TaxTMI 
TaxTMI 
TaxTMI 
1993 (11) TMI 13
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....The trustees are carrying on activities of charitable nature only and simply by labelling the trust to be charitable and religious, it does not become so. The Appellate Assistant Commissioner, by his order dated November 28, 1977, set aside the said part of the order. He arrived at the conclusion that the trust was charitable and religious and if the objects of the trust are independent and the trustees are given powers to spend the trust funds towards any of the objects of the trust within the framework of the trust deed, the nature of the trust would be decided by taking into consideration the objects of the trust. He further held that in the present case the trustees were empowered to spend the trust funds on religious activities which were independent of other activities. Therefore, the provisions of section 13(1)(b) were not applicable. Against that order, the Revenue preferred an appeal before the Tribunal. The Tribunal arrived at the conclusion that section 11 exempts income from property held by charitable or religious trusts while section 13(1)(b) takes away such exemption in the case of a trust for charitable purposes only, in case it is for the benefit of any particula....
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.... where any such income is finally set apart for application to such purposes in India, to the extent to which the income so set apart is not in excess of twenty-five per cent. of the income from such property. " The phrase "religious purpose" includes relief of the poor, education, medical relief, and the advancement (sic). However, the phrase charitable purpose is defined under section 2(15) of the Act which reads as under : " (15) 'charitable purpose' includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility not involving the carrying on of any activity for profit ; " It is to be noted that definition of the phrase "charitable purpose" is inclusive and it covers a wider field than the field covered by the words " religious purpose". Further, in some cases, even a religious activity by a particular sect would be a charitable activity ; for some, supply of fodder to animals and cattle is a religious object, while to others it may be a charitable purpose, according to Hindu religious activity. Similarly, Khairat under the Mohamedan law would be considered to be a religious activity. The said activities may be for a ....
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.... Pandit Saraswati). " In view of the aforesaid discussion, it can be said that a trust can be either for religious purposes or for charitable purposes or it can be for both charitable and religious purposes. An identical definition of the phrase "charitable purpose" was considered by the Supreme Court in the case of Fazlul Rabbi Pradhan v. State of West Bengal, AIR 1965 SC 1722, in the context of the West Bengal Estates Acquisition Act, 1953. Under section 2(c) of the Act, "charitable purpose" was defined to mean as including the relief of poor, medical relief or the advancement of education or of any other object of general public utility. The definition of "religious purpose" under section 2(n) is as under : " 2(n) 'religious purpose' means a purpose connected with religious worship, teaching or service or any performance of religious rites ; " Under section 6 of the said Act, exemption is given to corporations and institutions established exclusively for a religious or a charitable purpose or both. The court observed that the word "exclusively" limits the exemption to trusts, endowments or other legal obligations which come solely within charitable or religious purposes. Wit....
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....onsidered to be religious, pious or charitable according to the notions of members of the Dawoodi Bohra community and further the income in the corpus of these properties settled upon trust must be used for Dawat purposes, that is, for the benefit of the Dawoodi Bohra community. Though the words of clauses 6, 7 and 8 are very wide in terms, in fact, that apparently wide discretion of the Mullaji Saheb is bound down by the two factors, namely, that this is a wakf, a dedication by a Mussalman of property for purposes which, according to the notion of Mussalmans, are pious, religious or charitable, and, secondly, it must be used for Dawat purposes, that is, for purposes which go to benefit the Dawoodi Bohra community. With these two limitations operating on him, even the apparently wide discretion conferred upon the Mullaji Saheb as Dai-ul-Mutlak for the time being is confined within the four corners of these two overriding factors and in view of these two overriding factors it must be held that the properties in question settled by the two deeds of January 12, 1937, were settled upon trust for charitable or religious objects and were, therefore, entitled to exemption under section 11....
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....ligious purposes or a charitable or religious institution, any income thereof-- (i) if such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or (ii) if any part of such income or any property of the trust or institution (whenever created or established) is during the previous year used or applied, directly or indirectly for the benefit of any person referred to in sub-section (3) ; . . . (d) 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, 198....
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....r education of any particular religious community or caste. Clauses (c) and (d) would be applicable to a trust which is either for charitable purposes or religious purposes or partly charitable purposes and partly religious. Hence it can be stated that if a charitable trust is established only for the benefit of any particular religious community or caste, then the provisions of section 11 would not be applicable. But in the case of a trust or an institution for religious purposes wherein certain activities can be termed as charitable activities for the benefit of any particular religious community or caste, clause (b) would not be applicable. Mr. Shelat, learned counsel for the Revenue, vehemently submitted that by giving this interpretation to clause (b) of section 13(1), the said clause (b) can be made nugatory by merely using the words in trust deeds that the trust was established for religious and charitable purposes. He, therefore, submitted that the authority is required to determine the predominant purpose of the trust and if the predominant purpose is a charitable purpose it is difficult to accept the said contention mainly because it is nowhere provided in the section th....