TaxTMI 
TaxTMI 
1983 (1) TMI 109
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.... 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 principles thereof and/or morals ; (b) For the purpose to print, publish, sell, distribute other free or for price books, magazines, lectures, preachings, writings, periodicals, bulletins, journals and any other literature (c) To conduct or arrange lectures, tour....
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....cept 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 which may be or indirectly conducive to any of the objects of the Trust either gratuitously or otherwise. (q) To invest moneys belonging to the Trust in such securities or other wise and in such manner as laid down and/or provided for in the statutes and/or permission by ....
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....corporated in the objects of these presents. And provided further that if any time any of the objects mentioned hereinabove be deemed to be the object not 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 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 (two) and not more than 11 (eleven) members, as constituted and provided hereinafter : Acharya Shri Rajneeshji as the adviser of the Trust shall nominate up to 5 (five) (may be at a time or from time to time....
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....on 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 work 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'. Auditors' report for the year ended 31-12-1974 indicated that separate books of account were maintained at Poona for all transactions carried on from there in the name of Rajneesh Foundation. The figures of both Bombay and Poona accounts were amalgamated and a consolidated income and expenditure account was prepared with a balance sheet annexed thereto. Premises of the trust in Woodland Co-operative Society at Bombay were disposed of during the year 1974. The tr....
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....ublic utility, since it was for the spreading of teachings of various philosophers though mainly of Acharya Rajneesh, but since the object of public utility so conceived, involved the making of profit by a business---like activity in the publication and sale of books, magazines, tapes, etc., it was excluded by section 2(15) of the Act, from being a trust for charitable purposes. The Commissioner (Appeals) also held, considering the several clauses of the trust deed, that during the assessment years under appeal, the trust could not be held to be a religious trust. Dealing with the computation of income under the various heads, the Commissioner (Appeals) held that the donations were in the nature of capital receipts and have to be excluded in computing the total income of the assessee. Claim for exemption under section 54 of the Act was made while computing the income from capital gains. The ITO's view that as the trust as such was not residing in the property disposed of, the assessee was not entitled to relief under section 54, was upheld by the Commissioner. On the question of computation of income from the business of publication and sale of books, the Commissioner set aside the....
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....s been accepted by them showing that the authorities have accepted the trust as a charitable institution. Taking us through the various provisions of the trust deed dated 11-6-1969, the learned counsel has pointed out that the object clause specifying the purposes for which the trust existed clearly supports his claim. Sub-clause (a) of clause 5, according to the learned counsel, is the main object of the trust and refers to spreading and imparting the preaching of Acharya Rajneesh and other philosophers pertaining to all religions as well as morals. Sub-clauses (b) to (g) are ancillary objects necessary to make effective the principal object, obtaining sub-clause (a). Sub-clauses (h) to (q) of clause 5 put down the powers enabling the trustees to fulfil the objects. Sub-clauses (r) to (t) are, primarily subservient to sub-clause (a) and could also be regarded as other objects equally charitable. According to the learned counsel, these objects though by themselves charitable have also to be understood in the back ground of the principal object of the trust, viz., the spreading of the philosophy of Acharya Rajneesh. Provision of relief to the poor, medical relief running dharamshala....
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....cognition and upgrading took place subsequently, according to the learned counsel, it was only the culmination of an effort and activity which was being carried on during the year under appeal and the earlier years. A University cannot come into existence or be brought into existence by a stroke of the pen. Primarily it should evolve from a basic infrastructure and only an institution where education and teaching goes on for some time---with time blossoming into a fulfledged University as such---get recognition nationally as well as internationally. According to the learned counsel, the fact that in 1977 such recognition was achieved by the assessee-institution was ample proof to show the beginnings of teaching and education. The foundation of the University was also there during the years under appeal. Reference is in extenso made to the connotation of the word 'University' occurring in dictionaries and other literature material. A 'University' is a body of persons imparting knowledge. It may be done either by providing facilities for teaching and research or by the grant of academic degrees, etc., but the sole purpose of the University is not grant of degrees. Not merely formal e....
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.... were as many as 21 such programmes during the year 1974. The main activity of the Foundation is education and teaching which is achieved by teaching the individual the true purpose of life, how to be at peace with himself and to achieve his own individual true fulfilment and to give forth his best whatever be his vocation or activity in life. A complete list of the books published by the Foundation and also the attempts made by the Foundation to get recognition both on a national as well as international level as an academic institution conforming to the traditional type is referred to. Details of the programme of activities especially those in connection with the meditation are referred to indicate that there is a systematic study and training going on in the institution to justify its being called an educational institution. 13. The learned counsel has also pointed out that a trust as well would be entitled to the exemption under section 10(22). A trust can have various activities. If the activities of the trust would come within the scope of 'educational', then the trust itself would be exempt as to its income under section 10(22). In the case of the present assessee the act....
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....al part of the educational purpose. While on the one hand there was no evidence to show that the assessee's activities were intended for profit-making, on the other hand there is much to show that the institution does not exist for any purpose other than education. In fact if the donations received are omitted, there would be not only no surplus during the year but a deficit. Even the notional surplus after taking the donation into account is utilised for educational purposes, viz., construction of buildings. 15. Claiming that the assessee is entitled to exemption in the alternative under section 11, the learned counsel has put his claim under 3 broad heads : (i) firstly, that it is a general charitable purpose dealing with education ; (ii) secondly, that the objects of the trust constitute objects of general public utility ; and (iii) lastly, that, at any rate, the purpose is religious in nature. As a prelude to his argument, it is pointed out that the assessee-trust is registered with the Charity Commissioner as a charitable trust. It has also obtained clearance from the Commissioner under section 80G. These two clearly indicate that the profits, if any, could not ....
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....t is to educate the people on this religion. Merely because it contains certain new concepts or approaches, it would be wrong to treat it as not a religion. The learned counsel took us elaborately through the meaning of philosophy, the concept of a philosophy as expounded by persons like Aristotle, etc., to show what Acharya Rajneesh propounded is also a philosophy of life dealing with human truths, etc.---which after all is what religion is comprised of. 16. The learned counsel has also pointed out that having regard to the acceptance in the ITO's order of his being a charitable institution and the Commissioner's granting a certificate under section 80G, it was not open to the department to hold that what the assessee does is not an object of general public utility at all. In fact, if the trust is not for charity, it would be void being in breach of the principle of perpetuity there being no beneficiary. In that case only the settlor can be assessed and not the trustees and the assessment has to be cancelled. In fact even though the assessee can spend the moneys on any object enumerated in the various clauses of the trust deed, according to the learned counsel, there is not eve....
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....ething ; teaching is given and the person is trained up for a career. Section 10(22) has only relevance to formal education where education is a process by which knowledge, skill, training, habits, etc., are acquired, whereby a person is entitled to become a useful member of the society. According to the learned counsel, the definition given in this connection in Loka Shikshana Trust's case still holds good. The assessee-trust even if it is regarded as an institution, cannot be regarded as an educational institution. 18. It is also pointed out that, at any rate, the assessee is not an educational institution solely for educational purposes. Reference is made in this connection to the terms of clause 5(a) and (b) of the deed. The purpose as enunciated in these clauses is vague and specious ; there is no valid ascertainable purpose. On this point the learned counsel has raised a question : what are the preachings of Acharya Rajneesh and what is his status to be regarded as a philosopher. It must be shown that his preachings are of a type indicating advancement of humanity. Referring to the clause-other philosophers pertaining to all religions and/or main principles thereof and/or ....
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....on philosophical and spiritual subjects of Acharya Rajneesh, accompanied by two meditations in the day, said to be a sort of imparting training in Yogic and other technics of meditation. The publication of the discourses is in this letter said to be a part of the activities of the trust to achieve the main object. Several hours are devoted directly for imparting training in spiritual and philosophical activities which are carried on non-stop or without any vacation or holidays. It is on the basis of these that it is claimed that the institution is stated to be engaged in educational activities for as many as 2,400 hours a year 'which hardly any other educational institutions must be exceeding'. 20. In order to claim exemption under section 10(22), according to the learned counsel, the assessee must show that it is a University or other educational institution existing solely for educational purposes and not for profit. Though the Income-tax Act does not define the word 'University', there are other provisions such as those in the University Grants Commission Act, 1956, which defines it 'as established or incorporated by or under a Central Act, a Provincial Act, or a State Act an....
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.... it is existing solely for the purposes of education and it is similar in nature to a University, amongst other things it should have been recognised or be capable of recognition by the Director of Education or the Department of Education of the State or Central Government. It must have an educational programme, a syllabus, a standard for achievement prescribed ; it should have teaching staff with requisite and prescribed qualifications ; there must be minimum educational standards prescribed for admission to the institution ; annual and periodical programmes of teaching chalked out in advance for various courses ; and organised scheme of imparting education such as through lectures, workshops, libraries, etc., examinations periodically or finally or at any rate some type of appraisal of the students' achievement ; awarding of diplomas or degrees or even certificates in recognition of the completion of the education or educational programme. According to the learned counsel, if these tests are applied to the present case, the trust would fail miserably as an educational institution. Even, according to the assessee, the main object of the trust is to spread and impart the preachings....
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....as an object of general public utility. Even if this claim is accepted, according to the learned counsel, the manner in which it is achieved is through discourses for which often an entrance fee is charged, through books, normally if not excessively priced, and tapes, etc. The sale and distribution of these would clearly be an activity for profit under section 2(15). Exemption under section 11 on this ground cannot, therefore, be availed of. The assessee clearly does what any trader in books would do. Nor, according to the learned counsel, can a claim of the assessee as a religious institution be accepted. Acharya Rajneesh does not expand any religion even if it be understood in its widest sense. On the contrary, according to the learned counsel, he advocated, as is well known from papers, books, etc., certain course of conduct which at least in some circles is regarded as morally questionable, if not openly repugnant to the normal norms of civilised society. Even if this be regarded as religion, according to the learned counsel, it would be so crude as not to be recognised as a religious practice to be adopted in civilised society. 23. The principal point to be decided in these....
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....her the section nor the sub-section specifically provides that the income should accrue to the person, but unless the provisions of the Income-tax Act through its charging section relate the income to the person, the exclusion cannot operate. The natural corollary of this is that the income of the University or other educational institution should, if it be chargeable, be chargeable in the hands of the assessee. The essential ingredients of this section are that : (i) the income in question should be of a University or other educational institution ; (ii) existing solely for educational purposes ; and (iii) existing not for purposes of profit. Controversy was raised before us on behalf of the department that the exemption does not apply to a trust but only to an institution which satisfies the specific condition of section 10(22). This, however, is answered by the decision of the Madras High Court in the case of Aditanar Educational Institution, it stated : ". . . so long as it was found that the institution existed for educational purposes in the relevant year, and so long as its profit is incidental to the purpose of education, the income would be exempt, and not a....
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....eferring to K. V. Venkatakrishna's case the assessee's learned counsel pointed out that a tank was designated as an 'institution'. An 'institution' may be tangible as in that case or intangible as where one speaks of the 'institution of the marriage' but for the purposes of section 10(22) 'institution' has to be understood as something relevant in the context of a University and education. It could, therefore, mean only an organised establishment where activities which relate to education are carried on. Where a trust runs an educational institution, viz., a college, as in Aditanar Educational Institution's case, the trust could become the institution in question. The decisions cited above do not preclude the exemption being available but to the extent obtaining under section 10(22) to a trust or a society which as part of its several activities also runs an institution, for instance, a college, school, etc. 27. The exemption is available for the income of a University or other educational institution. That we are not concerned with the University here is clear. The claim made is that the assessee is an educational institution and for the assessee's part this claim has been made....
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....fit' are cumulative and must co-exist together to avail of the exemption. An educational institution generally exists for educational purposes. The significance of point 'solely' in the sub-section, therefore, cannot be regarded as a matter of mere caution. An educational institution may either, as a part of its activity of education or independent of it, have other purposes as well, where, for instance, educational institution which teaches the students also conducts a business where the students can be employed or the income from which can be utilised. The institution, however, in that case can be regarded as educational only if at least the major part of its activity should be for education. In order, however, to be entitled for the benefit of section 10(22) the institution should exist 'solely' for the educational purpose. In other words, any other purpose unless it could be a mere ancillary or incidental to the educational purpose, would deny the exemption. Likewise the institution should not exist for the purpose of profit. Profit, in this connection, would mean private profit. If, therefore, some profit accrues from the educational activity which is not appropriated by any p....
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....tion is a non-educational institution, prima facie it will not be entitled to the exemption. The institution for the purposes of section 10(22) should be an educational institution, even if its scope is understood as extended by the judicial decisions like Aditanar Educational Institution's case. In other words, according to us, the clarification 'educational' applies to the institution and not to the income and if this be so, primarily the nature of the institution is to be regarded rather than the nature of the income. If, therefore, an institution is not educational, the fact that for some years or any relevant previous year its income is educational may not qualify the institution for exemption under section 10(22). We have no hesitation in holding on a proper interpretation of section 10(22) that the nature of the institution as educational is a fundamental condition for availing of the exemption. Merely because, therefore, a trust or a society for some years or in any particular previous years exists for educational purposes and not for purposes of profit, the exemption would not be available to it. It is interesting to recall in this connection decisions of the High Courts s....
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....cepted. Under the trust deed as it stands it would be open to the assessee to embark on any of these activities even if they have no relation to the objects in clause (a). 31A. Secondly, the Ashram at Poona is claimed to be an educational institution in the light of Aditanar Educational Institution's decision. We find two objections to accepting this. The Ashram at Poona itself has several activities, full details of which are not delineated in any definite form. A circular on the activities of the Ashram issued to those who are invited to partake of its activities is very relevant in this connection. For instance one of the pamphlets issued indicates that the Ashram 'at present consists of two main building complexes surrounded by beautiful gardens'. Details are given of Krishna House and Lau Tzu House. Details of the Ashram programme are as under : "DAILY ASHRAM PROGRAMME (Except during camps) : 06.00 hrs. Dynamic Meditation 08.00 hrs. Discourse by Bhagwan Shree 17.30 hrs. Kundalini Meditation 19.00 hrs. Darshan. The activities are discourses, darshan, meditation camps, special programmes, rolfing, primal intensive, encounter groups, enlightening intensive, h....
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....cept is added the two other attributes 'existing solely for educational purposes' and 'not for profit', the idea is clear that whatever a person achieves in this institution should be an addition to his personal outfit similar to what obtains in a University or any other educational institution. In other words, even if section 10(22) does not require that a degree should be awarded, a regular course should be conducted or there should be an oversight by the education department of the State or a Commission like the University Grants Commission, it should comprise certainly systematic imparting of knowledge akin to what goes on in these places. If an institution, therefore, prepares a person for writing an examination conducted by a University or a faculty, or the organisation like the Institute of Chartered Accountants or conducts systematic classes educating adults or preparing a person for a discipline like Homoeopathy, Astrology, etc., it could be called an educational institution. But an institution where diverse activities are carried on to suit the interest and mind of a particular individual, activities incapable of being assessed in the end and not possible to be evolved as....
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....part of the activity of the Ashram consists in the publication of books. Whereas the local ashramites had the benefit of the lectures of Acharya Rajneesh in person, the substance of these lectures were made available to non-ashramites through books, tapes, etc. Certainly reading books may be a part of education but reading books by itself cannot be regarded as education, especially where the books themselves represent the view of an individual however eminent he be. If a person were to perhaps take up as a subject for research and investigation, the works of Acharya Rajneesh even as he could research on the works of Ramanuja or Kalidasa or Socrates or Shakespeare, say for preparing a thesis for a Doctorate or so, certainly that could be a part of educational activity. The institution which enables such activity to be carried would be an educational institution but not the reading of the books themselves. We have no doubt that a University or an institution which enables a scholar to study literature to use as his subject of research the plays of Shakespeare and Kalidasa to win a Doctorate degree would be conducting an educational activity, but wherever a person who continuously rea....
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....art for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of twenty-five per cent of the income from such property ;" The exemption in this case relates to the income from property held under trust for certain purposes. The exemption is available if the purposes are charitable. Even though the exemption applies to the income, the income under consideration is from 'property held under trust'. The criterion for decision, therefore, would depend on the property and the nature of the trust rather than the nature of income itself. A trust being an obligation attached to property with confidence reposed by the settlor the nature of the property when once a trust is constituted cannot change. If, therefore, a property is held under trust for charitable or other purpose, it should continue to be held for the same purpose if the provisions of section 11 are to be available. Since the nature of a property is to be decided by its position relating to the trust deed whether the exemption is available under section 11 or not would automatically depend on the trust deed itself. It is only, therefore, on a proper reading of t....
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....ubstantial groups of persons moved by the teachings, preaching, ways of life and guidance given by an eminent person or persons and coming through periods of life from generation to generation that we can call it a religion. Hinduism spread over the ages from sages to sages accumulating the genius of man from time to time comes down to us as the religion of Hinduism. Christianity set on the foundation of the teachings of Jesus subject to all its questioning of Christ, thwarting and disobeying him and his teachings from age to age has come down to us as a religion. Likewise with the prophet and the teaching of Kuran, the Budha and his great teachings, Mahavira with his prolific gifts to mankind have all come down to us from generation to generation being subjected to the contemporary struggle and tests from every generation so as to be regarded today as the religion of Islam, Buddhism, Jainism, etc. Even the philosophy of a great philosopher like Aristotle, Shankaracharya, Ramanuja have not come down to us with the high name of religion. With all their scholarship, wisdom and knowledge, masterly instructions, guidance and leadership for the community and their lasting all around con....
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....ssessee pointed out no evidential material other than a vague allegation is made in this regard. From the strictly jurisprudential point of view evidence of any type has not been produced in this connection. Acharya Rajneesh, however, is a controversial figure and we shall not be telling the truth if we disown having seen material relating to his activities in the common newspapers everybody reads day-to-day. In fact we find that one of the recent items of news indicates that the Acharya has shifted to the State of Oregan in the United States where his activities are carried on and as part of these even night clubs are to be opened in several parts of the world. This being mere a newspaper report cannot be treated as evidence or even serious information to judge a case. We are mentioning this only to emphasise the point that while on the one side evidence is not coming to prove the exact nature of the message the Acharya has to give and the specifically alleged noble way of life he holds out for humanity, there are other items of information to the contrary. It is true in the lifetime and even thereafter of every religious leader and prophet offensive things might have been said or....
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.... The learned counsel for the department pointed out that even entry to the Ashram including the hearing of the discourses is regulated by payment, that the tapes, books, etc., are all priced publication and the entire activity is run more on a business line than otherwise. Clinching evidence in this regard not having been brought before us, we cannot accept this argument. It, however, remains that the activities of the Ashram cannot be regarded as open to the public in the same way as those of charitable institutions as generally known. The trust deed makes it clear especially in clause 5(a) that a main object of the trust is the expounding of teachings of Acharya Rajneesh. Even though it refers to other philosophers, it is clear that such teachings are very limited if not negligible in extent. The institution, therefore, could be regarded as primarily intended for expounding the teachings of a single individual. This teaching is not part of the organised activity of studying the views or teachings of several eminent individuals. Even though, therefore, one who would attend the activities of the Ashram would do so only on purely personal considerations and not as part of availing o....
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....d to assist the trust in fulfilling its obligations. While the above clarification does not appear on the face of the trust or in any pamphlet relating to it or letters written by the assessee to the authorities, we have only the assertion of the learned counsel for the assessee in this regard to clarify the position. Be that as it may, in the absence of any regular membership of the trust deriving benefit in any particular manner from the trust, it is not necessary to delve deep into this question. The last point of interest raised by the assessee's learned counsel is the application of the trust in the subsequent years, i. e., in 1977 for being recognised in respect of its World University as a University. Apart from the fact that this is a matter which comes up for consideration long after the assessment year under appeal, what happened to any such application made by the assessee to the governmental and other authorities is also not known. Letters of appreciation and opinions as to the functioning of the trust and the institution produced from disciples and others have been put into support the assessee's claim as an educational institution. How far these writers are competent ....
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....very restricted meaning to this object. In our opinion, it would not be possible in this connection even to distinguish a newspaper or for a matter of that a periodical journal from other similar publications like a series of books published on one or different subjects or one or different aspects of the same subject. This would be the position in the present case where books are published and recorded tapes are distributed. In Incorporated Council of Law Reporter for England & Wales v. AG 47 TC 221 a Council formed to prepare and publish judicial reports was held to be charitable but in the restricted statutory exposition of charity under the Indian Act this ratio may not apply. As mentioned in Bar Council of Maharashtra v. CIT [1980] 126 ITR 27 (Bom.) not all items regarded as charitable under English law could be regarded as charitable in Indian law. None of the decisions, therefore, cited on behalf of the assessee would in the light of the facts in the present case explained in detail in the earlier paragraphs constitute a charitable purpose under the head 'Education'. 43. A claim to exemption on the ground of religious purposes was also made. Trusts for the building and ren....
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.... Trust [1955] 27 ITR 279 (Bom.), have all been held to be objects of general public utility. 45. In the case of Surat Art Silk Cloth, the Supreme Court discussed at length the scope of 'charitable purpose' obtaining in section 2(15) of the Income-tax Act. There the association carrying on several activities for the promotion of trade and commerce in art silk yarn, cotton yarn, raw silk, silk cotton, etc., deriving income by way of subscription from members and commission received from them on licences for import of foreign yarn, etc., claimed exemption under section 11. Though a good part of the dispute centred round the words 'not involving the carrying on of any activity for profit', their Lordships of the Supreme Court considered the scope of the basic claim itself 'object of general public utility' and held that the Art Silk Mfrs. Assn. satisfied the test. The other decisions on charity---Loka Shikshana Trust's case, Indian Chamber of Commerce's case, CIT v. Dharmodayam Co. [1977] 109 ITR 527 (SC) and Dharmaposhanam Co. were considered. While the words 'objects of general public utility' would exclude each of a private gain it should all the same subserve general public util....
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.... large stands in need of either because he is too poor or because he does not have the facility for the same or has got other disabilities and a person supplying these to him would give him a 'utility' and where such utility is granted to a substantial part of the public even though not the entire public, that would constitute an object of general public utility. In the present case, a person conducts discourses on whatever he feels to be important or conducts camps, etc., the way that he finds them interesting or brings out books written by him for sale. None of the decided cases help us in concluding that this would constitute an object of general public utility. What Acharya Rajneesh Ashram does in Poona, in our opinion, will not constitute an object of general public utility as understood from the decided cases including those extensively cited by the learned counsel for the assessee. 46. Even granting that the object served by the trust is an object of general public utility, the authorities below have held them to be covered by the phrase 'not involving the carrying on of an activity for profit' obtaining in section 2(15). The reason for coming to this conclusion is that t....
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....he activity of a trust consists of the carrying on of a business and there are no restrictions on its making profit the court could assume in the absence of indications to the contrary that the objects of the trust involved carrying on of an activity for profit. A minority view of Mr. Justice Beg in that case is to the effect that if profits necessarily feed a charitable purpose, under the terms of the trust, the mere fact that the activities of the trust yielded profit would not alter the charitable character of the trust. The genuineness of the purpose, according to the minority decision, was to be tested by the obligation created to spend the money exclusively or essentially on charity which determined the claim for exemption. Surat Art Silk Cloth's case disapproved the approach in the earlier case of Indian Chamber of Commerce where the Supreme Court held that the statute interdicted for the purpose of tax relief the advancement of object by involvement in the carrying on of activity for profit. The law settled by the Supreme Court in Surat Art Silk Cloth's case is that where the dominant or primary purpose was an object of public utility not involving the carrying on of an act....
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....nce being a physical residence of a physical person, the additional reference to a parent of the assessee clearly clinches the issue in favour of the department. In Abhay L. Khatau to which reference was made by the learned counsel, joint trustees were held to be unit for the purpose of taxation and capable of being assessed to wealth-tax in the status of an individual. Here too the reference was only to section 3, the charging section of the Wealth-tax Act, and the interpretation was for the purposes of fixing the liability to wealth-tax and the determination of the status in that connection. This decision also does not help the assessee. We have no hesitation, therefore, in upholding the view of the ITO on this point. Section 54(1) does not apply in the assessee's case. 51. As an alternative, reference is made to the provisions of section 11(1A) which runs as under : "11. (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 ar....
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....e trust and on being factually satisfied that the benefit of the institution, if any, was confined to the members admitted, the Commissioner (Appeals) erred in coming to the conclusion that the object of the trust was of general public utility. On this point we have discussed the position at length and come to the conclusion that the assessee-trust cannot be said to be one intended for general public utility. 53. Another ground challenged is regarding the computation of income. The trust received donations of Rs. 99,852 which are included by the ITO in his assessment. The Commissioner (appeals) deleted the inclusion. This is challenged in the departmental appeal. 54. The learned counsel for the department has pointed out that in the return filed by the assessee income from other sources on account of donations was shown at Rs. 99,852. According to section 12(a) of the Act, even if the assessee were for a charitable purpose the donations would be assessable unless it was intended for the corpus of the trust. There is no evidence in this regard. On the contrary even the nature of the alleged donations, according to the learned counsel, is not clear. A pamphlet published by the ....
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....t known whether payments regular or ad hoc are received for any of these or also for hearing the discourses of the Acharya. At one stage the learned counsel for the department pointed out that without an entrance fee it is not possible to get admittance to these discourses. There is no evidence on record to support the departmental stand. It is not, however, impossible to keep an entrance fee for lectures, given by eminent personalities---a practice very common in western countries though not in our country. Whether the alleged donations are received from insiders in the Ashram who get some benefit or other or from outsiders who are absolutely unconnected with the Ashram with its day-to-day or periodical activities, but all the same are inclined to donate to causes which they believe for is not clear. If it is the last, certainly it is a case of gifts and receipts of gifts do not attract tax as income. On the contrary if the receipts are from the insiders who take some advantage out of the Ashram, it will have to be decided in each cash as to whether there is a receipt by way of income or not. On the information available it is not possible to come to a definite conclusion on this.....
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.... 3. The Declarant shall deliver to the trust the completed type script of the Works and the trust shall print, produce, publish and well the works at its own cost and expenses in such manner and style and at such prices as the trust may at its discretion deem fit. 4. The Declarant has given to the trust a list of the books, articles and writings so far written by the Declarant and shall as and when any further books and articles are written, or any speeches are delivered, he shall furnish copies thereof to the trust to enable them to publish the same as aforesaid." The affidavit in effect is a gift of the exclusive printing and publishing rights in the books, articles, speeches, writings, etc., already existing and to be brought into existence in future to the trust. The substantial income the trust receives out of this property gifted to it is treated as the income of the trust. We do not know whether the alleged gift of Acharya Rajneesh is a valid gift, whether gift-tax has been paid on the same, etc. If the gift, is a valid one given and accepted, by the donee, etc., the property in the gift thus passed on to the donee, the trust, and the income therefrom would be assessab....