Income Tax Appellate Tribunal - Pune
Dy. Cit vs Rajneesh Foundation (Neo-Sannyas ... on 19 October, 2001
Equivalent citations: (2001)73TTJ(PUNE)649
ORDER
B.L. Chhibber, AM.
sMarch, 2000 The vital issue raised in this appeal by the revenue is whether the assessee is a public charitable trust as claimed by it and is eligible for exemption under sections 11 and 12 of the Income Tax Act (hereinafter referred to as the Act).
2. On 11-12-1931, was born in village of Kuchwara, Madhya Pradesh, Rajneesh Chandra Mohan, who afterwards became Acharya Rajneesh. After obtaining his M.A. degree, Chandra Mohan taught at the Raipur Sanskrit College from 1957 to 1959 and was a professor of philosophy at the University of Jabalpur between 1960-66. He resigned his professorship in 1966 allegedly to devote himself to spiritual work. He is stated to have travelled extensively delivering lectures between the years 1958 and 1969, until he settled in Bombay in 1969. He is stated to have held a meditation 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 Mahasamadhi on 19-1-1990.
3. By an indenture of trust dated 11-6-1969, Shri Himatlal Haribhai Joshi and Shri Ishwarlal Naranji Shah as settlers 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, tours, shibirs, research programmes or programme of any kind approved by the Board either in India or abroad and for that purpose, to call Acharya Shri Rajneeshji and other philosophers at the cost of trust;
(d) To start, promote, establish, maintain, control and/or conduct, gyana yagna, sadhana centres, seminars, discourses, study groups, lectures, reading rooms, libraries, schools, pathshalas research centres and other educational institutions and/or to arrange for the purpose with other schools/or educational institutions and for the purpose to do all acts, deeds and things necessary for the starting, conducting and/or promotion thereof;
(e) To give loans, scholarships, freeships, prizes, honorarium, remuneration and/or monetary assistance and/or such other assistantship, arrangements, etc. to the philosophers, thinkers, writers, authors and/or students, taking interest in the lines and objects of the trust and rendering help for carrying the same out;
(f) To establish, promote and maintain Ashram schools, colleges and such other institutions and for that purpose, to train students and teachers and to take an other steps for the purpose of putting into practice the ideals of education as laid down in the preceding para (a);
(g) To establish, promote, improve, control, diffuse and impart medical knowledge by way of Sadhana and other suitable systems beneficial to physical and mental health;
(h) To establish, promote and/or take over and conduct hospitals, health and medical centres or other such centres;
(i) To donate and contribute and/or to enter into working arrangements of any kind with other establishments, institutions, organisations, bodies or centres having objects wholly or partly similar to those of the trust and which may be deemed to be the activity conducted for the purpose of popularising, implementing and practising the ideals and philosophy laid down in preceding para (a);
(j) To maintain and safeguard the interest, objective and thinking of the trust and for that purpose to take all other steps that may be deemed necessary by the Board of trustees;
(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 conductive, 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 crust in such securities or otherwise and in such manner as laid down and/or provided for in the statutes and/or permission by the appropriate authorities from time to time;
(r) To provide for the relief of poor people and people in distress or for national cause; and to provide for medical relief;
(s) To maintain, run or otherwise arrange for Sadavrats, Dharmashalas, Rest houses, Kala Mandirs, Ball Mandirs, prayer halls, public gardens, public utilites, etc.;
(t) To establish, promote or take such other activities for advancement and propagation of education, literature, science, colleges, educational institutions and to provide or establish scholarships, gifts in cash or kind for education or developing mind or body;
(u) To promote and establish branches of the trust all over India and at such other places in the world as may be decided by the Board of trustees from time to time;
(v) To purchase, acquire or take on lease or rent, land for agricultural activities, for imparting training and activities for the inmates and to achieve self-sufficiency thereby;
(w) to accept by way of gifts, donations and/or otherwise any business on such terms and conditions they may be their absolute discretion agree upon. If the trustees accept any such gift or donation of a business or any such interest in business, the trustees at such time as they may deem proper or continue the share or interest in business donated to the trust and for that purpose, appoint chairman or some other trustee or trustees amongst themselves to represent the trust in such business and/or to become partner(s) in such business or behalf of the trust on such terms and conditions as the trustees in their absolute discretion deem proper,-
(x) To train and take up such activities like handicrafts, spinning, weaving, leather-crafts or other arts and other activities so as to impart basic training to the inmates and to achieve self-sufficiency thereof;
(y) Any other activities in furtherance of the aims of the trust and of general public utility.
And provided always that the trustees shall have full power and absolute authority in their entire discretion to add to and introduce other specific public charitable objects not inconsistent 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 object 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 objects."
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 to 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 but the total number of members so nominated shall not exceed 5) members on the Board of trustees and the trustees nominated shall constitute a committee for the time being and at the first meeting to be held after such nomination; the committee shall have powers to co-opt upto six members of trustees and thereafter the committee so constituted shall work as the Board of trustees. At the end of the year 50 per cent of the trustees shall retire by rotation. The trustees to retire at the end of the year shall be decided by a secret ballot at the meeting of the Board and subsequently, the trustees longer in the office, shall retire. Acharya Shri Rajneeshji shall re-nominate the trustees retiring from the trustees nominated by him and the fresh Board of trustees after the nomination by Acharya Shree Rajneeshji shall co-opt the trustees in a vacancy caused by the trustees retired from the co-opted members.
12. Acharya Shri Rajneeshji shall be the adviser as aforesaid for the life and he shall have powers and rights to nominate up to 5 (five) trustees from time to time and shall have also the rights to remove any trustees so appointed by him and can appoint some other person as trustee within the number of trustees so required to be nominated by him. If and when Acharya Shri Rajneeshji ceases to hold office for any reason, the I trustees at that time present shall be the trustees and shall continue to remain trustees till any of them shall cease to hold office either on death, resignation or removed from office by the Board of trustees at its meeting on a resolution carried out on two-third majority of the members present and voting.
Portion of clause 14 relevant for our purpose is as under :
"The Board of trustees at its discretion and as per the rules framed by them from time to time may on the application made in the prescribed form, approve of any person above 18 years of age, firm, association, trust or company either within India or outside who is interested and subscribes to the aims and objects of the trust as member. The Board of trustees may from time to time at its discretion provide for different class of membership like patrons, life members, honorary members 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 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 on 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.
5.1. The question of exemption under section 11 has a chequered history in his case since the inception of the trust in 1969the first assessment year being for 1970-71. For the assessment years 1970-71 to 1974-75, the claim that the trust is for public charitable purpose with the object to general public utility was not disputed by the assessing officer. In fact, the trust was recognised by the Commissioner, Bombay, for the purpose of section 80G upto the assessment year 1975-76. However, for the assessment year 1975-76, the assessing officer held that while the object of the trust is for general public utility, the said object involved carrying on of an activity for profit, namely, publication of books which were sold at very high prices. He, therefore, concluded that the trust was not for charitable purposes. On appeal, the Commissioner (Appeals) rejected the claim of exemption under section 10(22) and under section 11 of the Act. He held that during the year of account, the dominant object of the trust could not be said to be running an educational institution solely for educational purposes. At best, according to the Commissioner (Appeals), the object of the trust could be regarded as one for general public 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 businesslike 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. Both the revenue and the assessee challenged the order of the Commissioner (Appeals) before the Tribunal. The Tribunal Bombay Bench-B vide its order dated 21-1-1983, now reported as Rajneesh Foundation v. ITO (1983) 4 ITD 409 (Bom) rejected the assessees case of charitable purposes on the ground that : (a) the trust was not constituted for educational purposes; (b) the trust was not for religious purposes as it had no support for the case that its activities included the propogation of thoughts, ideas or activities of any particular individual regarded as an eminent religious authority or teacher. Even granting that the, teaching of a particular individual would have a religious basis or from the embryonic contents of a religion, it could best be, according to the Tribunal, called a private religion; (c) that the publication of books read with object clause indicated the publication of books was intended to be activity of profit.
6. For the assessment year 1976-77, although the assessing officer followed the earlier years order, the Commissioner (Appeals) held in favour of the assessee trust. Revenue took up the matter before the Tribunal, Pune Bench. There was a divergence of opinion between the Judicial Member (hereinafter referred to as the JM) and the Accountant Member (hereinafter referred to as the AM). The former viewed in favour of the assessee-trust, while the AM dissented. The matter was, therefore, referred under section 255(4) of the Act for the opinion of Third Member (hereinafter referred to as the TM). This reference was heard by a TM Bench of the Tribunal presided over by the then President of the Tribunal and vide a consolidated order dated 2-8-1988, decided the issue against the assessee trust. The TM came to the conclusion that the object cannot be considered to be charitable mainly on two grounds :
(1) that so long as Ranjneesh 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 this being lifetime advisor and the object was to preach, establish and perpetuate the image of Shri Rajneesh whose vague and contradictory views were not only not charitable, but were harmful to public interest.
In arriving at this conclusion, the learned TM quoted certain sentences and views from the works of Shri Rajneesh.
7. After the aforesaid order of the Tribunal, according to the representative of the assessee, the trustees were keen to bring to an end the unnecessary and long drawn litigation as also to settle once and for all the pending claims of the department for all the assessment years. The trust, therefore, proposed to the Commissioner, Pune :
"The only possible alternative is by way of assistance from friends and lovers who may be willing to help, provided all disputes between the department and R.F. are completely settled and there is no possibility of a recurrence in future. R.F. too is keen to bring to an end unnecessary and long-drawn litigation, as also to settle once and for all pending claims of the department under the Income Tax and Wealth Tax Acts, for all years since inception to assessment year 1988-89.
With this objective in mind and with the utmost consideration of the funds that could be raised, R.F. makes the following proposal :
(i) Adopt the Tribunal Pune Bench order and compute tax demands for all years from assessment years 1970-71 to 1988-89, including cases pending presently before the Commissioner/CWT(A), R.F.s estimates of such calculations are enclosed in Annexure I for ready reference.
The decision of the Tribunal taking into account the TMs order be accepted by both the parties upto assessment year 1988-89. From 1989-90, R.F. would agree to suitably modify the clauses of the trust deed to departments satisfaction, so that there is no longer any dispute about its public charitable nature.
(ii) Let no further action flow from the order of the Tribunal and treat an assessments from assessment year 1969-70 to assessment year 1988-89 as finally closed.
(iii) Department shall waive/drop all interest, penalties and prosecutions existing and/or proposed. Details of interest estimated by R.F. are in Annexure II.
(iv) Department shall remove attachment on properties of R.F. and allow operation of bank accounts.
(v) R.F. shall pay Rs. 30 lakhs immediately towards outstanding dues and the balance in instalments of Rs, 7.5 lakhs per month with the stipulation that all outstanding tax dues will be cleared by 30-9-1989.
(vi) Tax exemption has been 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 that he win 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 lifetime adviser of R.F. (Though in fact he has never exercised any powers of 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 Commissioner, Pune vide his letter dated 3-2-1989. It is noted that in the assessees 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 Commissioner, Pune, relating to the offer thus mentioned.
8. Thereafter, the assessee trust amended/deleted several clauses of the original deed of 1969 which had been found objectionable/repugnant by the revenue. The original deed was amended by an application dated 29-3-1989, made before the Deputy Charity Commissioner, Pune. It is the claim of the representative of the assessee that the trust also went through the process of amendment in order to avail of the benefits of exemption under sections 11 and 12 of the Act. In its correspondence to the Deputy Charity Commissioner, it was made clear that the amendments were necessitated as the Income Tax Act and Bombay Public Trusts Act applied different yardsticks to determine what is charity. The problem arising out of such conceptual difference could be solved only by reconciling the drafting of the trust deed with both the enactments. The revised trust deed was effective from the assessment year 1989-90. The assessments for assessment years 1989-90 and 1990-91 were completed on the footing that the assessee was a public charitable trust.
9. In the assessment year 1991-92 (under appeal), the assessing officer took the view that the circumstances have not changed, as the main object more or less remained the same and, therefore, the earlier Tribunal decisions governed the issue. In para 4 of his order, he has reproduced clause 5(a) in the original trust deed and the amended clause in the revised trust deed and he observes, "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 Shree Rajneesh, though it is mentioned that preachings of other philosophers, etc. will also be spread and imparted. But this clause does not preclude the trustees from spreading and imparting the preachings of Acharya Shree Rajneesh only. In this connection, it is to be stated that the Tribunal in its majority decisions has held that the preachings of Shri Rajneesh, are against public morality and against public policy and are not conducive for the well being of the society large ................ Therefore, so long as spreading and imparting the preachings of Acharya Shri Rajneesh forms one of the aims and objects of the assessee-trust, it cannot be accepted as existing for carrying out any charitable activity or even any religious activity." The assessing officer further held, "It is also to be stated that assessee has so far not been granted registration under section 12A by the Commissioner, Pune, the exemption claimed under section 11 by the assessee is, therefore, rejected."
10. The assessee appealed to the Commissioner (Appeals) 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 Deputy 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 created for charitable purposes will enjoy the exemption, even though its name is after a private person. For this, reference is invited to the decision of the Andhra Pradesh High Court in the case of CWT v. H.E.H Nizam Supplemental & Religious Endowment Trust (1973) 89 ITR 80 (AP).
(ii) Earlier Acharya Rajneesh was perceived as de facto controller. However, this clause of the trust deed has been amended in this regard as discussed above.
(iii) During the relevant accounting year, Acharya Rajneesh was no longer around since, he took samadhi in January, 1990.
(iv) The objections of the Tribunal that there was no limit to the preachings of Acharya Rajneesh since he was still alive, also no longer holds good. The limits to his teachings are already drawn and his writings are known.
(v) The Tribunals views that the preachings of Acharya Rajneesh were against public policy is no longer valid in view of the changed perception of the activities of the trust. Several Indian and international institutions have recognised the importance of the discourses of Acharya Rajneesh. Indian universities are considering opening separate departments for the study of the works of Acharya Rajneesh. It is understood that such a dialogue is in process at the university of Poona. If the preachings were against public policy, such a perception by educational institutions would have been unwarranted.
11. After giving careful consideration to the facts of the case as well as the view of the Tribunal in its majority decision and other subsequent events, like amendment in the trust deed and contemporary appreciation, the learned Commissioner (Appeals) held that it was clear that the object of the trust was to spread the teachings of various philosophers by various means, like discourses, media projects, etc. The sole purpose was the complete development of man in all spheres, like spiritual, mental and physical. She further states, "Acharya Rajneesh has advocated meditation as a means of self-realisation. This philosophy comes close to those expounded by several other Indian philosophers. May be the style and language of his discourses is different so as to make the traditionalist and conservatives uncomfortable with his pronouncement. Yet, he speaks in a language popularly understood and appreciated." She accordingly conclude as under :
"The assessing officers conclusion following the order of the Tribunal 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 Tribunal. 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 Commissioner (Appeals) and following grounds of appeal have been raised :
"(1) On the facts and in the circumstances of the case, the Commissioner (Appeals) 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 Commissioner (Appeals) has failed to appreciate the fact that assessing officers findings were based on the order of the Tribunal in the assessees case wherein it was held that the assessees case is not a fit case to be classified under section 11.
(3) On the facts and in the circumstances of the case, the Commissioner (Appeals) has erred in holding that the circumstances prevailing at the time of old assessments were totally different from the present circumstances relevant to the assessment year in question. (4) The order of the Commissioner (Appeals) may be vacated and that of the assessing officer be restored."
13. Shri Naresh Kumar, the learned Senior Departmental Representative strongly supported the order of the assessing officer. He took us through the assessment order and particularly para 4 on p 2 of the assessment order and submitted that there was no change in circumstances and the majority view of the Tribunal prevailed. He took us through various paras of the Tribunals order and submitted that this Bench has no power to differ from the Tribunals view. He relied particularly on the speeches quoted by the TM and appearing at para 218 of the paper book in support of his submission that the views of Shri Rajneesh are against public interest. He also submitted that the settlement was not effective as it was outside the provisions of the Act. He relied on certain case law and particularly the observations of the Delhi High Court in the case of CIT v. All India Hindu Mahasabha (1983) 140 ITR 748 (Del) at pp 768 and 769. He submitted that the Commissioner, Pune had granted registration to the assessee-trust under section 12A by order, dated 18-5-1998, on the basis of amended trust deed, but according to him, it is of no consequence, because prior to 1-4-1997, it was not mandatory for the Commissioner to pass such an order because law was subsequently amended and section 12A was brought on statute book with effect from 1-4-1997. He submitted that by amended clauses, the assessee-trust has changed the name from Rajneesh Foundation to Neo-Sanyas Foundation, but it is of no significance, because the preachings still continuesame preachings in 1988 continuewhich are against public policy. He submitted that the Commissioner (Appeals) cannot overrule the findings of the Special Bench of the Tribunal. He submitted that the discretionary power of the trustees to give power to certain personsin this case Acharya Rajneeshmake the trust as uncharitable. In support of this contention, he relied upon the observations on pp 1044 and 1045 on Chaturvedi &Pithisaria, Income Tax Law, 5th Edn. He further submitted that the T.M order of the Tribunal has given a clear finding that the preachings of Acharya Rajneesh are against public policy; the Commissioner (Appeals) 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 Commissioner (Appeals) deserves to be reversed and that 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 Commissioner (Appeals) 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 Commissioner, 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 Commissioners 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 registration under section 12A of the Act and that he would like to deal with the issue on merit.
15. Firstly, he pointed out that during the previous year, Shri Rajneesh (hereinafter referred to as Osho) was no longer alive as he took Mahasamadhi in January, 1990. Thus, a major ground taken by the Tribunal was no longer available. Relying on the various portions of the TMs order, the learned counsel point out that Osho was alive and was in a position to dominate the trustees loomed large on the mind of the TM in corning to the conclusion that the trust is not for public purposes, but for perpetuating Oshos image was greatly influenced by the above fact. The learned counsel referred to the Honble Supreme Courts decision in the case of Dhakeswari Cotton Mills Ltd. v. CIT (1954) 26 ITR 775 (SC) where the Supreme Court has held that if the Tribunals finding is based partly on relevant and partly on irrelevant material, one cannot say to what extent the Tribunal was influenced by the irrelevant material and thus, the entire finding of the Tribunal becomes vitiated. He further submitted that the ratio of this decision squarely applied to the extent that earlier decision of the Tribunal cannot be blindly followed as a binding precedent, as one cannot ascertain to what extent the TM was influenced by the fact that Osho was a living person to arrive at an adverse finding.
16. Shri Inamdar further pointed out that apart from exhaustive amendments of the trust deed, solely aimed at resolving the very same dispute, there has been a sea-change in the perception of the people and view of Osho have received much wider public recognition. He further drew our attention to p 255 of paper book No. 1 to indicate that complete Osho literature was accepted by the Parliament library, wherein Osho literature was termed as an original creation and it was observed that the essence as contained in all the books was to find peace in oneself and the main thrust was on meditationobservance of which is now being recognised universally in almost every field of human activity as a means of self-realisation. The learned counsel also referred to p 256 of paper book No. 1 and pointed out that no less than an institution like Jabalpur university backed by the State Government of Madhya Pradesh had established an Osho Chair 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 Oshos preachings were the preachings of a seer and were receiving recognition all over the world. He also referred to p 258 which contains a report that in the World Book Fair, Oshos 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 brought 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 Honble, Supreme Courts decision in the case of CIT v. Ahmedabad Rana Caste Association (1983) 140 ITR 1 (SC) in which the Honble Supreme Court held that mental, spiritual and physical development of man as a complete humanbeing is an object of general public utility. It also held that if the objects are beneficial to an identifiable large section of the public, it must be regarded for public benefit. The learned counsel, therefore, submitted that merely because Oshos preaching may seem controversial to some and beneficial to others, it cannot mean that they are not for public benefit. Referring to the distinction between public and private trust as pointed out on pp 172 and 173 of paper book No. 1, the learned counsel submitted that the trust is definitely not for private benefit.
17. Shri Inamdar, like the senior Departmental Representative, took us through the order of the TM and submitted that the TM has picked out a few sentences and paras totally out of context and particularly the two paras relied upon by the learned Senior Departmental Representative appearing on p 218, do not mean what the TM implies them to mean. In support of this, he brought to our notice the complete extracts filed in the paper book which was before the TM to show that Osho was only against the system of education and was never the favour of disorder in the sense of chaos. The learned counsel referred to paper book No. 2 to indicate what were the true views of Osho on religiousness, morality and disorder. He submitted that none of these views can be considered against public interest. He also pointed out that the very same philosophy has been expressed by Bertrand Russell in his book entitled "On Education" published in 1925.
18. The learned counsel also placed before this Bench two books authored by well-known and respected philosopher J. Krishnamurthy expressing the same views. He also placed before us a report in the Times of India dated 15-10-1999 to show that a report has been submitted to a Bombay university based on study poll wherein identical views as those of Osho have been echoed.
19. The learned counsel further submitted that the main activity carried on was meditation, as Osho had developed several techniques of meditation for improvement of mind and body. He relied on the income and expenditure account to show that the main income and expenditure is only from activities relating to meditation courses. He also pointed out that Osho had written and preached the views of several past and contemporary philosophers such as Kabir, Nanak, Budha, Mahavir etc. and placed on record a complete list of books authored by Osho.
20. The learned counsel concluded that the revenue relied solely on the earlier order of the Tribunal which has been adequately dealt with by the learned Commissioner (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 Commissioner Pune.
21. In rejoinder, Shri Naresh Kumar, the learned Senior Departmental Representative 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 TM order of the Tribunal still prevails. Referrng to the contention of the learned counsel that Osho developed different techniques of meditation and his stress was on meditation, the learned Departmental Representative 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 Tribunal which clearly held that the teachings of Acharya Rajneesh were against public policy.
22. We have considered the rival submissions and perused the facts on record. At the very outset, we must state that the first ground of appeal is erroneously taken by the revenue as the learned Commissioner (Appeals) has not directed to grant registration under section 12A of the Act. However, as a matter of fact, he has pointed out that such registration has been granted by the Commissioner, 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 Commissioners 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. The grant of registration by the Commissioner, Pune, under section 12A vide order dated 18-5-1998, on the basis of amended deed of trust, in our opinion, is itself a strong ground for treating the trust as charitable in nature. We do not find any substance in the view of the learned Senior Departmental Representative that grant of registration by the Commissioner under section 12A is of no consequence. No doubt, the amendment was brought on the statute book with effect from 1-4-1997, but the same applied to all pending applications and registration has been granted by the Commissioner on 18-5-1998.
23. The whole of the order of the assessing officer and the thrust of the arguments of the learned Senior Departmental Representative are based on the majority order of the Tribunal dated 2-8-1988, but much water has flown in the Ganges since the majority order was passed eleven years back. The said order was based on the trust deed executed in 1969. In the year 1989, as pointed out in para 8, the assessee-trust amended/deleted several clauses of the original deed of 1969 which had been found objectionable/repugnant by the revenue. A whole series of amendments were proposed, but for our purpose, only the important ones are discussed as under :
(a) In the original application to the Deputy Charity Commissioner, in order to avoid any unnecessary disputes in future by mere use of the name Acharya Rajneesh and to bring out the real intention of the settlor, it was proposed to delete the name of Acharya Rajneesh from the entire trust deed. In this context, it was proposed to rename the trust as Neo-Sanyas Foundation." It was also proposed to amend the object clause 5(a) which in the original 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 redraft 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 moral and physical betterment of human beings with the ultimate object of self-realisation. " However, the Deputy 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 an 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 preachings of philosophers, thinkers and scholars both past and contemporary (including Acharya Rajneesh) pertaining to all religions, and/or main principles thereof for the spiritual, mental and/or moral and physical betterment of human beings with the ultimate object of self-realisation. "
(b) The original clause 2 stated that "Acharya Shree Rajneeshji shall be the advisor to the trust for the life and as an advisor shall have powers as hereinafter mentioned." This clause stands deleted in the amended trust deed.
(c) The next clause that ran into difficulties with the department was clause 5(b) by which in order to spread the preachings of Acharya Rajneesh and other philosophers the trust would "print, publish, sell, distribute either free or for price books, magazines, lectures, preachings, writings, periodicals, bulletins, journals and any other literature;" This sub-clause was considered by the Tribunal to be resulting in a business activity for profit. At the time the amendments were proposed to the Deputy Charity Commissioner, the definition of "charitable purposes" in section 2(15) of the Act had been amended by deleting the words "not involving the carrying on of any activity for profit` and there was no need to amend this sub-clause 5(b). However, a new section 11(4A) had been introduced in the Act with effect from 1-4-1984, which made the business income of the charity in certain trusts taxable which would have resulted in denial of exemption to donor in respect of donation made by them to charity. Since the sole object of their application was to avoid litigation with the Income Tax Department, this sub-clause has also been deleted.
(d) clause 5(f) of the original deed which dealt with establishing, promoting and maintaining Ashrams, schools, colleges, and such other institutions and for the purpose, to train students and teachers and to take all other steps for the purpose of putting into practice the ideals of education as laid down in sub-clause 5(a) has also been deleted.
(e) The next amendment relates to clause 11 by which 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 of which 5 members wore to be nominated by Shri Acharya Rajneesh. It was felt by the Tribunal that this read with clause (2), item (b) (supra) gave de facto control 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 law or otherwise conferring or attaching these presents shall be decided according to the wishes of the majority of the trustees."
24. In view of the above amendments, we do not agree to the view of the learned Senior Departmental Representative that the amended deed of trust of 1989 was a replica of the old deed in essence and hence TMs order still prevails. The revised trust deed was effective from the assessment year 1989-90. The assessments for assessment years 1989-90 and 1990-91 were completed on the footing that the assessee was a public charitable trust. It is only in the assessment year 1991-92 (under appeal) that the assessing officer, ignoring the assessment order for the earlier two assessment years, took the view that the circumstances had not changed and hence, the assessee was not entitled to exemption under sections 11 and 12 of the Act.
25. It is further noted that during the previous year, Shri Rajneesh was no longer around, as he took Mahasamadhi on 19-1-1990. Thus, a major ground taken by the Tribunal that Acharya Shri Rajneesh was the de facto controller was no longer available. The objection of the Tribunal that there was no limit to the teachings of Acharya Shri Rajneesh since he was still alive also no longer holds good. The limits to his teachings are already shown. His writings are well known all over the world.
26. In the present case, the background of the settlement is to be kept in mind, where the assessee trust acted to its detriment and interest by withdrawing the writ petition and paying full taxes on the assurance that the amended trust deed will resolve the disputes. Therefore, even if the settlement is not considered as final, say in the matter in view of the changed circumstances and the amended trust deed, earlier decision cannot also be treated as binding per se. After hearing both the parties at length, we agree with the finding of the learned Commissioner (Appeals) that the preachings of Acharya Shri Rajneesh were against the public policy is no longer valid in view of the changed perception of the activities of the trust. We find that over 650 books written by Osho have been widely studied and have been translated into many European, Asian and other languages. Some of the books were produced before us which we had the chance to go through. Osho wrote on diverse subjects, like Vedanta, on Geeta (Geeta Darshan), on the philosophy 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 the 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 on 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 public policy, such a perception by the Indian Parliament and by eminent educational institutions would have been unwarranted. In our opinion, merely because Oshos preachings may seem controversial to some and beneficial to others, cannot lead to the conclusion that they are not for public benefit. We find that the main activity carried on is meditation as Osho had developed several techniques of meditation for improvement of mind and body. This fact is clear from the income and expenditure account for the years ending 31-3-1991, 31-3-1992, and 31-3-1993, which is reproduced as under :
Year ended 31-3-1991 31-3-1992 31-3-1993 Income from meditation & healing courses 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 71,60,500 From the above figures, it is evident that the main income and expenditure is only from activities relating to meditation courses. Over the ages, meditation has been the bedrock of Indian philosophy; all important religions of our secred motherland, be it Hinduism, Budhism, or Jainism have emphasised the importance of meditation as a means towards attainment of eternal peace. It is well known that only through meditation can one find the treasure one is looking for meditate! meditate! meditate!so say the Sages. Gaining mastery over the mind is the real education and such education comes through meditation. Meditation techniques range from ancient techniques of Tibetan, Budhism, Vipassana, Sufism, Zen and ancient Indian mystical traditions to new and scientific methods specially designed for the contemporary man. Here, we would like to quote Osho views on meditation from the book "An Introduction to the Teachings of Bhagwan Shree Rajneesh, Series II from I to q" pp 240 and 241 printed and published in U.S.A. by Acharya Rajneesh foundation International :
"Meditation : meditation is a very simple process. all that you need to know is the right button. The Upanishads call it Witnessingthe right button. Just witness your mind process, dont do anything at all. Nothing needs to be done, just be a witness, an observer, a watcher, looking at the traffic of the mindthoughts passing by, desires, memories, dreams, fantasies. Simply stand aloof, cool-watching it, seeing it, with no judgment, with no condemnation, neither saying. "This is good", nor saying, "This is bad." Dont bring your moral concepts in, otherwise you will never be able to meditate.
Sit by the side of a river and watch the river flowing. Yes, sometimes driftwood passes by and sometimes a boat comes and sometimes a dead body and sometimes a beautiful woman may be swimming in the river-you simply watch, you dont get bothered, you remain cool, you dont get excited. You are not supposed to do anything, you have nothing to do so. It is the river and it is the rivers business. You simply sit silently. Sitting silently, slowly slowly the art is learnt ........... and one day, the moment your watchfulness is total, the mind evaporates.
Philosophia 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 (Del); the Delhi Bench of the Tribunal has held that transcendental meditation (TM) is an education 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 co-operative 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 Kumaries Ishwariya Vishwa Vidhyalaya (1999) 65 TTJ (Jp) 694.
29. In the case of Addl. CIT v. Surat Art. Silk Cloth Manufacturers Association (1980) 121 ITR 1 (SC) the Honble Supreme Court has held that if a primary or dominant purpose of a trust or institution was charitable another object which by itself may not be charitable but was merely ancillary on incidental to the primary or dominant purpose would not prevent the trust or institution from being a valid charity. In this judgment, the judgment of the Supreme Court in the case of CIT v. Dharamodayam Co. (1977) 109 ITR 527 (SC), CIT v. Cochin Chamber of Commerce & Industry (1973) 87 ITR 83 (Ker) and Andhra Pradesh State Road Transport Corporation v. CIT (1975) 100 ITR 392 (AP) have been approved. The Honble Bench of the Supreme Court consisting of five Judges presided over by P.N. Bhagwati J. (as he then was) overruled its earlier judgment in the case of Indian Chamber of Commerce v. CIT (1975) 101 ITR 796 (SC). The Honble Bench also disapproved the observation of Khanna and Gupta, JJ., in Sole Trustee, Loka Shikshana Trust v. CIT (1975) 101 ITR 234 (SC) and further approved the observation of Beg, J. in Sole Trustee, Loka Shikshana Trust v. CIT (supra). In the case before us, as pointed out in the preceding paras, the dominant and primary objects of the assessee trust are charitable in nature. Accordingly, we do not find any infirmity in the findings of the Commissioner (Appeals) and confirm the same.
30. In the result, the appeal is dismissed.
30th March, 2000 K.C. Singhal, J.M.
31. After going through the proposed order carefully, it appeared to me that findings given in the proposed order are contrary to the findings of the larger Bench in assessees own case (as TM Bench headed by the then President of the Tribunal). Since in my opinion, such findings cannot be given by this Bench, it was suggested by me in various discussions with my learned brother that the matter be referred to the Honble President for constituting a Special Bench of five Members, if it is necessary to take different view than the view taken by the earlier Bench of three Members. The said suggestion has not been accepted by my learned brother for two reasons : firstly because of grant of registration under section 12A by the Commissioner vide order, dated 18-5-1998, on the basis of amended deed which itself is a strong ground for treating the trust as charitable in nature. Secondly, because of majority view of the Tribunal dated 2-8-1988 in assessees 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 Commissioner 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 propriety of the Bench. It has been held by the Honble Supreme Court in the case of Union of India v. Raghubir Singh (1989) 178 ITR 548 (SC) 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 (Mad) had suggested that if there are any compelling reasons to take contrary view, then reference should be made to the President for constituting Special Bench. In view of these decisions, a decision of the earlier Bench of the Tribunal comprising three Members in assessees own case is binding on this Bench. Even assuming a different view is possible on the basis of amended deed and the fact that registration under section 12A has been subsequently [after the order of assessment and order of Commissioner (Appeals)], then the matter should have been referred to the President for constituting a Special Bench.
33. Now I proceed to express my dissenting view. The first finding of the proposed order is that grant of registration under section 12A by the Commissioner vide order dated 18-5-1998 is itself a strong ground for holding the assessee-trust as charitable trust (para 22). If this view is taken to the logical end, then it impliedly means that the jurisdiction of the Tribunal is ousted to consider the issue whether objects of the assessee trust are charitable or not. This issue had also arisen before the larger Bench. There the assessee had raised a contention before that the revenue could not contest assessees claim to exemption under section 11 since certificate under section 80G had been issued by the Commissioner. The larger Bench in para 8 of its order (p 226 of the paper-book) held as under :
"Therefore, the grant of certificate has no legal implication. Secondly, the Tribunal has the power to decide the eligibility of an assessee for exemption under section 11 and if the Commissioners certificate was to be taken as conclusive, the Tribunals jurisdiction would be ousted, which is an absurdity. Further, section 80G is meant for granting deduction to donors and not for the institution which claims to be charitable or religious institution. Therefore when a certificate is granted, the claim of the institution to exemption under section 11 is not examined in detail as would be done when the institution claims the exemption under section 11. Therefore this contention of the assessees counsel is not accepted."
Accordingly, the above finding of the proposed order is, in my opinion, contrary to the legal finding of the larger Bench.
34. The next important finding of the proposed order is that after the amendment of the trust deed, the objects of the trust have now become charitable particularly in view of the changed circumstances. Let me first state the finding of the larger Bench in this regard. In para 11 (p 216 of the paper book) 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 p 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 p 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 Lok Sikshan Trust v. CIT (1975) 101 ITR 234 (SC), 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 preachings, which part of the preachings, may influence the public mind cannot be said."
Regarding his preachings about the religion, it was held by the larger Bench (at p 220 of the paper-book) as under :
"The first difficulty is the lack of clarity in the said preaching so as to be considered with reference to the above meanings. The following are the instances. They also show that some of the statements go exactly contrary to the established religion."
In support of the above, the Bench referred to various preachings of Rajneesh on religion.
In view of the above findings, it was held by the larger Bench, that assessee was not entitled to exemption under section 11 since the primary object was not wholly charitable or religious. Reference can be made to para 13 wherein it was finally concluded as under :
"On an overall view of the matter the only object of the trust is to project, establish and perpetuate the image of Sri Rajneesh with all his vague and contradictory views which can neither be called religious nor serve any such purpose or any purpose of educational or charitable nature or of general public utility."
35. According to the proposed order, the above findings, are no more applicable to the year under consideration on account of the following changed circumstances :
(1) The main object clause 5(a) which was considered partly non-charitable by the larger Bench has been amended.
(2) Original clause (2) appointing Acharya Rajneesh as lifetime advisor has been deleted;
(3) Object clause 5(b) authorising the trust to print, publish, sale, distribute either free or for price, books, magazines, lectures, preachings, writings, periodicals, bulletins etc., considered by the larger Bench as an activity for profit has been deleted.
(4) The object clause 5(f) which was also considered earlier as objectionable has been deleted.
(5) clause 11 providing control of Acharya Rajneesh has been amended by removing the name of Acharya Rajneesh.
(6) clause 28 has also been suitably amended so as to take out the control of the trust from Acharya Rajneesh.
(7) That Acharya Rajneesh took Samadhi on 19-1-1990 and is no more alive. Therefore the major ground taken by the Tribunal that Acharya Rajneesh was de facto controller and there was no limit, to his teachings, is no longer available.
(8) That the complete Osho literature of Acharya Rajneesh has been accepted by the Parliament library.
(9) Ravi Durgavati University of Jabalpur has established as 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 (page 216 of the paper-book). 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 preaching of Acharya Shree Rajneeshji and other philosophers pertaining to all religions and/or main principles thereof and/or morals.
(a) To spread and impart the preaching of philosophers both past and contemporary (including Acharya Shree Rajneesh) pertained to all religions and/or main principles thereof for the spiritual, mental and/or moral and physical betterment of human beings with the ultimate objects to 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 spirit. It is clear from the submissions of the learned counsel for the assessee that the preaching of Rajneesh if being spread and imparted through more than 650 books written by Acharya Rajneesh Reference can be made to para 26 of the proposed order. It is also not the case of the assessee that it had excluded those preachings of Acharya Rajneesh which were found by the larger Bench as against general public utility and accepted norms of religion. If that is so, then it cannot be said that primary and dominant object has become wholly charitable or religious after the amendment. Therefore, it is my considered view that finding in the proposed order to the effect that primary and dominant object has become charitable is contrary to the finding of the larger Bench in assessees own case.
37. It is in view of the above considerations, it was suggested by me that this Bench has no jurisdiction to go against the finding of the larger Bench and consequently, it was further suggested that matter be referred to the Honble President for considering the issue by the Special Bench. Since this suggestion was not accepted, this dissenting view is being expressed by me.
38. Section 11 of the Income Tax Act, 1961, clearly provides that exemption is available only if the trust is wholly charitable or religious. Honble Supreme Court had to consider the scope of section 11 in the case of Yogiraj Charity Trust v. CIT ss(1976) 103 ITR 77 (SC). In that case a clear distinction was made between the primary and dominant object and the objects which are ancillary to the main object. The primary or dominant object must be wholly charitable. It is only the ancillary object which may be itself be not charitable and such ancillary object would not render the trust non-charitable if such ancillary object are for the advancing of primary or dominant object. However, if the main object is not wholly charitable, then the trust would not be entitled to exemption. The relevant observations of their Lordships at p 781 of 103 ITR may be usefully quoted as under :
"The question is whether exemption can be granted where some objects are charitable and some non-charitable. Where there are several objects of a trust, some of which are charitable and some non-charitable, and the trustees in their discretion are to apply the income to any of the objects, the whole trust fails and no part of 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 Raza 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 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 objects of the trust.
If the primary or dominant purpose of a trust is charitable, another object which by itself may not be charitable but which is merely ancillary or incidental to the primary or dominant purpose would not prevent the trust from being a valid charity. "
Again, the Supreme Court, in case of Addl. CIT v. Surat Art & Silk Cloth Manufacturers Association (1980) 121 ITR 1 (SC) held as under :
"(ii) Where the main or primary objects are distributive, each and every one of the objects must be charitable in order that the trust or institution may be upheld as a valid charity. But if the primary or dominant purpose of a trust or institution is charitable, another object which by itself may not be charitable but which is merely ancillary or incidental to the primary or dominant purpose would be prevent the trust or institution from being a valid charity."
39. Following respectfully the above decisions of the Supreme Court, it is held that in order to get exemption under section 11, the dominant or primary object must be wholly charitable. If it is found that such object is partly non-charitable, then claim of the assessee for exemption fails in its entirety. As already explained, it was held by the larger Bench that dominant or primary object was object in clause 5(a) i.e. spreading and imparting of the preachings of Acharya Rajneesh. It has also been expressed by me that even after the amendment of this clause, the main object is still to continue to spread and impart the preachings of Acharya Rajneesh. The preachings of Acharya Rajneesh have been found by the larger Bench against the general public utility and accepted norms of religion. Such finding is still binding of this Bench for the reasons given by me in the earlier part of the order. Following the finding of the larger Bench, it is held that primary object clause 5(a) still continues to be partly non-charitable and therefore, the assessee-trust is not entitled to exemption under section 11 despite other amendments.
40. The next important finding of the larger Bench is that assessee-trust had applied the funds to non-charitable purpose by acquiring motor vehicles, generators and general equipments totalling Rs. 16,93,977. The following finding was recorded (p 224 of paper-book) :
"Further, we find on a scrutiny of the balance sheet for the year ended 31-12-1978, additions of assets of Rs. 11,44,637 to motor vehicles, Rs. 2,06,296 under generators and Rs. 3,43,044 under general equipment (refer p. 2137 of the paper-book). 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 construction 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 the balance sheet appears at p 69 of paper-book. The additions in this year were as under :
Rs.
Motor vehicles 2,45,740 Furniture & fixtures 34,59,897 General equipment 1,69,62,866 Computer 89,016 Total 2,07,57,519 Following the finding of larger Bench, it is held that such lavish 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 account (p 67 of the paper-book) it is seen that out of the total income of Rs. 3,29,74,831, the income under the head "meditation" itself is Rs. 9,09,62,318. 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 are 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 in view the Indian tradition, a charitable institution is expected to provide subsidised food to its participants instead of earning substantial amount. Further, the income so earned is utilised in lavish spending so as to acquire the Ashram with five-star facilities as is clear from the accounts. As stated earlier, the assessee has spent more than Rs. 2 crores in acquiring general equipments and furniture apart from the expenditure in acquiring immovable properties worth more than Rs. 2 crores. I fail to understand as to what type of charity is provided by the trust to the public. In my opinion, not only the objects should appear to be charitable, but activity carried on by the trust should appear to be carried on for attaining charitable objects. For example, an activity to run a hospital is certainly an activity for achieving charitable objects. But, if such activity is carried on with exclusive profit motive by running a nursing home, it may cease to be a charitable activity unless such profits are shown to be applied for charitable objects. From the style of functioning in the present case, I am of the considered opinion that main object of the activity carried on by the assessee is to earn profits and not to achieve a charitable object.
43. In view of the above discussions, the appeal of the revenue stands allowed.
Reference Under section 255(4) of the Income Tax Act, 1961 31-3-2000 As there is a difference of opinion between the AM and the JM, the matter is being referred to the President of the Tribunal with a request that the following question may be referred to a TM or to pass such orders as the President may desire :
"Whether, on the facts of the case and in law, the assessee is entitled to exemption under section 11 of the Income Tax Act, 1961?"
R.V. Easwar, J.M. (As Third Member) 3-10-2001 The following question has been referred to me for decision under section 255(4) of the Income Tax Act :
"Whether on the facts of the case and in law, the assessee is entitled to exemption under section 1 of the Income Tax Act, 1961 ?"
2. The aforesaid question has been referred to me on a difference of opinion between the learned Members constituting the Bench, Whereas the learned Accountant Member (AM) has held that the assessee is entitled to the exemption, the learned Judicial Member (JM) has rejected the assessees claim.
3. I may briefly narrate the facts leading up to the difference of opinion. The assessee is a trust by name Neo Sanyas 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 para 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 v. ITO (1983) 4 ITD 409 (Bom). After a detailed discussion, the Tribunal held that the trust was not entitled to the exemption.
4. Thereafter, for the assessment year 1976-77, again the matter of exemption under section 11 reached the Tribunal. There was a difference of opinion between the learned JM and the learned AM, the former holding that the assessee was-eligible for the exemption in view of the change in the facts and circumstances for the year under consideration and the latter holding that the earlier order of the Tribunal reported in (1983) 4 ITD 409 (Bom) (supra) must be followed, denying the exemption. The matter was referred under section 255(4) and in view of the importance and complexity of the issue, the Honble President had constituted a Bench of three learned Members to decide the difference of opinion. By order dated 2-8-1988, the Three Member Bench (hereinafter referred to as TMB) upheld the view taken by the departmental authorities that the assessee was not eligible for the exemption under section 11. Very briefly stated, there were two points on which the TMB came to this conclusion. Firstly, it was held that Acharya Rajneeshs preachings were vague and his views were contradictory and some of them were in fact even harmful to the public interest. Secondly, it was held that since the Acharya was alive, he could change his views and therefore there is an element of vagueness about his preachings. On these major premises, the assessees claim for exemption was negatived.
5. The assessee filed a writ petition (WP No. 2597 of 1988) before the Honble Bombay High Court challenging the order of the TMB. Pending the writ petition, the assessee applied to the Commissioner, Pune for settlement of the pending issues in order to put an end to the long drawn litigation regarding the claim for exemption. A detailed reference to the proposals put forth by the assessee before the Commissioner is contained in para 7 of the learned AMs order. Suffice it to notice only a few of the proposals. It was proposed by the assessee that it would pay the taxes as per the TMBs orders up to and including the assessment year 1988-89, that it would withdraw the writ petition before the High Court, that the trust deed would also be suitably amended or modified with effect from the assessment year 1989-90 in, order to overcome the objections of the income-tax authorities. By letter dated 3-2-1989, the aforesaid proposals were broadly accepted by the Commissioner.
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 Deputy 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 Trusts 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 assessees claim for exemption under section 11.
8. In the assessment year 1991-92, which is the year under appeal, the assessing officer 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 be spread and imparted. But this clause does not preclude the trustees from spreading and imparting the preachings of Acharya Shri Rajneesh only." The assessing officer also referred to the orders of the Tribunal for the earlier years and noted that the infirmities or repugnancies pointed out in the preachings of the Acharya such as that they were against public morality or public policy and are not conducive for the well-being of the society at large, held good even for the year under consideration since the object of the trust still continues to be the imparting and spreading the preachings of the Acharya. According to the assessing officer, so long as the trust continued to pursue the spreading of the Acharyas preachings, it would not be eligible for the exemption. He further noted that the assessee has so far not been granted registration under section 12A. In this view of the matter the claim for exemption was rejected.
9. Before the Commissioner (Appeals), elaborate submissions were made on behalf of the assessee as to why and how the earlier orders of the Tribunal cannot be applied any longer. In short it was pointed out that the various amendments made to the trust deed excluded the control of Acharya Rajneesh over the assessee-trust, it was also pointed out that the main object of the trust was to spread the preaching of all persons including those of Acharya Rajneesh and therefore the trust did not stand for the spreading of Acharya Rajneeshs message or preaching exclusively. It was further submitted that the clause permitting publication and sale of audio cassettes, video cassettes, books, etc. containing the teachings of the Acharya was deleted with the result that such activities can no longer be pursued by the trust. It was also pointed out that the public perception of the activities of the assessee-trust has drastically changed since the TMBs order in 1988 and that many of the books authored by the Acharya found a place in the Parliament library. Attention was drawn to the fact that some of the universities like the Jabalpur University and the Pune University were proposing to or had actually set up a chair for research into the preachings of the Acharya. It was thus submitted that there was nothing objectionable or repugnant in the preachings of the Acharya and what he had preached during his lifetime was only meditation, the aim of which 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 longer valid. Attention of the Commissioner (Appeals) was also drawn to the settlement entered into with the Commissioner 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 Commissioner (Appeals) in an elaborate order accepted the assessees 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 orders as being in the way of the assessee getting exemption under section 11. He also held that the message preached by Acharya Rajneesh was meditation as a means of self-realisation, which came close to the message expounded by several other Indian philosophers. According to him, the preaching of Acharya Rajneesh had a spiritual base, without adhering to a particular religion. The Acharya was no more and thus his message could no more suffer from vagueness and no more ran the risk of being changed or contradicted. The deed had also been amended to exclude the Acharya from the de facto control of the trust. The Commissioner (Appeals) further noted that since 1988, when the Three Member Bench (TMB) passed its order, the teachings of the Acharya have commanded much wider acceptance and in view of the changed situation, the assessee must be held eligible for the exemption under section 11. He directed accordingly.
11. The revenue carried the matter in appeal to the Tribunal. The learned AM, after referring to the history of the assessee-trust, the objects of the trust deed, the amendments/deletions made thereto, the settlement arrived at with the Commissioner, Pune, as well as the earlier orders of the Tribunal and the arguments before him, came to the conclusion that the decision rendered by the earlier Tribunal cannot be applied to the present year. His reasons were that the trust deed had been drastically amended to exclude the name of Acharya Rajneesh and also to remove his hold over the activities of the trust. He noted that in the objects clause, the assessee wanted to remove the reference to Acharya Rajneesh and his preaching, but the Deputy Charity Commissioner, Pune, was of the view that since the trust had already gained the name by the original clause, the name of the Acharya should not be omitted altogether from the objects clause. It was at his insistence that the name of the Acharya was retained even in the amended clause. The Commissioner (Appeals) noted that the trust deed as amended referred to the spreading and imparting of the preaching of philosophers, thinkers and scholars, both past and contemporary (including Acharya Rajneesh) pertaining to all religions, and/or main principles thereof for the spiritual, mental and moral and physical betterment of human beings with the ultimate object of self-realisation. He noted that the Acharya also ceased to be an advisor of the trust for life. The trust had also omitted clause 5(b) under which it was empowered to print and publish books, 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 Acharyas 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 Acharya 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 was no limit to the teachings of Acharya as he was still alive. They cannot also be considered to be vague any longer.
13. The learned AM thereafter referred to the settlement with the Commissioner, Pune and observed that the assessee-trust had acted to its detriment and interest by withdrawing the writ petition. It had also paid the full taxes up to and including the assessment year 1988-89 on the assurance that the amended trust deed would resolve all disputes. He observed that even if the settlement cannot be considered as the final word in the matter, in view of the changed circumstances and the amended trust deed, the earlier decisions of the Tribunal cannot be treated as binding per se.
14. Thereafter, the learned AM proceeded to refer to the changed perception of the activities of the trust. He noted that over 650 books written by Acharya Rajneesh have been widely studied and translated into many European, Asian and other languages. He noted the fact that some of the books were produced before the Bench and they (the learned Members) had the chance to go through the same. The Acharya had written on diverse subjects, such as Vedanta on Geeta (Geeta Darshan), on the philosophy of Sant Kabir (Kahe Kabir Diwana), on Guru Nanak (Ek Omkar Satnam), a commentary on the Sikh scripture known as "Japuji" hailed as the best commentary by no less a person than H.E. Gyani Zail Singh, the former President of India. The learned AM also referred to the fact that the complete Rajneesh literature was accepted by the Parliament library, where it 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 the 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". He further referred to the fact that the subject of meditation is now being recognised universally as a means of self-realisation and that the Rani Durgavati University of Jabalpur, backed by the State Government of Madhya Pradesh has established an Osho Chair for the study of the philosophy of Acharya Rajneesh. The learned AM reasoned that if the preachings of the Acharya were considered to be against public policy or harmful to the public interests, such a perception by eminent universities 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 that the Commissioner (Appeals) was not justified in directing the grant of registration under section 12A. The assessee would appear to have contended before the Bench that this argument of the department embodied in ground No.1 is not factually correct as the Commissioner (Appeals) had not directed the Commissioner to grant registration under section 12A. However it was pointed out that as a matter of fact, registration had been granted by order dated 18-5-1998 with effect from 18-12-1997. It appears that the assessee contended that with effect from 1-4-1997, the Commissioner was empowered to examine the genuineness and the charitable nature of the objects of the trust and, therefore, registration by itself would put an end to the matter regarding the charitable nature of the objects of the trust. It would thus appear to have been raised as an argument by the learned counsel for the assessee that registration under section 12A, in view of the provisions of section 12AA introduced with effect from 1-4-1997, has put an end to the controversy, but yet it was contended that the assessee would not prefer to rest its case solely on the ground of registration and that the departments objections would be met on merits also. This aspect of the matter has been adverted to in para 14 of the learned AMs order.
17. The learned JM was however not inclined to agree with the proposed order of the learned AM. In his view, it would be opposed to the principle of judicial propriety to deviate from the view taken by the earlier Tribunals and hold that the assessee is entitled to the exemption under section 11. He has observed in para 31 of his order that it was suggested by him to the learned AM that the matter should be referred to the President with a request to constitute a Special Bench consisting of 5 learned Members if it is found that a different view is to be taken. The suggestion was not accepted by the learned AM for two reasonsfirstly, because of the grant of registration under section 12A on the basis of the amended deed which is a strong ground for treating the trust as charitable in nature and secondly, the earlier order of the TMB was passed 11 years back based on the unamended deed which has now been practically replaced by a new deed which was drawn up in consultation with the Commissioner, Pune and which removed all the defects contained in the original deed. Since the learned AM did not accede to the request, the learned JM proceeded to record his dissenting view.
18. He first referred to the learned AMs view that the 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 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 preaching of the Acharya still continues to be spread and imparted by the trust, which has already been held by the TMB as not a charitable object. The Acharya had also written around 650 books and the preachings of the Acharya, which were found by the TMB to be against general public utility and accepted norms of religion, had not been excluded by the assessee-trust even after the amendment. Thus, according to the learned JM, clause 5(a) was substantially the same, both before and after the amendment and that the primary and dominant object was non-charitable. According to the judgment of the Supreme Court in the case of Yogiraj Charity Trust v. CIT (1976) 103 ITR 777 (SC), the primary or dominant object must be wholly charitable. This has also been reiterated by the Supreme Court in the case of Addl. CIT v. Surat Art & Silk Cloth Manufacturers Association (supra). The earlier finding of the TMB that the preachings of Acharya Rajneesh are against general public utility and accepted norms of religion continue to hold good. Therefore, according to the learned JM, the assessee is not entitled to the exemption under section 11.
20. In paras 40 to 42 of the order, the learned JM has referred to the acquisition of assets by the trust such as motor vehicles, computers, general equipment, generators, furniture, etc. From the accounts, he found that the additions to the assets during the year amounted to Rs. 2,07,57,519. Purporting to follow the decision of the TMB, he held that such lavish expenditure was for non-charitable purposes. He thereafter referred to the style of functioning of the trust. He observed that the main activity of the trust appeared to him to be the carrying on of business for the sole purpose of acquiring assets in such manner as to make the Ashram have five-star facilities. He referred to the details of income received from meditation and the expenditure in connection therewith, which showed a profit of Rs.2.41 crores. This was considered by him to be a pure business activity. The participants in the activities of the trust were charged for taking food, etc. which according to the learned JM is contrary to the Indian tradition. According to him, not only should the objects of the trust be charitable, all the activities of the trust should appear to be carried on for achieving the charitable objects. From the style of functioning of the assesseetrust, the learned JM came to the conclusion that the main object 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 learned Departmental Representative 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 Departmental Representative 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 should refrain from expressing my opinion. He pointed out in this connection that though the learned JM had suggested to the learned AM that the matter should be placed before the Honble President with a request to constitute a larger Bench of five learned Members or more for resolving the issues, the learned AM had not acceded to the suggestion, The learned JM had not pursued the matter. According to Mr. Inamdar, the learned JM should have pursued the matter further and included a question to the effect whether the matter should be decided only by a larger Bench and not by a Division Bench. No such question has been referred to me. On giving careful consideration to the contentions on this aspect, I am of the opinion that it is not within my jurisdiction to adjudicate on this aspect of the matter since it has not been referred to me. What has been referred to me is only the question whether the assessee is entitled to the exemption under section 11. I, therefore refrain from adjudicating upon the question as to whether the matter should have been decided by a larger Bench consisting of five learned Members or more.
23. With regard to the precise question of judicial propriety, which was submitted with considerable vehemence before me by both the sides, this is a matter I can examine only to a limited extent within the framework of the question proposed to me. It is open to me to examine whether the learned AM was right in holding a different view on the ground that the trust deed has been substantially altered and also on the ground that there is a change in the public perception regarding the activities of the trust. It is equally open to me to consider, within the framework of the question referred to me, as to whether the learned JM was right in saying that there is no change in the circumstances of the case and that the trust deed remains substantially the same and, therefore, the earlier orders of the Tribunal should be followed. Judicial discipline and propriety are salutary principles that have to be followed in the interest of uniformity, clarity and certainty in the adjudication process. However, the principles should not be indiscriminately applied, ignoring the changes in the facts and circumstances that have taken place since the earlier decisions and their impact on the question for the year under consideration. Blind adherence to the earlier 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-where it has been held that despite a material change in the factual or legal position, the Tribunal should stick to its earlier view. If the fallacies or pitfalls pointed out by the Tribunal in the rival stands are rectified and the parties have effected changes in the factual position, or if there is a change in the documentation, the impact of those changes have to be evaluated by the latter Tribunal. If ultimately it is shown that there is no substantial change in the factual or legal position, the Tribunal is bound to follow the earlier view taken by it. Though it was suggested to me by the learned Departmental Representative in the course of his arguments that even if there is a change in the factual or legal position the matter should be referred to a larger Bench for consideration. I am unable to proceed further on this aspect of the matter in the absence of a specific question on the precise point, as I have pointed out earlier. My jurisdiction, within the framework of the question, is only to examine whether there is a change in the factual or legal position in the current year and if I find there is such a change, which of the differing orders is to be upheld.
24. In the aforesaid background, I proceed to examine the question whether there is any change in the position for the year under appeal. As already noted by me, the question whether the matter should have been placed before a larger Bench of five or more learned Members has not been referred to me and, therefore, the only aspect which I can go into is whether there has been a substantial change in the factual or legal position and if so, what is its effect on the assessees claim. The only options available to me is that if I find that there is no substantial change, have to agree with the learned JM, but if I find that there is a substantial change in the position, as compared to the years with which the earlier Tribunals were concerned, then my duty is to agree with the view taken by the learned AM. These are the only options available to me and the third option, that of holding that the matter should have been referred to a larger Bench consisting of five or more learned Members is not open to me in the absence of a specific question to that effect.
25. Before I proceed to examine whether there is a change in the position for the year under appeal, I need to refer to one or two other aspects of the matter. It was argued before me on behalf of the department that the amended trust deed did not take effect for the year under appeal and that it took effect only from 3-9-1991, the date in which the District court passed the order approving the changes. It was contended that the Commissioner (Appeals), inasmuch as he had looked into the amended deed, committed an error, it was further contended that the conclusion of the Commissioner (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 Deputy Charity Commissioner is decisive of the matter. It was pointed out that this view of the Commissioner (Appeals) is not correct in view of the judgment of the Supreme Court in the case of CIT v. Kamala Town Trust (1996) 217 ER 699 (SC). 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 as to the date from which the amended trust deed had come into effect, that there is no decision by either of them on this point, and, therefore, there is no difference between them on the point and consequently it is not open to the learned Departmental Representative to raise the point at this stage. Gently but firmly he reminded me of my jurisdiction as TM it was pointed out that in the absence of any decision on this point, by either of the learned Members, I have no jurisdiction to enter into this arena. Mr. Inamdar, however, without prejudice to his preliminary objection, put forth his submission on the merits of the question also viz., whether the amended trust deed was applicable for the year under appeal. On this aspect, he drew my attention to the fact that the Supreme Court in the case of Kamala Town Trust (supra) did not hold as a matter of law that in all cases an amendment to the trust deed operates only prospectively, that the decision proceeded on a concession made that the amendment took only prospective effect, that the assessee-trust passed a resolution on 21-3-1989, proposing to amend the trust deed, that an application to the Commissioner was made under section 12A on 30-3-1989, itself enclosing a copy of the amended deed, that the assessments for the assessment years 1989-90 and 1990-91 were completed on the footing that the assessee was a charitable trust only on the basis of the amended deed and that the trust deed as amended cannot be kept in limbo, during the time taken to get it approved and that as soon as the resolution was passed and the deed was amended on 30-3-1989, and filed with the Commissioner, it had come into force so far as the assessee is concerned.
26. On this aspect of the matter, I have to sustain the preliminary objection taken by Mr. Inamdar. Nowhere in the differing orders passed by the learned Members, have they discussed the question as to when the amended deed came into effect, it appears to me on a reading of the learned AMs order, which records the rival contentions, that the question was not argued at all before the Bench. The learned JM has also not adverted to any such argument. Therefore, I am convinced that I am precluded from entering into this question. There appears to have been no dispute between the parties that it was the amended trust deed which was applicable to the assessment year under consideration. Even the learned JM has only held 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 earlier orders of the Tribunal including the TMBs order, cannot be applied. The first is the grant of registration under section 12A of the Act, The second is the changes made in the trust deed as well as the changed perception of the teachings of Acharya Rajneesh.
28. So far as the impact of section 12A is concerned, I am of the opinion that in view of the amended procedure for registration of charitable trusts introduced by section 12AA with effect from 1-4-1997, by the Finance (No. 2) Act, 1996, it is no longer possible to accept the claim that registration of the trust under section 12A does not mean that the objects of the trust are charitable in nature. I recall that earlier there used to be a controversy as to whether such registration precludes the income-tax authorities from examining the nature of the objects of the trust at the time of the assessment. There was a cleavage of judicial opinion on this aspect and the position remained unsettled. However, section 12AA, which was introduced from 1-4-1997, in terms says that registration shall be accorded to the trust by the Commissioner after satisfying himself about the objects of the trust and the genuineness of the activities of the trust or institution. The Commissioner has been conferred the power to call for such documents or information from the trust as he thinks necessary in order to satisfy himself about the genuineness of the activities of the trust. He may also make such enquiries as he may deem necessary in this behalf. Such powers have been expressly conferred upon the Commissioner and he can pass an order registering the trust only after satisfying himself about the objects of the trust and the genuineness of its activities. The section also contemplates an opportunity to be given to the trust before the Commissioner exercises his power of refusal to register the trust. The Departmental Circular No.762, dated 18-2-1998 (published at (1998) 145 CTR (St) 38) has explained the scope and effect of section 12AA. The circular is reproduced at pp. 1090 and 1091 of Chaturvedi & Pithisarias Income Tax Law, 5th Edn. The circular recognises the effect of the section.
29. In the present case, the assessee had applied to the Commissioner for registration under section 12A of the Act only on the basis of the amended trust deed. This is an undisputed position, having regard to the application dated 30-3-1989, filed. On the same day with the office of the Commissioner, Pune, in the prescribed Form 10A, a copy of which is placed at pp. 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 Commissioner, 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 Commissioner how the amended trust deed has sought to remove the objections raised by the departmental authorities upto 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 letter also explains further the assessees case by reference to the changed perception of the teachings of the Acharya. A copy of this letter is at pp. 6-19 of the paperbook No. III. Thereafter, on 18-3-1997, the assessee wrote another letter to the Commissioner, Pune briefly recapitulating the developments and requesting the Commissioner to look into the pending application for registration. On 18-5-1998, the Commissioner, Pune passed an order under section 12A registering the assessee-trust with effect from 18-12-1997. A copy of this order is at p. 2 of the paperbook No. III. From this documentation, it is clear to me that registration has been granted by the Commissioner only on the basis of the amended trust deed. The significance of such registration, according to me, is that it has been granted after 1-4-1997. The assessees application has been pending with the Commissioner from 30-3-1989. Registration has been granted after the advent of section 12AA, which came into effect from 1-4-1997. Therefore it would be reasonable to hold that the registration was granted only after the Commissioner had satisfied himself as to the genuineness of the activities of the trust and the objects of the trust after conducting the necessary enquiry and calling for the necessary documents and information. The assessments for the assessment years 1989-90 and 1990-91 were completed accepting the assessees claim for exemption under section 11, though these were completed under section 143(1)(a). They have not been shown before me to have been reopened to withdraw the exemption granted, Presumably, the departmental authorities are agreed that after the amendments carried out to the trust deed and after the grant of registration under section 12A on the basis of the amended trust deed and after being duly satisfied about the genuineness and the objects of the assessee-trust, there is no case for rejecting the assessees claim. I am therefore in agreement with the view taken by the learned AM that the grant of registration under section 12A is a strong ground for treating the assessee as a charitable trust. This is one of the important changes in the circumstances for the year under appeal and has rightly persuaded the learned AM to take a view different from the view taken by the earlier Tribunals.
30. In my opinion, apart from the above, there is also one more reason why the registration must be considered to be a significant change. For the assessment years 1975-76 and 1976-77, the Tribunal had rejected the assessees plea for exemption under section 11. Certain doubts had been expressed by the Tribunal regarding the teachings of Acharya Rajneesh. Objections had also been raised to a certain clause in the trust deed which according to the Tribunal amounted to carrying on of a business activity and some clauses which gave powers to the Acharya to gain control over the administration of the trust. In this background, the assessee came up with a settlement proposal before the Commissioner. 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 Commissioner. 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 Commissioner when he granted registration with effect from 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 much weight to the grant of registration. Thus, it would be safe and reasonable to assume, according to me, that the departmental authorities have themselves taken note of the changes in the facts and circumstances of the case from the assessment year 1989-90 itself.
31. The learned JM has stated that he cannot accept the grant of registration as a strong ground for holding that the assessee is a charitable trust. He has referred to the order of the TMB in this behalf, where the TMB has held that if the certificate of registration issued by the Commissioner is to be taken as conclusive, the Tribunals jurisdiction to decide the eligibility of an assessee for exemption under section 11 would be ousted, which would be an absurdity. In my opinion, this view of the TMB has to be appreciated in the light of section 12A as it stood then. As already mentioned by me, at the relevant time, there was a controversy regarding the impact of the certificate of registration. One opinion was that it was a mere registration of the trust and nothing more, whereas the other view was that if a trust was registered by the Commissioner, it also meant that the charitable nature of the objects cannot be called in question in the assessments. The TMB would appear to have preferred the former view. Secondly and more significantly, section 12AA has made a marked difference in the impact of the certificate of registration granted by the Commissioner. This section came into force from 1-4-1997, and was not in the Act when the TMB decided the appeal for the assessment year 1976-77. As already observed by me, registration can now be granted only after the Commissioner is satisfied about the objects of the trust and the genuineness of the activities, in view of this change in the legal position, the view taken by the TMB cannot be automatically applied to the present year. The learned JM has taken the view, again following the TMB, that the Tribunal has to decide the eligibility of an assessee under section 11 and if the Commissioners certificate is to be taken as conclusive, that means that the Tribunal's jurisdiction is ousted, which is an absurdity. The answer to this is again that after the advent of section 12AA, the certificate of the Commissioner granting registration has to be considered as conclusive of the objects and the genuineness of the activities of the trust. It is possible that the legislature wanted to do away with the litigation that often arises regarding the charitable 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 Commissioner, a senior officer of the department, has been conferred powers 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 Commissioner 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 not automatic and must be expressly conferred and if it is not so conferred, it cannot be viewed as encroaching upon the jurisdiction of the appellate functionaries. The jurisdiction and role of the appellate authorities are controlled by the express terms of the statute constituting them and conferring upon them the powers to decide disputes. Even otherwise, the impact of section 12AA, in my humble opinion, is not what is apprehended by the learned JM If the Commissioner grants registration to the trust, it means that he is satisfied about the objects and genuineness of the activities of the trust. No question can, therefore, arise in the assessment regarding these. If, on the other hand, despite the issue of the certificate, the assessing officer refuses the claim for exemption on the ground that the objects of the trust are not charitable or that the activities of the trust are not genuine, there is always a right of appeal to the assessee against the assessment. Even if the Commissioner refuses registration and the assessing officer purports to follow the same in the assessment by denying the exemption under section 11, the right of appeal given to the assessee against the assessment is protected. Such a right has not been taken away. Perhaps it is even open to the trust to challenge the order of the Commissioner refusing registration by way of writ proceedings. Therefore, notwithstanding the introduction of section 12AA,the right of the Tribunal to examine the correctness of the claim under section 11 is still preserved in appropriate cases. The assessee's right to contest the claim is also preserved. Therefore, in my humble opinion, the fears of the learned JM that the Tribunal's jurisdiction would be ousted are perhaps not justified.
32. I now turn to the next important difference of opinion. According to the learned JM, even after the amendment of the trust deed, the objects of the trust cannot be considered as charitable and there is no change in the circumstances for the year under appeal, in para 35 of the order, the learned JM has listed 9 points, which according to learned AM, denote a change in the circumstances. The learned JM has not agreed with the learned AM that these 9 points indicate a change in the circumstances for the year under appeal. In the opinion of the learned JM, the amendment made to the main object clause 5(a) does not cure the defect, pointed out by 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 preaching of Acharya Shree Rajnishji and other philosophers pertaining to all religions and/or main principles thereof and/or morals.
(a) To spread and impart the preaching of philosophers both past and contemporary (including Shri Acharya Rajneesh) pertained to all religions and/or main principles thereof for the spiritual, mental and/or moral and physical betterment of human beings with the ultimate 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 IMB 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 teachings to be vague, susceptible to contradictions or changes since the Acharya was alive. The objection that the teachings of the Acharya could be changed and, therefore, may be considered as vague is no longer valid, because the Acharya is no more around. He took Maha Samadhi on 19-1-1990. His teachings, therefore, have attained a definiteness and have become unalterable. It is a different matter that some of the members of the public may hold a different viewpoint or may not agree or follow the teachings of Acharya Rajneesh. But, the charge that the teachings were liable to be changed or contradicted can no longer hold good. This is one important change, which has an impact for the current year.
34. The imparting and spreading of the teachings of Acharya Rajneesh have been considered by the learned JM, following the order of the TMB, to be a non-charitable object of the assessee-trust. The answer to this has been given by the learned AM in para 23(a) and para. 26. He has first noticed that the proposed amendment was to the effect that the assessee-trust would spread and impart the preaching of philosophers both past and contemporary pertaining to all religions, etc. The name of Acharya Rajneesh was proposed to be completely omitted from the original clause. However, the Deputy Commissioner of Charities, Pune did not agree to the deletion of the name of the Acharya from the clause, since according to him, the trust had gained its name and reputation by the original clause and, therefore, it was not proper that it should be omitted. Therefore it was that the name of the Acharya was mentioned in parenthesis in the amended clause, in my opinion, the retention of the name of Acharya Rajneesh in the amended clause per se cannot be objected to and considered to impart a non-charitable colour to the object. Whatever be the merits of his teachings, he was the preacher and, therefore, it was quite in order that his name shall find mention in the objects clause. As I have already observed, even the TMB did not consider the mention of his name in the objects clause to be objectionable. There, the real objection was to the nature and content of his preaching and teachings. According to them, they were harmful to public morality. This part of the objects clause has been considered by the learned AM in para 26 of the order. According to him, the objection that the teachings 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, Geetha, 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 religions. Different forms and types of meditation have been developed by different religions all over the world and at present, in the contemporary world, meditation has been considered to be an important method of self-realisation and ultimately the attainment of peace, The learned AM has referred to certain teachings of the Acharya on meditation. He has held that the main activity of the assessee-trust is to hold meditation classes so as to enable humanity to enlighten themselves and attain peace and self-realisation. He has referred to the income and expenditure relating to this activity for the year under consideration.
35. In the light of the aforesaid developments which have taken place in the recent past and certainly after the order of the TMB, I agree with the observations of the learned AM that there is a changed perception of the teachings of Acharya Rajneesh in the public mind. It is difficult to imagine that the teachings of any person which are vague or opposed to public policy or harmful to the interests of public morality would be found worthy of being researched upon by educational institutions or worthy of adorning the libraries of esteemed political institutions established by the Constitution of India.
36. In my opinion, therefore, in view of the changed public perception of the teachings of Acharya Rajneesh, whether one agrees with the teachings or follows them or not, it must be held that the earlier view that his teachings were vague or opposed to public policy or were harmful to public morality can no longer be countenanced. I, therefore, agree with the learned AM on this part of the controversy.
37. The other main amendments made to the Trust Deed are also very relevant. The original clause (2) appointing Acharya Rajneesh as life-time advisor was deleted. After, the Acharya took Maha Samadhi, this clause has become redundant at any rate. Similarly, the clauses which gave the Acharya "de facto" control of the administration of the trust have also been omitted. Again, these clauses, even if they had continued, would have become redundant after the Maha Samadhi of the Acharya. The power of the Acharya to act as arbitrator in case of disputes regarding the administration of the trust has also been taken away by the amendment and has been vested with the Board of Trustees. All these amendments were aimed at meeting the objection of the department that one single individual was being given disproportionate powers of control over the affairs and administration of the trust. 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 paras 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, etc. These observations were objected to by Mr. Inamdar on the ground that they are all based on hearsay and that neither side had argued these matters at the time of the hearing of the appeal by the Bench. It was submitted that the assessee did not have an opportunity of meeting, the observations made by the learned JM, Mr. Inamdar also pointed out that on these matters, there is no opinion expressed by the learned AM except to the income and expenditure on meditation courses offered by the trust. He also referred to the fact that on these aspects, there is no finding recorded by either the assessing officer or the Commissioner (Appeals). He, therefore, pleaded that these observations should be ignored by me while taking a decision.
40. I have carefully considered the plea of Mr. Inamdar, the learned counsel for the assessee. I find that neither the Commissioner (Appeals) nor the assessing officer has referred to the style of functioning of the assessee-trust. They have not referred to any "lavish expenditure" having been incurred by the assessee on provision of 'five-star facilities". The learned AM has also not adverted to these aspects of the matter. In paras 13 and 21, the learned AM has recorded the contentions of the learned senior Departmental Representative. A perusal of these paras does not reveal that any objections were taken on behalf of the department on the ground that the assessee was indulging in lavish expenditure in the provision of five-star facilities. Consequently, there is no finding recorded by the learned AM on this aspect of the case. The learned JM in para 40 has referred to the order of the TMB which in turn has referred to the accounts for the year 1978. In paras 41 and 42, he has referred to the accounts for the year under consideration in support of the view that the assessee incurred lavish' expenditure on provision of five-star facilities. After going through the orders of the Income Tax Authorities for the year under consideration, the contentions raised by the department before the Tribunal both in the grounds of appeal as well as in the course of the arguments, I do find substance in the claim of Mr. Inamdar that the question of lavish expenditure or five-star facilities was never raised either by the departmental authorities or before the Tribunal. The assessee, therefore, has had no opportunity of meeting them. Under these circumstances, I am unable to take note of the observations made by the learned JM in paras 40 to 42 of the order.
41. For all the aforesaid reasons, I agree with the order of the learned AM and answer the question referred to me in the affirmative. The matter will now go before the Bench for passing necessary orders.
B.L. Chhibber, A.M. : 19-10-2001 As there was a difference of opinion between the AM and the JM, the following question was referred to a TM;
"Whether, on the facts of the case and in law, the assessee is entitled to exemption under section 11 of the Income Tax Act, 1961 "
2. The learned JM, Shri R.V. Easwar, starting as TM by his opinion dated 3-10-2001, has concurred with the views of the AM and has answered the question in the affirmative. In accordance with the majority view, the issue stands decided in favour of the assessee and against the revenue.
3. In the result, the appeal is dismissed.