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Resolved that for day to day running of Dainik Saamana following guidelines and principles shall be followed :

1. The object of the Trust is 'Promotion and Propagation of ideologies of National Interest' and hence every issue shall be published keeping the object in mind.

2. The Daily shall not be allowed to be used for the benefit of any religion or caste.

3. The activity of Daily shall be utilised for the achievement of the other charitable objects of the Trust also.

6. Thereafter, the Executive Trustee, Secretary and Treasurer of the Trust issued an appeal to the public informing them that a charitable trust by the name of "Prabodhan Prakashan" had been established to preserve Indian cultural heritage and ensure its continuity and inculcate strong nationalistic thought. In order to achieve this purpose, the Trust had decided to publish a daily by the name of "Dainik Saamana". Contributions were invited from the public towards the corpus fund of the Trust in the following words (English Translation) :

11. At the same time, the Assessing Officer did not set off the loss from publication of Dainik Saamana against income from donations stating that the loss would be carried forward for set off in subsequent years. Accordingly, she computed the total income at Rs. 9,86,188 and carried forward business loss of Rs. 15,82,545.

12. It was again submitted before the CIT(A) that the object of the Trust was charitable and Dainik Saamana was being published on "No Profit No Loss Basis". The Trust was registered with the Charity Commissioner and also under Section 12A of the Income-tax Act, 1961. Publishing of a newspaper was stated to be a charitable activity. Reliance was also placed on the decision of the Tribunal in the case of Janata Trust v. Fifth TTO [1986] 16 ITD 147 (Bom.) and the judgment of the Allahabad High Court in the case of Pratap Press v. CIT [1961] 41 ITR 577. The CIT(A) first analysed whether the activity of "Dainik Saamana" could be treated as "biisiness" within the meaning of Section 2(13) of the Income-tax Act, 1961, according to which, business includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. After referring to several case laws, he held that the activity was clearly business as the assessee was carrying on a systematic and organised activity of purchase of paper, printing of newspaper, incurring of various expenses on processing and packing and transportation etc. and also had advertisement income and income from waste paper sales. In fact the advertisement receipts were as much as Rs. 13,92,319.

(i) U.U. Charitable Trust v. Fifth ITO [IT Appeal No. 1852 (Bom.) of 1983, dated 16-4-1985] for assessment year 1979-80 (copy given);

(ii) N.A. Ramachandra Raja Charity Trust v. First ITO [1985] 14 ITD 230 (Mad.);

(iii) ITO v. Malirarn Pooranmal Charitable Trust [1981] 12 TTJ 245 (Jp.); and

(iv) CIT v. Trustees of Visha Nima Charity Trust [1982] 138 ITR 564 (Bom.).

21. Regarding the second proposition, the learned Counsel for the assessee submitted alternatively that if the donations were not exempt under Section 11(1)(d) of the Income-tax Act, then the provisions of Section 12 of the Act would be applicable. Under this section, voluntary contributions received by a trust created wholly for charitable or religious purposes shall, for the purposes of Section 11, be deemed to be the income derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and Section 13 shall apply accordingly. In this connection, he submitted that the object of the Trust was charitable and so was Clause (iv) of the objects relating to publication of Dainik Saamana and reliance was placed on the following decisions :

38. In the case of Pratap Press (supra), the aim of the newspaper was to encourage all that would lead to the progress of the nation and political matters were to accord with aims and objects of Indian National Congress. It was held that the object of the trust was that of supplying an organ of educated public opinion which was a charitable object within the meaning of Section 4(3)(0 of the Indian Income-tax Act, 1922, the trust was a charitable trust and the income was exempt under Section 4(3)(0 of the said Act. In coming to the conclusion, the Allahabad High Court applied the decision of the Privy Council in Trustees of the Tribune's case [supra). These decisions support fully the contention of the learned Counsel for the assessee that the object of the Trust in running Dainik Saamana was a charitable purpose within the meaning of Section 2(15) of the Act, as it stood from 1-4-1984.