TaxTMI 
TaxTMI 
2001 (10) TMI 297
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....ion camp for the first time in 1964 in Rajasthan. After 1969, many public lectures and appearances were ascribed to him. He also had written profusely on spiritual and allied subjects. Acharya Rajneesh took Maha Samadhi on 19th January, 1990. 3. By an indenture of trust dated 11-6-1969, Shri Himatlal Haribhai Joshi and Shri Ishwarlal Naranji Shah as settlors drew up a Trust Deed creating the Trust known as 'Jeevan Jagruti Kendra'. To start with the registered office of the Trust was at 29, Eastern Chambers, 3rd Floor, 128, Poona Street, Bombay. Under clause 4 of the conditions of the Trust Deed, the activities of the Trust could extend to the whole of India and to such other parts of the world as are decided upon by the Trustees from time to time. Shri Rajneesh, according to clause 2 of the Trust Deed, was to be the advisor to the Trust for life and as an advisor was to have powers mentioned in the Trust Deed. Clause 5 of the Deed dealing with the aims and objects of the Trust runs as under: "5. The aims and objects of the Trust shall be: (a) To spread and impart the preaching of Acharya Shri Rajneeshji and other philosophers pertaining to all religions and/or main....
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....es; (k) To enter into any arrangement with the Government, local authorities, other quasi-Government bodies and other public or private bodies, organisations and/or institutions in order to promote and achieve and/or all of the aims and objects of the Trust; (l) to accept donations either in cash or in kind and/or under any other arrangements and to raise moneys otherwise, for the purposes of carrying out the objects and activities of the Trust and to accept subscriptions and gifts of movable or immovable properties for the same purpose. (m) To borrow and raise moneys for the purpose of carrying out the objects of the Trust in such manner and from such persons as the Trust may think fit; (n) To acquire land, purchase buildings, construct or take on lease or exchange or hire any movable or immovable properties or rights or privileges for the purpose of carrying out the objects of the Trust; (o) To enter into contract, execute deeds and do all other things and to undertake any other activities as may be conducive, suitable or incidental to the work for the attainment of the objects of the Trust or any of them or part of them; (p) To undertake and execute any Trust w....
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.... with the objects and purposes to these presents to the advancement of the times and circumstances which may from time to time exist as they may consider desirable and in such case, such newly added objects so decided upon by the trustees shall be deemed to have been incorporated in the objects of these presents, hereinabove be deemed to be the objects and considered charitable or otherwise, by any of the authority, the same shall stand deleted, and the trustees shall not spend any of the trust funds on the said object." 4. The Trustees had power to accept donations and contributions from individuals or institutions. The Trustees under clause 7 have absolute power at their discretion (to deal with and to put into practice the objects mentioned hereinabove). Other clauses of the Trust Deed gave power to the Trustees to deal with the movable and immovable properties etc. to make rules and regulations for the day-to-day working of the Trust. Clauses 11 and 12 dealing with the management of the property and other business of the Trust are as under: "11. The management of the property and other business of the Trust shall be carried out by a Board of Trustees of not less than 2 (t....
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....mbers and/or ordinary members. The Board of Trustees at its discretion in consideration of any scheme of settlement or arrangement including amalgamation or otherwise, may also provided for the co-option of patrons and life members as patrons and life members of these presents. The Board of Trustees may from time to time frame rules for the election and/or nomination of executive council from amongst the different class of members and such council will look after such works as per the rules framed by the Board." 5. An amendment to the Trust Deed dated 26-9-1969 made certain minor changes including the deletion of the words 'or abroad' appearing in clause 5(c) of the Deed. All the activities of the Trust were being carried on to start with at Bombay. In March 1974, a new ashram premises was taken at Poona. The trustees also decided to change the name of the Trust from 'Jeevan Jagrati Kendra' to 'Rajneesh Foundation'. 6. The question of exemption under section 11 has a chequered history in this case since the inception of the Trust in 1969--the first assessment year being for 1970-71. For the assessment years 1970-71 to 1974-75, the claim that the ....
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....ctivity of profit. 6A. For the assessment year 1976-77, although the Assessing Officer followed the earlier year's order, the CIT(A) held in favour of the assessee Trust. Revenue took up the matter before the ITAT, Pune Bench. There was a divergence of opinion between the Judicial Member and the Accountant Member. The former viewed in favour of the assessee Trust, while the Accountant Member dissented. The matter was, therefore, referred under section 255(4) of the Act for the opinion of Third Member. This Reference was heard by a Three Member Bench of the Tribunal presided over by the then President of the ITAT and vide a consolidated order dated 2-8-1988 decided the issue against the assessee Trust. The Third Member came to the conclusion that the object cannot be considered to be charitable mainly on two grounds: (1) that so long as Rajneesh is alive, one cannot predict what he will preach and thus the object cannot be said to be charitable, and, (2) the affairs of the Trust were dominated by Shri Rajneesh in view of his being life-time advisor and the object was to preach, establish and perpetuate the image of Shri Rajneesh whose vague and contradictory views were ....
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....een denied mainly on the grounds that: (a) Bhagwan Shree Rajneesh is a living person and object of propagating his philosophy may not be in public interest as nobody can say what he will preach in future. (b) Some of the views propounded by Bhagwan Shree Rajneesh are repugnant to traditional concepts of public morality and/ or Indian way of life. (c) Bhagwan Shree Rajneesh is life time adviser of R.F. (Though in fact he has never exercised any powers or discretion to influence the object of R.F.). R.F. agrees to suitably modify the Trust Deed and refrain from carrying on objectionable activities/objects from tax point of view. (vii) If the aforesaid terms find acceptance of the department, R.F. undertakes not to press its Writ Petition No. 2597 of 1988." These proposals were broadly accepted by the CIT, Pune vide his letter dated 3-2-1989. It is noted ;that in the assessee's proposal dated 28-11-1988, the Trust had offered in para 4(vi) to suitably modify the Trust Deed and refrain from carrying on objectionable activities/objects from tax point of view. However, there is no mention in the letter of the CIT, Pune relating to the offer thus mentioned. 8. Therea....
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.... has so far not been granted registration under section 12A by the CIT, Pune, the exemption claimed under section 11 by the assessee is therefore rejected." 10. The assessee appealed to the CIT(A) who after exhaustive review of all the facts and circumstances, including, in particular, the amendments of the Trust Deed, the changed perception about the philosophy of Shri Rajneesh and other materials on record, came to the conclusion that the objects of the Trust were for the benefit of the public at large. She held that the Assessing Officer has not taken cognizance of certain important facts, viz: (i) The first proposal for amendment of the Trust Deed was to delete the name of Acharya Rajneesh entirely. It was, however, the Dy. Charity Commissioner, who prevailed upon the trustees to retain his name since the Trust activities were already motivated by Acharya Rajneesh. The intention, however, was only to spread the teachings of famous thinkers and philosophers, including the preachings of Acharya Rajneesh. Commemorating the name of the founder of any institution is not relevant factor for determining whether the institution is for charitable purposes or not. The Trust crea....
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....e order of the ITAT is not correct in view of the distinct difference in the circumstances prevailing then and the circumstances present during the relevant assessment year. The Trust was amended and without the physical presence of Acharya Rajneesh being allegedly the de facto controller, is different from the circumstances which was considered by the ITAT. Furthermore, the teachings of Acharya Rajneesh have much wider acceptance than it had in 1988. The Trust is therefore, eligible for exemption under section 11 of the Act, being for charitable purposes." 12. The Revenue has challenged the order of the CIT(A) and following grounds of appeal have been raised: "(1) On the facts and in the circumstances of the case, the CIT(A) has erred in directing to grant registration to the assessee trust under section 12A and to allow exemption under section 11 of the Income-tax Act. (2) The CIT(A) has failed to appreciate the fact that Assessing Officer's findings were based on the order of the ITAT in the assessee's case wherein it was held that the assessee's case is not a fit case to be classified under section 11. (3) On the facts and in the circumstances of the cas....
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....are against public policy; the CIT(A) has not taken into consideration the nature of the teachings and hence she is not competent to say that the teachings of Acharya Rajneesh are not against public policy. He, therefore, concluded that the order of the CIT(A) deserves to be reserved and that of the Assessing Officer deserves to be restored. 14. Shri S.N. Inamdar, the learned counsel for the assessee, submitted that the first ground of appeal is erroneously taken and the learned CIT(A) has not directed to grant registration under section 12A of the Act. However, as a matter of fact, he pointed out that such registration has been granted by the CIT, Pune in respect of the same Trust Deed and there has been no change in the Trust Deed. He also pointed out that procedural amendment in the form of insertion of section 12A, which requires the CIT's satisfaction about the public charitable nature of the Trust was made with effect from 1-4-1997 and applied to all pending applications and the registration has been granted on 18-5-1998. However, the learned counsel made it clear that he does not wish to rest his case solely on the ground that the Trust has now been granted registrati....
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....hair for the study of his philosophy. He particularly emphasised that the object behind establishing an Osho Chair was also identical with the objects of the Trust. According to the learned counsel, this was clinching evidence that Osho's preachings were the preachings of a Seer and were receiving recognition all over the world. He also referred to page 258 which contains a report that in the World Book Fair, Osho's books and particularly the book entitled 'Meditation the First and the Last Freedom' was the highest sold book. He submitted that when Osho had large public following not only in India but all over the world and the general public bought his books in such large quantity, itself is a proof that a large section of the public considers his views as beneficial to mankind. The learned counsel relied on the Hon'ble Supreme Court's decision in the case of CIT v. Ahmedabad Rana Caste Association [1983] 140 ITR 1 in which the Hon'ble Supreme Court held that mental, spiritual and physical development of man as a complete human-being is an object of general public utility. It also held that if the objects are beneficial to an identifiable large section ....
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....ier order of the Tribunal which has been adequately dealt with by the learned CIT (Appeals) and considering the material change in the object clause and the actual activities carried on by the trust, it would be unjust and unfair to deny the benefit of section 11 to the Trust which is also registered under section 12A of the Act now by the CIT, Pune. 21. In rejoinder, Shri Naresh Kumar, the learned senior D.R. maintained that the Trust Deed was a replica of the old Deed in essence and that there was no change. He further maintained that the Third Member order of the Tribunal still prevails. Referring to the contention of the learned counsel that Osho developed different techniques of meditation and his stress was on meditation, the learned D.R. submitted that the meditation as propounded by Acharya Rajneesh is against public morality. He further submitted that merely because the Indian Parliament have placed books authored by Acharya Rajneesh in its library and that some Universities have adopted to propagate the philosophy of Acharya Rajneesh cannot overrule the order of the ITAT which clearly held that the teachings of Acharya Rajneesh were against public policy. 22. We hav....
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....Trust Deed read as "to spread and impart the preachings of Acharya Rajneeshji and other philosophers pertaining to all religions and/or main principles thereof and/or morals." Since this phraseology had been found repugnant to the Department, it was proposed to re-draft the clause to read "to spread and impart the preaching of philosophers both past and contemporary pertaining to all religions and/or main principles thereof for the spiritual, mental and/or morals and physical betterment of human beings with the ultimate object of self realisation." However, the Dy. Charity Commissioner did not agree to the deletion of the name of Acharya Rajneesh from the object clause since the Trust had already gained the name by the original clause and it had already carried out such objects in all probabilities. Shri Acharya Rajneeshji being the sole head of the Trust in question, the same objects would be carried out. By changing the words it is not likely that the Trustees would stop publishing or preaching the teachings of Acharya Rajneesh. Keeping these objects in mind, the final amendment, as concluded and approved by the District Civil Court, now reads as under: "To spread and impart p....
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....rol to Acharya Rajneesh over the activities of the Trust. This clause has now been amended and it reads as "the management of the property and other business of the Trust shall be carried out by the Board of Trustees of not less than 2 (two) and not more than 6 (six) members." The power given earlier to Acharya Rajneesh to nominate 5 members on the Board of Trustees has also been deleted. Thus, objection No. 1 relating to the exercising of de facto control over the activities of the Trust is explained to be resolved by deletion of Clause 2 and amendment of Clause 11. (f) Clause 12 also gave difficulty to the department in recognising the Trust as for charitable purposes. The Clause nominated Acharya Rajneesh as advisor for life. This Clause has also been deleted. (g) Finally, the original Clause 28 which gave power to Acharya Rajneesh to guide and advise on all disputes regarding the administration of Trust, now reads as under: "All disputes arising in the administration of the Trust and all questions relating to the interpretation of these presents or to the exercise or non-exercise of the powers and authorities which are conferred by these presents or vested in them by l....
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....ilosophy of Sant Kabir (Kahe Kabir Diwana), on Gurunanak (Ek Omkar Satnam), a commentary on the Sikh scripture known as "Japuji" hailed as best commentary by Gyani Zail Singh, Ex-President of India. We further find that complete Osho literature was accepted by the Parliament library, where Osho literature was termed as "an original creation" and it was observed by Shri Shivraj Patil, the then Speaker of the Lok Sabha who received the literature from he assessee Trust that "the essence as contained in all the volumes is that one should find peace in oneself. Only then can peace be attained in the society and in the entire universe." 27. We find that the main thrust of the activities of the assessee Trust is on Meditation--observance of which is now being recognised universally in almost all fields of human activity as means of self-realisation. It has been brought to our notice that an Institution like Rani Durgawati University, Jabalpur, backed by the State Government of Madhya Pradesh has established an Osho Chair for the study of his philosophy. The object behind establishing an Osho Chair was also incidental to the objects of the Trust. If the preachings of Osho were against ....
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....p; 2,65,74,029 2,83,95,951 1,52,53,173 Voluntary contributions 2,74,555 5,01,441 5,43,910 Other income (rent, interest, Income-tax refund etc.) 1,15,06,511 46,16,802 56,32,134 Expenditure on Meditation 1,04,11,299 1,73,25,549 ....
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....SOPHIA ULTIMA Meditation can bring you to your nature. It can help you to drop all the perversions. It can make you intelligent, it can make you loving, it can make you spontaneous, it can make you responsible. It can make you a benediction to yourself and to existence. Except meditation there is no other method which can help. This is the key, the master key." GUIDA SPRITUALE." The above views of Osho on Meditation are in line with the Indian techniques of Meditation and we do not find anything in these views which may be called against the public policy. 28. In the case of ITO v. S.R.M. Foundation of India [1987] 21 ITD 598, the Delhi Bench of the Tribunal has held that Transcendental Meditation (T.M.) is an educational activity and hence an act of charity. As stated above, the assessee Trust is also having Meditation classes which spread to the humanity to enlighten them to teach themselves to be healthy and cooperative with each other; there is no separate religion and all are one, i.e., human beings. A similar view has been held by the Jaipur Bench of the Tribunal in the case of Dy. CIT v. Prajapita Brahma Kumaris Ishwariya Vishwa Vidhyalaya [1999] 65 TTJ (Jp.) 654....
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....f majority view of the Tribunal dated 2-8-1988 in assessee's own case was written 11 years ago based on old deed which has now been amended and wholly replaced. According to him, the new deed has been written after consultation with CIT to come over all the defects in the original deed which stood in the way of granting charitable status to the assessee. Since in my view, despite the so-called change in the deed, different view cannot be taken, there is no other alternative for me except to express my dissenting view. 32. Before expressing my dissent, it would be useful to say few words about judicial proprietary of the Bench. It has been held by the Hon'ble Supreme Court in the case of Union of India v. Raghubir Singh [1989] 178 ITR 548 that pronouncement of law by a Division Bench of Supreme Court is binding on a Division Bench of the same or smaller number of Judges. The aforesaid observations are not only applicable to Supreme Court Benches, but to all Benches of High Courts and Tribunals since such principle is of universal application. That is why the Madras High Court in the case of CIT v. L. G. Ramamurthy [1977] 110 ITR 453 had suggested that if there are any com....
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....w of the changed circumstances. Let me first state the findings of the larger Bench in this regard. In para 11 it has been held that principle object of the Trust is contained in Clause (a) of the Object Clause and other Clauses are merely ancillary thereto. We will refer to this Clause later on. Thereafter at page 217, it has been held by the larger Bench "under Clause (a), the object is to spread and impart preaching of Shri Rajneesh and other philosophers, but the material which has been supplied to us clearly shows the free dominance of Shri Rajneesh." Then, they had referred to the, preachings of Shri Rajneesh at pages 217 and 218. Thereafter it was held: "the above paragraphs clearly show not only that his preaching is against the accepted idea of Education as spelt out by the Supreme Court in the well known case of Sole Trustee Loka Sikshana Trust v. CIT [1975] 101 ITR 234, but also that they would be positively harmful to the interest of general public. Under the section, as pointed out above, it is necessary that the objects should be wholly for charitable purpose which means that no part of it should go against the object of public utility. In a whole body of preach....
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....Rajneesh has been accepted by the Parliament Library. (9) Rani Durgavati University of Jabalpur has established an Osho Chair for study of philosophy. 36. Now let me discuss whether the amended main object of Trust i.e., Clause 5(a) has become charitable or after the amendment, still remains partly charitable or partly non-charitable. It is the finding of the larger Bench that the main and dominant object of the Trust is the object mentioned in Clause 5(a) and other objects are merely ancillary to the main object. It would therefore be useful to quote the original as well as amended clause 5(a) as under: ------------------------------------------------------------------------------------------- Original clause Amended clause ------------------------------------------------------------------------------------------- (a) To spread and impart the &n....
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....; of human beings with the ultimate objects of self realisation. -------------------------------------------------------------------------------------------- A comparison of both original and amended clause clearly shows that in reality, there is no fundamental change in the object. The preachings of Acharya Rajneesh still continue to be spread and imparted by the Trust. The change is only in the language and not in the ....
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.... the income is exempt from tax. Where the objects are distributive, each and every one of the objects must be charitable in order that the trust might be upheld as a valid charity. If no definite part of the property or its income is allocated to charitable purposes and it would be open to the trustees to apply the whole income to any of the non-charitable objects, no exemption can be claimed. [See East India Industries (Madras) (P.) Ltd. v. CIT and Mohammed Ibrahim Riza Malak v. CIT]. In order to claim the benefit of the exemption under section 4(3)(i) of the Act the property must be held under trust or other legal obligation wholly for religious or charitable purposes. The only relaxation which may arise in some cases is that all the primary objects of the trust must be of a religious and charitable nature and the existence of any ancillary or secondary object which is not of a religious or charitable nature but which is intended to subserve the religious and charitable objects may not prevent the grant of an exemption. This is because such an ancillary or secondary object, even though not of a religious or charitable nature, is intended to effectuate the main and primary obje....
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....rators and Rs. 3,43,044 under General equipment. It has not been shown to us how such expenditure can be described as expenditure for a charitable purpose or for serving a purpose of general public utility not involving an activity for profit nor are we satisfied that it is so. It is only the superior de facto power of Rajneesh which has made such expenditure possible. That power is a part of the constitution of the assessee trust and shows its real nature. A trust with this kind of constitution which does not prevent the use of the funds for such non-charitable purpose defeats its claim as a charitable trust." 41. The perusal of Balance Sheet for the year under consideration shows that apart from investment in immovable properties worth Rs 1.25 Crores plus, trust had invested funds worth more than Rs. 2 Crores in acquiring general equipments, Furniture, Motor vehicle and computer. The copy of Balance Sheet appears at page 69 of Paper Book. The additions in this year were as under: ------------------------------------------------------------------------------------------- Motor Vehicles &nb....
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....avish expenditure was for non-charitable purposes and therefore, exemption under section 11 fails. 42. Before parting with my order, it would be useful to refer the style of functioning of the Trust. From the perusal of statement of accounts, it appears to me that main activity of the Trust is to carry on the business for the sole purpose of acquiring assets in the manner as to making the Ashram having Five Star facilities. If reference is made to the Income and Expenditure A/c. it is seen that out of the total income of Rs. 3,29,74,831, the income under the head "Meditation" itself is Rs. 3,09,62,318. Page 72 of the Paper Book shows the details of income from meditation. The total receipts from the participants is Rs. 2,65,74,029 against nominal expenditure of Rs. 24,02,953 only resulting in profit of Rs. 2,41,72,076. By any standard, it has to be considered as pure business activity. Not only that it is found that the Trust also charged separately from the participants for their foods etc. during their stay. Such receipts arc shown under the head 'Kitchen' amounting to Rs. 2,68,22,927 against expenditure of Rs. 1,83,41,127 resulting in profit of Rs. 84,81,800. Keeping ....
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....ed the assessee's claim. 3. I may briefly narrate the facts leading up to the difference of opinion. The assessee is a trust by name Neo Sannyas Foundation, which was earlier known as Rajneesh Foundation. The Trust was constituted by Deed dated 11-6-1969 by two persons as settlors. The Trust was originally known as Jeevan Jagruti Kendra. It initially functioned from Bombay. The aims and objects of the aforesaid Trust, as per clause (5) of the Deed, have been reproduced by learned AM in paragraph 3 of his order and for the sake of brevity, they are not reproduced here. The first year of assessment of the Trust to Income-tax was the assessment year 1970-71 and up to and including the assessment year 1974-75, the trust was granted exemption under section 11. In the assessment year 1975-76, a dispute arose for the first time as to the entitlement of the assessee for the exemption. By 1974, the name of the Trust had been changed to "Rajneesh Foundation" and the trust had also shifted its base from Bombay to Pune. For this year, the matter reached the Tribunal. The decision of the Tribunal is reported as Rajneesh Foundation. After a detailed discussion, the Tribunal held that the ....
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....ted by the CIT. 6. Thereafter, the assessee-Trust made the necessary amendments to the Trust Deed including the deletion of certain clauses in the object clause considered by the Income-tax Department to be objectionable. An application was made on 29-3-1989 before the Dy. Charity Commissioner of Pune and therein it was made clear that the amendments to the Deed became necessary because of the view taken by the Income-tax authorities. An attempt was made to reconcile the Trust Deed in consonance with the Income-tax Act and the Bombay Public Trust Act. The amendments were allowed in substance. 7. The assessments for the assessment years 1989-90 and 1990-91 were completed under section 143(1)(a) accepting the assessee's claim for exemption under section 11. 8. In the assessment year 1991-92, which is the year under appeal, the Assessing Officer (A.O.) took the view, with reference to the amended objects clause 5(a), that the "substance of the clause, even after amendment, has remained virtually the same i.e., the trust even now aims at spreading and imparting preaching of Acharya Shri Rajneesh, though it is mentioned that preachings of other philosophers etc. will also b....
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....ich was self-realisation, which is the ultimate aim of all religions. In support of the claim that the Acharya can no longer be accused of being vague in his preaching, it was pointed out that he took "Maha Samadhi" on 19-1-1990 and therefore one of the main objections of the TMB, viz., that the Acharya can change his views, was no loner valid. Attention of the CIT(Appeals) was also drawn to the settlement entered into with the CIT with a view to putting an end to the litigation up to the assessment year 1988-89 and also to the fact that from the assessment year 1989-90, the activities of the assessee-Trust were governed by the amended Trust Deed, which did not contain any of the objectionable clauses. It was therefore pleaded that the assessee should be granted exemption. 10. The CIT(Appeals) in an elaborate order accepted the assessee's contentions and held that there was a distinction between the position which obtained up to the assessment year 1988-89 and the position which obtained thereafter. He referred to the various amendments carried out to the Trust Deed and held that these amendments removed the obstacles which were highlighted by the Tribunal in its earlier ord....
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....t had also omitted clause 5(b) under which it was empowered to print and publish book, etc. containing the preachings of Acharya Rajneesh. This clause had been considered by the TMB as resulting in a business activity for profit and the omission thereof was considered by the learned AM as a significant change. Clause 5(f) authorising the establishment of Ashrams, schools, colleges, etc. for the purpose of training students in the ideals of education was also deleted. The Acharya's powers to nominate members to the Board of Trustees was also deleted. Thus, the Acharya was neither an advisor to the Trust nor exercised any de facto control over the Board of Trustees. Earlier, the Acharya was the final arbitrator of all disputes regarding the administration of the Trust. However this power was taken away from him and any disputes were to be decided according to the wishes of the majority of the Trustees. 12. The learned AM further noticed that the Acharaya was no longer around as he had taken Maha Samadhi on 19-1-1990. This had put an end to any control exercised by him over the affairs of the assessee-trust and also took care of the objection of the earlier Tribunals that there....
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....versities or by the Parliament of India would have been unwarranted. He further observed that merely because the preachings of Acharya Rajneesh would seem controversial to some, it cannot be assumed that they are not for public benefit. He referred to the accounts of the Trust and found that the main activity carried on by the Trust was meditation on the lines developed by the Acharya by adopting several techniques for the improvement of the mind and the body. The stress of the Acharya, according to the learned AM, was on meditation which has also been recognised as the bedrock of Indian philosophy. He proceeded to quote from a book written by the Acharya on the subject of meditation and held that these views of the Acharya were in line with the Indian techniques of meditation and there was nothing therein which can be said to against public policy. 15. In the aforesaid view of the matter, the learned AM held that the assessee was entitled to the exemption under section 11. 16. In the course of the arguments, a point appears to have been made before the Bench of that the CIT (Appeals) was not justified in directing the grant of registration under section 12A. The assessee wou....
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....he registration under section 12A was a strong ground for holding that the assessee was a charitable trust. According to the learned JM, if this view is taken to its logical end, then it would mean that the jurisdiction of the Tribunal, to consider the issue whether the objects of the Trust are charitable or not is ousted. He noted that the very same question had arisen before the TMB and the TMB had held that the grant of a certificate under section 80G does not mean that the Tribunal does not have the power to decide whether the objects of the assessee-Trust are charitable in nature or not. Accordingly, the learned JM held that the view of the learned AM regarding section 12A of registration is contrary to the view of the TMB. 19. Turning to the decision of the learned AM that after the amendment of the Trust Deed and in view of the changed circumstances, the objects of the Trust have become charitable in nature, the learned JM proceeded to record his view. According to him, clause 5(a) of the Trust Deed, when compared to the original Deed, shows that there was no fundamental change in the object. The change according to him, was only in language and not in spirit. The preachi....
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....ject of the assessee is to earn profit and not to achieve any charitable object. In this view of the matter, dissenting from the view expressed by the learned AM, he held that the assessee was not entitled to the exemption under section 11. He thus allowed the appeal by the Revenue. 21. This is how the matter is now before me. I have carefully considered the rival contentions. I have also perused the written submissions filed by the learned DR at the time of the hearing as also the written submissions filed by the assessee, including the written submissions filed by the assessee under cover of letter dated 16-4-2001, for which my leave had been taken at the time of the hearing itself. 22. The facts have been narrated in sufficient detail in the order of the learned AM. There is no need to reproduce them now. The first question that was argued before me by the learned DR was that the Bench should have referred the matter to a larger Bench for decision if it had felt that the matter required reconsideration, assuming that there was a change in the facts. Mr. Inamdar, the learned counsel for the assessee submitted that in the absence of a precise question on this aspect, I shoul....
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....decisions without being sensitive to the changes, both factual and legal, also does harm to the adjudication process just as a refusal to follow the earlier decisions even when the facts and circumstances and the legal position continue to be the same. This is especially true under the Income-tax law, where each assessment year is considered to be a different year and where the principles of res judicata are generally not to be applied. It is no doubt true that certain fundamental principles do not keep changing from year to year and such fundamental principles have got to be uniformly applied for all years. But even in the matter of examining the applicability of those principles, the Tribunal has to first examine whether there is any change in the factual or legal position from those obtaining in the earlier years and if there is a change, the Tribunal has to proceed to evaluate the impact of such changes upon the applicability of the earlier decisions of its own. I have not been referred to a single case--though both sides referred to various judgments before me on the question of judicial propriety--whether it has been held that despite a material change in the factual or legal....
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.... did not take effect for the year under appeal and that it took effect only from 3-9-1991, the date on which the District Court passed the order approving the changes. It was contended that the CIT (Appeals), inasmuch as he had looked into the amended Deed, committed an error. It was further contended that the conclusion of the CIT (Appeals) that the amended Deed came into effect from the assessment year 1989-90 proceeds on the erroneous assumption that the date of the application made to the Dy. Charity Commissioner is decisive of the matter. It was pointed out that this view of the CIT (Appeals) is not correct in view of the judgment of the Supreme Court in the case of CIT v. Kamala Town Trust [1996] 217 ITR 699. It was further submitted that the amended Deed has also clouded the view taken by the learned AM, who proceeded on the assumption that the amended Deed applied to the assessment year under appeal. Mr. Inamdar, the learned counsel for the assessee took up a preliminary objection to the effect that the Assessing Officer has not stated that the amended Deed is not effective for the year under appeal, that neither the learned JM nor the learned AM has discussed the question ....
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....ld that the amendments did not make any substantial change to the earlier position; he has not held that the amendments do not apply to the assessment year under consideration. On this question, therefore, there is no decision by either of the learned Members presumably because the case all through proceeded on the footing that the amended Trust Deed applied to the year under consideration. This matter was therefore not argued before them. I therefore sustain the objection of Mr. Inamdar. Consequently, I do not propose to enter into an academic discussion of the question on merits, viz., whether the amended Trust Deed applies to the assessment year under appeal or not. 27. The question whether there is a change in the facts and circumstances for the year under appeal has been carefully considered by me in the light of the orders of the learned Members constituting the Bench and the rival contentions very ably put forth before me. I am satisfied that there is a change in the facts and circumstances for the year under appeal which justifies the view taken by the learned AM. According to the learned JM, there are two changes pointed out by the learned AM, because of which the earli....
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....ibed form 10A, a copy of which is placed at pages 10 and 11 of paper book No. III filed by the assessee. There is also a letter written by the assessee on 4-8-1992 to the CIT, Pune in which there is reference to the pending application for registration under section 12A. In this letter, the assessee has sought to explain to the CIT how the amended trust deed has sought to remove the objections raised by the Departmental authorities upto to the assessment year 1988-89. The assessee has further sought to explain that from the assessment year 1989-90, the objects of the trust can neither be considered vague nor to project and perpetuate the image of a single individual, viz., Acharya Rajneesh. The latter also explains further the assessee's case by reference to the changed perception of the teachings of the Acharya. A copy of this letter is at pages 6-9 of the paperbook No. III. Thereafter, on 18-12-1997, the assessee wrote another letter to the CIT Pune briefly recapitulating the developments and requesting the CIT to look into the pending application for registration. On 18-5-1998, the CIT Pune passed an order under section 12A registering the assessee Trust w.e.f. 18-12-1997. A....
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.... In this background, the assessee came up with a settlement proposal before the CIT. It had amended the Trust Deed and had sought to remove the objectionable clauses therein. It had also offered to pay the taxes up to the assessment year 1988-89, as per the orders of the Tribunal, to put an end to the litigation. It had withdrawn the Writ Petition filed by it against the order of the TMB. The settlement had been broadly accepted by the CIT. The Acharya had taken Maha Samadhi in January, 1990. All these developments were clearly within the knowledge of the departmental authorities. The impact of all these developments, it would be reasonable to assume, would have been taken into account by the CIT when he granted registration w.e.f. 18-12-1997 to the assessee-trust under section 12A. The grant of registration has to be viewed in the light of the aforesaid developments. Therefore it is that I consider the grant of registration to be of great significance, may be even indicating a change of heart on the part of the departmental authorities in their attitude to the assessee-Trust. These considerations and developments add that such weight to the grant of registration. Thus, it would be....
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....ble nature of the objects of a Trust and wanted that a scrutiny of the objects and activities of the trust should be made at the inception itself by a senior functionary of the Department. That is perhaps why the CIT, a senior officer of the Department, has been conferred power to scrutinise the objects and activities of the Trust even before granting registration. An opportunity of being heard has also been provided to the Trust, in case the CIT does not propose to grant the certificate. It is certainly open to the Legislature to attempt to put an end to unnecessary litigation or to control the same at the threshold itself and such an attempt, in my humble opinion, cannot always be considered to be an attempt to oust the jurisdiction of the Tribunal. The introduction of section 12AA must be viewed in this context and not as an attempt to oust the jurisdiction of the Tribunal. It may perhaps even be argued, though it is not necessary for the present case, that if the Parliament wishes that a particular type of controversy cannot be contested by way of the normal appeal remedy, there is very little the appellate authorities could do. It must be remembered that a right of appeal is n....
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.... the TMB that this clause is partly non-charitable. According to the learned JM, this clause, both before and after the amendment, refer to the teachings of Acharya Rajneesh and for that reason, it continues to be non-charitable, and therefore the ratio of the order of the TMB continues to apply for the year under appeal also. I may reproduce this clause both before and after the amendment ------------------------------------------------------------------------------------------- Original clause Amended clause ------------------------------------------------------------------------------------------- (a) To spread and impart the (a) To spread and impart the preaching of Acharya  ....
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....p; Objects of self realisation. -------------------------------------------------------------------------------------------- 33. It is true that even after amendment it is open to the trust to spread and impart the teachings of Acharya Rajneesh. But the question is:-- Did the TMB consider that a trust would be ineligible to be characterised as a charitable trust because it endeavoured to spread the teachings of a particular individual? In my opinion, the answer is in the negative. It is not because the assessee-trust was formed to impart and spread the teachings of one individual that it was held to be non-charitable in nature. The real reason, in my humble opinion, which persuaded the TMB to hold that the aforesaid clause (before amendment) was partly non-charitable was because it considered the teachings of the Acharya to be opposed to public policy and harmful to public morality. It also considered the teach....
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....eachings of the Acharya were against public policy or morality is no longer valid in view of the changed perception of the activities of the trust. He has referred to the fact that over 650 books written by the Acharya have been widely studied and translated into many European, Asian and other languages. He has also referred to the fact that the writings were on diverse subjects such as Vedanta, Geeta, the philosophy of Sant Kabir and Guru Nanak, commentary on Sikh scriptures and so on and so forth. The learned AM has further referred to the fact that the complete literature of Osho has been accepted by the Parliament Library, where it has been termed as an "original creation" by the then Speaker of the Lok Sabha. The learned AM has also referred to the fact that reputed institutions such as Rani Durgavati University of Jabalpur has established an Osho chair for research into the philosophy of Acharya Rajneesh, He has further referred to the fact that the main teaching of Acharya Rajneesh was meditation which constitutes the basis of all important religious. Different forms and types of meditation have been developed by different religions all over the world and at present in the c....
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....st. These amendments do make a significant impact on the position obtaining for the year under appeal. 38. One more important amendment was the one made to clause 5(b) which authorised the trust to print, publish, sell, distribute either free or for a price, books, magazines, lectures, preachings, writings, periodicals, bulletins, etc. This clause was considered by the TMB as an activity for profit. This clause was deleted by the amendment to the trust deed. The amendment meets one of the basic objections of the departmental authorities to the grant of exemption. 39. In paragraphs 40 to 42, the learned JM has made observations regarding the style of functioning of the assessee-trust. He has referred to the acquisition of assets by the trust and has opined that such large acquisition of assets by incurring "lavish expenditure" was for non-charitable purposes. He has also referred to the fact that there was a surplus in the meditation activities of the trust and therefore such activity must be considered to be a "pure business activity". The learned JM has also referred to "five star facilities" provided by the trust by incurring huge expenditure on general equipment, furniture....