Yoga Guru Baba Ramdev, who has become world-famous over the years for his endeavours in Ayurveda, business, politics and agriculture has a big reason to smile. One of his ventures, Patanjali Yogpeeth, which is a public charitable trust, has come out victorious in its appeal before the Income-tax Appellate Tribunal (ITAT), which has finally accepted the Haridwar, Uttarakhand-based trust's tax-exempt status.
According to the reasoning provided by the Delhi bench of ITAT behind its decision, it concluded, since Yoga entails providing medical relief and the camps are also known to provide people both 'medical relief ' and`education,' hence it falls within the umbrella meaning of charitable purpose, thus the Patanjali Yogpeeth trust is fully entitled to seek I-T exempt status under the sections 11 and 12 of the Income Tax Act.
In its order dated February 9, 2017, ITAT said, "The finding of I-T authorities that propagation of yoga by Patanjali Yogpeeth does not qualify as medical relief or imparting of education is not justified."
While the litigation settled by ITAT's Delhi bench specifically caters to the 200809, the Tribunal has also taken into consideration the new subsequent amendment in the I-T Act, which came into action last year on April 1, 2016. This particular amendment in the spotlight specifically added the word 'yoga' within the definition of a 'charitable purpose'.
If the ITAT wouldn't have upheld Patanjali Yogpeeth's exempt status, it would have become liable to pay income tax to the Indian government like a regular company. It is interesting to note that the Yogpeeth's total income never came out in the open in the ITAT order.
In addition to the upholding the tax-exempt status, the ITAT also concluded that the whopping corpus of Rs 43.98 crore received by the Haridwar, Uttarakhand-based trust in donations, primarily for the purpose of construction of cottages under its Vanprasth Ashram Scheme (which caters to providing accommodation to people attending residential yoga courses at the Yogpeeth), were capital receipts and hence not liable to income tax. In its order, The ITAT mentioned, "Corpus donations are not taxable, even in circumstances where the trust is not eligible for I-T exemption".
The Delhi bench of ITAT even ended up deleting the various additions made by the I-T authorities to Baba Ramdev's Patanjali Yogpeeth's income. This included a Rs 96 lakh addition made for services the trust extended to Vedic Broadcasting in which Acharya Balkrishnan, a trustee and close aide of Baba Ramdev holds substantial interest. According to the ITAT, it deleted the additions because the I-T authorities on the ground had failed to understand the facts. In fact, towards the end, the ITAT also ended up agreeing with the submissions made by the trust and concluded that some of the inferences made by the I-T authorities such as receipt of anonymous donations or the provision of benefits to certain persons were made without fully understanding and appreciating the facts.
Well, the final conclusion is that Ramdev's Patanjali will be doing tax-free business from now onwards, and the one thing that really made this possible was its 'Yoga' Tag.
According to the reasoning provided by the Delhi bench of ITAT behind its decision, it concluded, since Yoga entails providing medical relief and the camps are also known to provide people both 'medical relief ' and`education,' hence it falls within the umbrella meaning of charitable purpose, thus the Patanjali Yogpeeth trust is fully entitled to seek I-T exempt status under the sections 11 and 12 of the Income Tax Act.
In its order dated February 9, 2017, ITAT said, "The finding of I-T authorities that propagation of yoga by Patanjali Yogpeeth does not qualify as medical relief or imparting of education is not justified."
While the litigation settled by ITAT's Delhi bench specifically caters to the 200809, the Tribunal has also taken into consideration the new subsequent amendment in the I-T Act, which came into action last year on April 1, 2016. This particular amendment in the spotlight specifically added the word 'yoga' within the definition of a 'charitable purpose'.
If the ITAT wouldn't have upheld Patanjali Yogpeeth's exempt status, it would have become liable to pay income tax to the Indian government like a regular company. It is interesting to note that the Yogpeeth's total income never came out in the open in the ITAT order.
In addition to the upholding the tax-exempt status, the ITAT also concluded that the whopping corpus of Rs 43.98 crore received by the Haridwar, Uttarakhand-based trust in donations, primarily for the purpose of construction of cottages under its Vanprasth Ashram Scheme (which caters to providing accommodation to people attending residential yoga courses at the Yogpeeth), were capital receipts and hence not liable to income tax. In its order, The ITAT mentioned, "Corpus donations are not taxable, even in circumstances where the trust is not eligible for I-T exemption".
The Delhi bench of ITAT even ended up deleting the various additions made by the I-T authorities to Baba Ramdev's Patanjali Yogpeeth's income. This included a Rs 96 lakh addition made for services the trust extended to Vedic Broadcasting in which Acharya Balkrishnan, a trustee and close aide of Baba Ramdev holds substantial interest. According to the ITAT, it deleted the additions because the I-T authorities on the ground had failed to understand the facts. In fact, towards the end, the ITAT also ended up agreeing with the submissions made by the trust and concluded that some of the inferences made by the I-T authorities such as receipt of anonymous donations or the provision of benefits to certain persons were made without fully understanding and appreciating the facts.
Well, the final conclusion is that Ramdev's Patanjali will be doing tax-free business from now onwards, and the one thing that really made this possible was its 'Yoga' Tag.
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