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27. Arguing that the petitioner's submissions are meritless, it was stated that the means and objects, for which the Trusts were set up, were clearly charitable. Learned counsel also relied upon the minutes of the meeting dated 10.06.1989 which led to the lease deed in the case of Moolchand. It was argued that this clearly showed that the said Trust was granted land on the basis of its aims and objectives which were charitable and to provide treatment to poorer sections of the society and further the public good. In terms of Clauses 14 and 16 of the lease deed of 24.04.1968, the Trust was obliged to manage the hospital to the satisfaction of the lessor, i.e. the Central Government. This, submitted counsel, enable the lessor to give such directions as to the proper management of the Trust and its activity, including the direction to give free treatment. Learned counsel submitted that the expression "satisfaction and management" ought to be given a wide meaning, having regard to the larger public purpose.

Charitable trust

61. One of the contentions raised by Mr Shanti Bhushan in Moolchand was based on the concept of charitable object as it has been generally understood and particularly in the context of section 2(15) of the Income Tax Act, 1961. The point made was that the idea of charitable object does not mean that the charitable activity should be rendered free of charge; eleemosynary is not an essential ingredient of a charitable purpose. It was accordingly contended by him that by not treating poor and indigent patients free of charge, the writ petitioners did not offend the idea of charitable purpose or object. This was in response to the submission of the respondents that being charitable trusts of establishments for charitable purposes, the petitioners could be compelled to achieve their objects through the impugned orders.

62. The definition of "charitable purpose" in the Income Tax Act, 1961 purports to follow the four main divisions of charity as enunciated by Lord Macnaghten in his speech, now considered as classic, as member of the House of Lords in Commissioner‟s for Special Purposes of Income Tax Act V. Pemsel (1891) 3 TC 53 (HL). He observed that "in its legal sense (charity) comprises four pre-divisions; trust for the advancement of education; trust for the advancement of religion; and trust for the purposes of beneficial, community not falling under any of the preceding heads." The English concept of charity could be different from the Indian concept. Under the Indian concept, certain purposes which are not considered charitable in England are considered charitable objects. However, both in England and in India the common position was that if the purpose or object of a trust is charitable, that it has to be paid for does not alter the charitable nature of the object. In In re Trustees of the Tribune (1939) 7 ITR 415, the Privy Council held that it is not necessary to constitute a charity that it should provide something for nothing, or for less than it costs, or for less than its ordinary value. This position has been reiterated in Cawse (Surveyor of Taxes) V. Committee of the Lunatic Hospital (1891) 3 TC 39 (QB), Lord Nuffield as Ordinary Trustee of the Nuffield Provident Guarantee Fund V. Commissioner of Inland Revenue (1946) 28 TC 479 (KB), In re the Trustees of the Tribune (1939) 7 ITR 415 (PC), Commissioner of Income Tax V. Breach Candy Swimming Bath Trust, Bombay (1955) 27 ITR 279 (Bom), Commissioner of Income Tax V. Pulikkal Medical Foundation Pvt. Ltd. (1994) 210 ITR 299 (Ker).