Tax Exemption for ISKCON's Govinda Restaurants?

BY: SUGATA GHOSH

Mar 24, 2013 — MUMBAI, INDIA (TIMES OF INDIA) — I-T dept questions merit in granting exemption to Iskon's restaurant chain Govinda.

Is spreading the virtues of vegetarianism a good enough reason to avoid tax? One of these days, the court may have to take a call on whether it wants to listen to the taxman's argument that it isn't.

The other protagonist in the brewing court tussle involves Iskcon — one of the largest trusts known for its 'Hare Krishna Movement' — whose earnings from 'Govinda', a popular vegetarian restaurant chain, has come under the Income-Tax Department's glare.

For the taxman, Govinda is a pure commercial activity, but for Iskcon, inculcating vegetarian food habits is nothing but charity that should be free from taxation. Moreover, a major portion of Govinda's income is donated to charity, which publishes brochures and booklets for the promotion of vegetarianism.

But the tax office thinks otherwise. According to the I-T Department, the restaurant's activities and source of income clearly fall under the definition of "business".

Last year, the Appellate Tribunal, a quasi-judicial authority, had dismissed the stand taken by the department, which then approached the high court to argue its point. A tax professional familiar with the case said the hearing for admission of the department's plea is expected to come up "any time now".

"If the court admits the petition, it will be a landmark case. All the more because the definition of 'charitable purpose' has been widened from the start of assessment year 2009-10," said Arvind Dalal, a senior chartered accountant and an authority on trust matters.

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