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Showing contexts for: charitable trust objects in Jaipur Charitable Trust vs Commissioner Of Income-Tax, Central, ... on 14 April, 1980Matching Fragments
"To open, found, establish, equip, finance, assist, maintain, or contribute to religious, commercial, technical, industrial or commercial concerns, institutions, associations or bodies imparting any type of training or providing employment to persons."
4. Under clause 5(b), the trustees had power to acquire, start or establish, equip or close any business undertaking or industry. Under clause 11 the trustees had authority to acquire, hold, carry on and manage any trade or business or any share thereof. The trustees were also given full discretion in employing the whole or any portion of the trust property or any funds of the trust in such trade or business or running business concern or managing agencies or other investments or shares or securities, etc. Clause 30 provided that if any object of the trust was found to be invalid or contrary to law, it would not affect the other objects of the trust. This court held that the object of establishing an industrial or commercial concern providing employment to persons mentioned in clause 5(a)(v) was not of a religious or charitable nature. In view of clause 30 it was observed that the various objects of the trust could be taken to be independent and there was nothing in the trust deed to prevent the trustees from applying the entire trust income for an object which was not of religious or charitable nature like the one in clause 5(a)(v). The reference in the said clause that the concern or institution in question must provide employment to persons was superfluous because industrial or commercial concerns must, in the very nature of things, provide employment to some persons. The establishment of commercial or industrial concerns normally postulate profit motive and there was nothing in the trust deed which ruled out the element of profit by the trust. A trust founded for the object of setting up an industrial or commercial concern would obviously be not for a religious or charitable purpose. Nor could it be said that the non-religious and non-charitable objects of the trust were not the primary object. The property of the trust could not, therefore, be said to be held "wholly for religious or charitable purposes" and its income was not exempt from tax under s. 4(3)(i). The words "wholly for religious or charitable purposes" in s. 4(3)(i) show that the income from trust property would be exempt only if all the objects of the trust are of a religious or charitable nature. In case a trust has ten distinct objects and nine of them are of religious or charitable nature but the tenth is not of a religious or charitable nature, the income derived from the property of the trust would not be exempt from taxation under s. 4(3)(i). The reason is that the trustees in such an even can apply the property of the trust exclusively for that object of the trust which is not of a religious or charitable nature. The court followed the principle laid down in this respect by the decision of the Privy Council in Maulana Mohammed Ibrahim Riza Malak v. CIT, AIR 1930 PC 226, and of the Supreme Court in East India Industries (Madras) P. Ltd. v. CIT . The court pointed out that the relaxation had been permitted in such cases. This was that if all the primary objects of the trust are of religious or charitable nature, the existence of an ancillary or secondary object which is not of a religious or charitable nature but which is intended to subserve the religious and charitable objects, would not prevent the grant of such an exemption. However, as already pointed out, the court held, on a construction of the trust deed, that the various objects set out in clause 5 were independent objects and none of them could be described as the primary object or the sole and dominant object, the other being secondary or ancillary to effectuate the main and primary object of the trust. This reasoning of the High Court was fully endorsed by the Supreme Court in the decision referred to earlier. In view of these decisions and having regard to the fact that we are considering the same trust deed in relation to the same provision of law for the assessment year 1961-62, we are unable to see how any different answer could be given to the question referred to us. So far as the assessment year 1961-62 is concerned, Mr. G. C. Sharma sought to contend that the decision of the Supreme Court in the case of the present assessed should be read as modified by the recent decision of the Supreme Court in the case of Addl. CIT v. Surat Art Silk Cloth Manufacturers Association . This argument, however, is not tenable because in the said decision the Supreme Court was only concerned with the interpretation of the words "not involving the carrying on of any activity for profit" which had been added at the end of the definition of "charitable purpose" as contained in the 1922 Act. We are, therefore, of opinion that so far as the assessment year 1961-62 is concerned, the question referred to us has to be answered in the negative and against the assessed.
(i) If there are several objects of a trust or institution, some of which are charitable and some non-charitable and the trustees or the managers in their discretion are to apply the income or property to any of those objects, the trust or institution would not be liable to be regarded as charitable and no part of its income could would be exempt from tax. Mohammed Ibrahim Riza Malak v. CIT, AIR 1930 PC 226, and East India Industries (Madras) P. Ltd. v. CIT approved.
(ii) If the primary or dominant purpose of a trust or institution is charitable, another object, which by itself may not be charitable but is merely ancillary or incidental to the primary or dominant purpose, would not prevent the trust or institution from being a valid charity. For instance, if in order to give effect to a charitable purpose, an incidental entry into the political domain is contemplated or if the activities of an institution in the carrying out of its main charitable purpose incidentally benefit the members of the society or the institution, this would not by itself prevent the association or institution from being a charity. CIT v. Andhra Chamber of Commerce approved.
7. It is in the light of this judgment of the Supreme Court that we will have to scrutinise the purpose of the charitable trust and in doing so we have also to bear in mind the interpretation placed upon the trust deed by the earlier decision of the Supreme Court in Yogiraj Charity Trust . The previous decision of the Supreme Court and this court have proceeded on the footing that the various objects of the trust as set out in clause 5 are independent objects and that since one of these objects, namely, to run commercial concerns, cannot be described as a charitable purpose, the claim of the entire trust for exemption must fail on the principle of the decision of the Privy Council in Mohd. Ibrahim, AIR 1930 PC 226, which has been approved in the East India Industries (Madras) P. Ltd. and Yogiraj Trust cases and even in the Surat Art silk Cloth Manufactures Association case . Mr. G. C. Sharma, learned counsel for the assessed, contends that the earlier decision proceeded on the assumption that the carrying on of a business is necessarily a non-charitable purpose since it involves the carrying on of an activity for profit, although these words which have been added in the 1961 Act were not there in the 1922 Act. Learned counsel contends that this assumption under the old Act is not justified and that this would be clear from that even under the 1961 Act it is now clear that the mere fact that an activity for profit is contemplated by the trust does not render it a non-charitable trust or institution. He points out that there are as many as 14 object set out in clause 5 of the trust deed. Every one of them, with the exception of clause (v), is clearly a charitable purpose. Each one of the objects provides for relief of the poor, education, medical relief, religious purpose or other objects of general public utility. In fact this has also been recognised by the earlier decision of the Supreme Court. This being so, the reference in clause 5(a)(v), even though wide enough to include the running of a business, should have been interpreted as involving the running of a business not with a view to varying on any activity for the making of profit but merely for the purpose of carrying out the several admittedly charitable or religious purposes set out in the trust deed.
16. I.T. Rs. Nos. 42 & 43/72 :
17. These two references pertain to the case of Dalmia Jain Charity Trust (renamed as Durga Trust). The references relate to the assessment years 1965-66 and 1966-67. The relevant trust deed was executed on June 1, 1946, by Seth Ramkrishna Dalmia.
18. Mr. G. C. Sharma, learned counsel for the petitioner, brings to our notice that the terms of this trust deed are entirely different from those considered by us in the cases of Jaipur Charitable Trust and Jagdamba Charity Trust. The objects of the trust are set out in clause 5. There are as many as 18 objects and we find on a perusal that practically all these are charitable objects within the meaning of s. 2(15) of the 1961 Act. The only two clauses which can be said to correspond to those in the case of the Jaipur Charitable Trust are cls. (x) and (xi), which run as follows :