Learned AO that the assessee has made certain

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 20 - investments which was in violation of specific norms and modes stipulated u/s 11(5) of the Act as alleged. Precisely it is seen form No.26AS for the F.Y. 2010-11 that assessee has received Rs.69,032/- interest income from one Unitech Ltd. and Rs.88,382/- from Shriram Transport Finance Co. Ltd., TDS in the appropriate rate were also deducted. So far as the case of Shriram Transport Finance Co. Ltd. is concerned the said deposit was withdrawn during the F.Y. 2011-12. Notice was issued to the assessee in regard to the violation of provision of section 11(5) in respect of such investment made with Shriram Transport Finance Co. Ltd. and Unitech Ltd. The assessee replied as follows: “In response to the above query the assessee responded as given below. There has been no violation of the provisions of Section 11(5) in respect of Shriram Transport Finance and Unitech Ltd, as these were not part of the accumulated amounts under section 11(2) of the Income Tax Act, 1961. The provisions of the section reads as follows: “the Forms and modes of investing or depositing the money referred to in clause (b) of sub section (2) shall be the following namely” and clause (b) of sub section (2) reads as follows “Where eighty five percent of the income referred to in clause (a) or clause (b) reads with explanation to that sub-section is not applied, or is deemed to have been applied complied with namely:- (b) the money so accumulated or set apart is invested or deposited in the forms modes specified in sub section (5) from reading the provisions of section 11(5) with section 11(1)(b) it is very clear, there have been no violations of the provisions of section 11(5).” 9.2 The case of the assessee before the Learned AO is this that the investment of funds of the assessee in section 11(5) made it mandatory only in respect of accumulated income u/s 11(2) and the same was not applicable to other funds of the assessee. However, such plea of the assessee was not accepted by the Learned AO on the premise that as per section 13(1)(d)(i) of the Act any funds of trust and interest required to be invested or deposited only in the form or modes specified in sub section 5 of section 11. This investment made by the assessee is in violation of specified modes of section 11(5) of the

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 21 - Act as observed by the Learned AO.Finally the assessee has been held ineligible to claim exemption under section 11 and 12 of the Act. However, the Learned CIT(A) considering the entire aspect of the matter excluded the interest income from M/s. Shriram Transport finance Co. Ltd. while granting relief to the assessee declaring it allowable u/s 11 of the Act. Hence the instant appeal before us.

9.3 During the appellate proceeding, the assessee submitted that in every branch of the assessee-trust across the country is taking care of to apply the provision of Income Tax Appeal Act but inadvertently without the notice of the assessee the certain amount got deposited with M/s Unitech Ltd and Shriram Transport Finance Co. Ltd. without there being any malafide intention for making such deposit. It was further submitted by the assessee that as soon as the assessee trust came to know about such deposit the same were immediately withdrawn and such fact of withdrawal of deposit were made known to the assessing officer by and under a letter dated 11.11.2015. It was reiterated by the assessee that alleged deposit with Shriram Transport Finance Co. Ltd. does fall within the mischief of either section 13(1)(d)(i) for the reason that said deposit was not made during the impugned previous year or section 13(1)(d)(ii) for the reason that the same was not made prior to 01.03.1983 and continued to remain so deposited after 30.11.1983. It is relevant to mention that following details were also submitted by the assessee in order to justify its case:

Sl. Name of the Date of End of the 1 Year from Date of No. Parties Deposit FY the end of withdrawal the FY of deposit 1. Sriram Transport 05.09.2009 31.03.2010 31.03.2011 30.11.2010 Finance Co.

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 22 - Sriram Transport 12.09.2009 31.03.2010 31.03.2011 08.12.2010 Finance Co. Sriram Transport 12.09.2009 31.03.2010 31.03.2011 08.12.2010 Finance Co. Sriram Transport 31.03.2010 31.03.2010 31.03.2011 30.11.2010 Finance Co. 2. M/s. Unitech 29.01.2011 31.03.2011 31.03.2012 30.01.2012

9.4 It was further clarified by section 13(i)(d)(i)/(ii) is only applicable in the event any fund of the trust/institutions investment or deposited otherwise then in anyone or more of the forms or modes specified in section 11(5) of the Act. .

9.5. Even assuming for the sake of argument that there is a violation of section 13(1)(d)(i) of the Act then the question would be, whether the trust would be denied benefit under section 11 on its total surplus or it is to be confined qua the amount. In order to address the controversy we deem it appropriate to take note of section 11(2),(5) and 13(i)(d) of the Act which read as follows: 23Income24 from property held for charitable or religious purposes. 2511. (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income— 26[(a) income derived from property24 held under trust wholly24 for charitable or religious purposes, to the extent to which such income24 is applied24 to such purposes in India; and, where any such income24 is 24accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart27 is not in excess of 28[fifteen] per cent of the income from such property; (b) income derived from property held under trust in part27 only for such purposes, the trust having been created before the commencement of this Act, to the extent to which such income27 is applied to such purposes in India; and, where any such income is finally set apart for application to such purposes in India, to the extent to which the income

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 23 - so set apart is not in excess of 28[fifteen] per cent of the income from such property; (c) income 29[derived] from property held under trust— (i) created on or after the 1st day of April, 1952, for a charitable purpose which tends to promote international welfare in which India is interested, to the extent to which such income is applied to such purposes outside India, and (ii) for charitable or religious purposes, created before the 1st day of April, 1952, to the extent to which such income is applied to such purposes outside India: Provided that the Board, by general or special order, has directed in either case that it shall not be included in the total income of the person in receipt of such income; 30[(d) income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus31 of the trust or institution.] 32[Explanation.—For the purposes of clauses (a) and (b),— (1) in computing the 33[fifteen] per cent of the income which may be accumulated or set apart, any such voluntary contributions as are referred to in section 12 shall be deemed to be part of the income; (2) if, in the previous year, the income applied to charitable or religious purposes in India falls short of 34[eighty-five] per cent of the income derived during that year from property held under trust, or, as the case may be, held under trust in part, by any amount— (i) for the reason that the whole or any part of the income has not been received during that year, or (ii) for any other reason, then— (a) in the case referred to in sub-clause (i), so much of the income applied to such purposes in India during the previous year in which the income is received or during the previous year immediately following as does not exceed the said amount, and (b) in the case referred to in sub-clause (ii), so much of the income applied to such purposes in India during the previous year immediately following the previous year in which the income was derived as does not exceed the said amount, may, at the option of the person in receipt of the income (such option to be exercised in writing before the expiry of the time allowed under sub-section (1) 35[* * *] of section 139 36[* * *] for furnishing the return of income) be deemed to be income applied to such purposes during the previous year in

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 24 - which the income was derived; and the income so deemed to have been applied shall not be taken into account in calculating the amount of income applied to such purposes, in the case referred to in sub-clause (i), during the previous year in which the income is received or during the previous year immediately following, as the case may be, and, in the case referred to in sub- clause (ii), during the previous year immediately following the previous year in which the income was derived.] 37[(1A) For the purposes of sub-section (1),— (a) where a capital asset, being property held under trust wholly for charitable or religious purposes, is transferred and the whole or any part of the net consideration is utilised for acquiring another capital asset to be so held, then, the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purposes to the extent specified hereunder, namely:— (i) where the whole of the net consideration is utilised in acquiring the new capital asset, the whole of such capital gain; (ii) where only a part of the net consideration is utilised for acquiring the new capital asset, so much of such capital gain as is equal to the amount, if any, by which the amount so utilised exceeds the cost of the transferred asset; (b) where a capital asset, being property held under trust in part only for such purposes, is transferred and the whole or any part of the net consideration is utilised for acquiring another capital asset to be so held, then, the appropriate fraction of the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purposes to the extent specified hereunder, namely:— (i) where the whole of the net consideration is utilised in acquiring the new capital asset, the whole of the appropriate fraction of such capital gain; (ii) in any other case, so much of the appropriate fraction of the capital gain as is equal to the amount, if any, by which the appropriate fraction of the amount utilised for acquiring the new asset exceeds the appropriate fraction of the cost of the transferred asset. Explanation.—In this sub-section,— (i) “appropriate fraction” means the fraction which represents the extent to which the income derived from the capital asset transferred was immediately before such transfer applicable to charitable or religious purposes; (ii) “cost of the transferred asset” means the aggregate of the cost of acquisition (as ascertained for the purposes of sections 48 and 49) of the capital asset which is the subject of the transfer and the cost of any

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 25 - improvement thereto within the meaning assigned to that expression in sub-clause (b) of clause (1) of section 55; (iii) “net consideration” means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.] 38[(1B) Where any income in respect of which an option is exercised under clause (2) of the Explanation to sub-section (1) is not applied to charitable or religious purposes in India during the period referred to in sub-clause (a) or, as the case may be, sub-clause (b), of the said clause, then, such income shall be deemed to be the income of the person in receipt thereof— (a) in the case referred to in sub-clause (i) of the said clause, of the previous year immediately following the previous year in which the income was received; or (b) in the case referred to in sub-clause (ii) of the said clause, of the previous year immediately following the previous year in which the income was derived.] 39[(2) 40[Where 41[eighty-five] per cent of the income referred to in clause (a) or clause (b) of sub-section (1) read with the Explanation to that sub-section is not applied, or is not deemed to have been applied, to charitable or religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part, for application to such purposes in India, such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of the income, provided the following conditions are complied with, namely:—] (a) such person specifies, by notice in writing given to the 42[Assessing] Officer in the prescribed43 manner44, the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed ten years; 45[(b) the money so accumulated46 or set apart is invested or deposited in the forms or modes specified in sub-section (5)]:] 47[Provided that in computing the period of ten years referred to in clause (a), the period during which the income could not be applied for the purpose for which it is so accumulated or set apart, due to an order or injunction of any court, shall be excluded:] 48[Provided further that in respect of any income accumulated or set apart on or after the 1st day of April, 2001, the provisions of this sub-section shall have effect as if for the words “ten years” at both the places where they occur, the words “five years” had been substituted.] 49[Explanation.—Any amount credited or paid, out of income referred to in clause (a) or clause (b) of sub-section (1), read with the Explanation to that

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 26 - sub-section, which is not applied, but is accumulated or set apart, to any trust or institution registered under section 12AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub- clause (vi) or sub-clause (via) of clause (23C) of section 10, shall not be treated as application of income for charitable or religious purposes, either during the period of accumulation or thereafter.]”

“61[62(5) The forms and modes of investing or depositing the money referred to in clause (b) of sub-section (2) shall be the following, namely :— (i) investment in savings certificates as defined in clause (c) of section 263 of the Government Savings Certificates Act, 1959 (46 of 1959), and any other securities or certificates issued by the Central Government under the Small Savings Schemes of that Government; (ii) deposit in any account with the Post Office Savings Bank; (iii) deposit in any account with a scheduled bank or a co-operative society engaged in carrying on the business of banking (including a co- operative land mortgage bank or a co-operative land development bank). Explanation.—In this clause, “scheduled bank” means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934); (iv) investment in units of the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963); (v) investment in any security for money created and issued by the Central Government or a State Government; (vi) investment in debentures issued by, or on behalf of, any company or corporation both the principal whereof and the interest whereon are fully and unconditionally guaranteed by the Central Government or by a State Government; (vii) investment or deposit64 in any 65[public sector company]: 66[Provided that where an investment or deposit in any public sector company has been made and such public sector company ceases to be a public sector company,—

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 27 - (A) such investment made in the shares of such company shall be deemed to be an investment made under this clause for a period of three years from the date on which such public sector company ceases to be a public sector company; (B) such other investment or deposit shall be deemed to be an investment or deposit made under this clause for the period up to the date on which such investment or deposit becomes repayable by such company;] (viii) deposits with or investment in any bonds issued by a financial corporation which is engaged in providing long-term finance for industrial development in India and 67[which is eligible for deduction under clause (viii) of sub-section (1) of section 36]; (ix) deposits with or investment in any bonds issued by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes and 67[which is eligible for deduction under clause (viii) of sub-section (1) of section 36]; 68[(ixa) deposits with or investment in any bonds issued by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for urban infrastructure in India…”

Section 13(i)(d) “(d) 1 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[ not being a Government company as defined in section 617 of the Companies Act, 19563 (1 of 1956 ), or a corporation established by or under a Central,. State or Provincial Act are held by the trust or institution after the 30th day of November, 1983 : Provided that nothing in this clause shall apply in relation to- (i) any assets held by the trust or institution where such assets form part of the corpus of the trust or institution as on the 1st day of June, 1973 4 ];”

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 28 - 9.6 A bear perusal of section 11(2) would indicate that if a charitable trust fails to apply income referred to in clause (a) or clause (b) of subsection 1 towards its object during the previous year but has accumulated or set apart either in whole or in part, for application of the object of the trust in future years then such accumulation is to be regulated under the mechanism provided in clause(a),(b) and (c); the accumulation or setting apart would be required to be invested or deposited in the form or mode specified in sub clause 5.

As far as scope and interpretation of subclause 5 is concerned both the parties are not disputing to the same. This clause provides a mechanism as to how the accumulated fund would be required to be invested.

9.7. Now we turn to section 13 of the Act. Sub class (a) of sub section (1) provides that “any part of the income from the property held under the trust for private religious purposes which does not enure for the benefit of the public; thus it suggests only that part of the income to be excluded from the benefit of section 11 and 12 which does not enure for the benefit of the public. Similarly, sub clause (b) contemplates “ in the case of a trust for charitable purposes or a charitable institution created or established after the commencement of the Act, any income thereof in the trust institution is created or established for the benefit of any particular religious community or caste;” meaning thereby that income would not be exempted under section 11 and 12 of the Act. Therefore, while construing the meaning and scope of section 13(1) (d) we have to bear in mind the complete scheme of the section. And the cost of repetition we would like to reproduce the relevant part of clause (d) : “(d) 1 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-

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 29 - (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”

9.8 A perusal of the above along with the finding of the Learned AO would indicate that the area of dispute between the assessee and the Learned AO relates to construction of expression “any income”implied as above. According to the Learned AO, if there is any investment of surplus fund accumulated or otherwise in violation of sub clause 5 then the trust would lose the benefit under section 11 on its total surplus whereas the stand of the assessee is, even assuming there is any violation, then, only the income in respect of such investment will be excluded from the benefit of exemption under section 11 and 12 of the Act. For buttressing the stand the assessee has relied upon the following circular issued by the CBDT:

“Circular No. 387, dt. 6th July, 1984, which reads as follows: Levy of income-tax at maximum marginal rate in the case of charitable and religious trusts which forfeit tax exemption ............ 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 settler, 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,

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 30 - 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.”

9.9 In view of the clarification made by the above circular the relevant income is only required to be disallowed and not in respect of the income of the appellant trust. However, the exemption under section 11 or 12 of the Act is not permissible to be denied. In this aspect we have also carefully considered the judgement passed by the Learned Tribunal in the case of Gurdayal Berlia Charitable Trust-vs-Fifth ITO reported in (1990) 34 ITD 489 (Bom) where similar issue was discussed taking into considering that particular circular being No.387 containing explanatory notes on the Finance Act, 1994, more particularly paragraph 28.6 as already reproduced hereinabove. Finally, the Hon’ble Tribunal, Bombay Bench was pleased to hold that the breach of section 13(1)(d) and 13(2)(h) would lead to forfeiture of exemption of income derived from such investment and not the entire income would be subjected to the maximum marginal rate of tax under section 164(2) of the Act. Ultimately it was held that exemption under section 11 is available to the assessee only on the income to the extent the same is derived in conformity of section 11 and applied during the year for such purpose of charitable trust.

9.10. Taking into consideration the ratio laid down by the aforesaid judgement we find that there is a factual difference between the eligibility of exemption and withdrawal of the exemption/forfeiture of exemption for contravention of the provisions of law. These two concepts are different and they have different consequences. Having regard to this particular aspect of the matter we are of the considered opinion that the withdrawal of exemption by means of forfeiture of exemption in violation of section13(1)(d) of the Act

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 31 - does not render the assessee ineligible for remaining income which is not forfeited for exemption, which the Learned CITA, as we find from the records, has taken into consideration in its proper perspective without keeping any ambiguity so as to warrant interference. Hence this ground of appeal preferred by Revenue is found to be devoid of any merit and thus dismissed.

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 32 - passed by the Hon’ble Delhi High Court in the matter of the DIT (Exemption) vs. M/S. Bagri Foundation where the court observed as follows “what follows is that the amount accumulated cannot be donated to another trust. However, the said explanation does not place a total embargo on donations by one trust to another. It does not prohibit the trust from donating its entire income in a relevant year to another trust , as is the law as noticed in the Division Bench in Shri Ram Memorial Foundation. The embargo is only on the income of the trust not applied in the relevant year but accumulated set apart being donated to another trust…”

10.1. The assessee further relied upon the judgement passed in the matter of Gagan Education Society-vs-ACIT, reported in (2011) 131 ITD 442 wherein the assessee society donated certain sum to another charitable society out of current year’s income and claimed deduction. The Hon’ble ITAT observed that the restriction imposed by section 11(3)(d) applies to income under section 11(2) and not to current year’s income or to accumulation under section 11(1) and thus assessee’s claim was allowed.

10.2. Therefore, if the donations have been made from the income of the previous year and not out of the accumulation under section 11(2) then the same be eligible to be considered as application of income as long as the recipients are charitable organizations. Having regard this particular aspect of the matter the AO has been further directed by the Learned CITA to verify as to whether these trust have the status of exemption under the Income Tax Act and also whether they are charitable organisation. Subject to such verification of the objects of the recipients the Ld AO was directed to treat the application

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 33 - of income of the assessee, which in our considered view is just and proper and without any ambiguity so as to warrant interference. The order passed by the Learned CIT(A) is,thus,, conformed. Resultantly the appeal preferred by the revenue is dismissed.

11.1 Heard the respective parties, perused the relevant materials available on record. The Learned AO, as it appears from the order, has not granted the benefit under section 11 of the Act and further denied the benefit to the appellant under section 11(1)(d) of the Act. It further appears from the order impugned, that the Learned CIT(A) observed that Section 2(15) r.w.r. 13(8) of the Act is not applicable to the case of the appellant and further that the appellant would eligible to claim benefit u/s 11 and 12 of the Act including the deduction u/s 11(1)(d) of the Act which has been confirmed by us in this appeal. The Learned CIT(A) has, therefore, directed the Learned Assessing Officer to verify whether the corpus donation were received or the voluntary donations have been received by the appellant with a specific direction taking into consideration the entire aspect of the matter, which in our considered opinion is just and proper without any infirmity so as to warrant interference. Thus the appeal preferred by the revenue is found to be devoid of any merit and hence dismissed.

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 34 -

12.1 Heard the respective parties, perused the relevant materials available on record. During the scrutiny, it was observed that the assessee has claimed a sum of Rs.2,28,105/- as deduction being loss on sale/write off assets. It appears from the records that the Assessing officer considered the appellant as an AOP and assessed the income of the assessee under section 28 to 44of the Act. The assessee has been denied to claim of separate loss on account of sale of assets and thus it should have been considered in the block of assets as observed by the Learned AO. However, since the assessee has already been declared as an eligible exempt entity by the Learned CIT(A), the assessee has further been declared to be eligible to claim the loss or profit on account of sale of assets in its income and expenditure account and in that view of the matter the relief towards such claim of Rs.2,28,105/- as loss on the sale of assets has been allowed by the Learned CIT(A). In the light of the above discussion, we do not find any infirmity in the impugned order passed by the Learned CIT(A) so as to warrant interference. Thus the question is accordingly answered in the affirmative, i.e. in favour of the assessee and against the revenue. Consequently the appeal fails and is accordingly, dismissed.

In the result revenue’s appeal is dismissed. 14.

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 35 - ITA Nos. 805 & 806/Ahd/2018 for A.Ys. 2012-13 & 2013-14 : 15. In these appeals all the grounds are identical to that of the grounds already been dealt with by us in ITA No.265/Ahd/2018 for A.Y. 2011-12 and in the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, these appeals preferred by the revenue are also dismissed.

ITA No. 2344/Ahd/2018 for A.Y. 2014-15 : 16. In this appeal ground No.1, 2 & 3 are identical to that of the grounds already been dealt with by us in ITA No.265/Ahd/2018 for A.Y. 2011-12 and in the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, this appeal preferred by the revenue is also dismissed.

Ground No.4 : This ground of appeal is consequential to ground No.1 17. hence, dismissed.

In the combined result, all the revenue’s appeals are dismissed. 19.

This Order pronounced in Open Court on 03/09/2019

Sd/- Sd/- ( PRAMOD KUMAR) ( Ms. MADHUMITA ROY) VICE PRESIDENT JUDICIAL MEMBER

Ahmedabad; Dated 03/09/2019 PritiYadav, Sr.PS

ITA Nos.265, 805, 806 & 2344/Ahd/2018 DCIT vs. VyaktiVikas Kendra India Assessment Years 2011-12, 2012-13, 2013-14 & 2014-15 - 36 -

आदेशक���त�ल�पअ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent. 3. संबं�धतआयकरआयु�त/ Concerned CIT 4. आयकरआयु�त(अपील) / The CIT(A)-9, Ahmedabad. 5. �वभागीय��त�न�ध, आयकरअपील�यअ�धकरण, अहमदाबाद/ DR, ITAT, Ahmedabad 6. गाड�फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत��त //True Copy// उप/सहायकपंजीकार (Dy./Asstt. Registrar) आयकरअपील�यअ�धकरण, अहमदाबाद / ITAT, Ahmedabad