Indian Kanoon - Search engine for Indian Law

3. Facts leading to this appeal may be briefly stated thus :

The respondent is a trust registered under Bombay Public Trusts Act. Earlier it was known as Rajneesh Foundation. However, after amendment in the trust deed, it came to be known as Neo Sannyas Foundation. The respondent filed returns of income for the asst. yr. 1991-92 showing certain income and claimed exemption from income-tax under Section 11 of the IT Act. The AO rejected the claim on the ground that similar claim of the trust was rejected earlier for the asst. yr. 1975-76 and the asst. yr. 1976-77 on the grounds that trust was not for educational or religious purposes and the activity of the publication of books was intended for profit. For the asst. yr. 1976-77, it was observed that as long as Acharya Rajneesh was alive, one could not predict what he would preach and hence, the object of the trust could not be said to be charitable and secondly, affairs of the trust were dominated by the single person Acharya Rajneesh and the object of the trust was to preach and propagate philosophy of Acharya Rajneesh and perpetuate image of Acharya Rajneesh whose vague and contradictory views were not only not charitable but harmful to the public interest. The AO noted that even though after rejection of the claim for the asst. yrs. 1975-76 and. 1976-77, the trust deed was amended virtually it remained the same. Order passed by the AO was challenged before the CIT(A) by the respondent contending that there were distinct differences in the circumstances prevailing during the asst. yrs. 1975-76 and 1976-77 and the asst. yr. 1991-92. In view of the amendment in the trust deed, appeal was allowed and the respondent was held entitled to exemption under Section 11. Revenue challenged that order before Tribunal. In view of the difference of opinion between the AM and the JM, the matter was referred to Third Member who agreed with the views of the AM and in the result, appeal of the Revenue came to be dismissed [The Tribunal order is reported as Dy. CIT v. Rajneesh Foundation (Neo Sannyas Foundation) (2001) 73 TTJ (Pune)(TM) 649--Ed.]. In the present appeal, the Revenue has challenged the findings of the Tribunal on several grounds.

4. Heard the learned Counsel for both the parties.

5. Dr. Daniel, the learned Counsel for the Revenue vehemently contended that the claim of the respondent for exemption under Section 11 for the asst. yrs. 1975-76 and 1976-77 was rejected by giving very cogent reasons by the Tribunal and the circumstances have not changed in spite of amendment in the trust deed carried in the year 1989. He contended that the said trust was established with the predominant object of preaching and propagating philosophy of Acharya Rajneesh, who was controversial, and certainly not for the benefit of the society in general. He also contended that the predominant object of the trust was not charitable but to make income as all the services rendered by the trust were for price. Books were published and sold and income was earned. The trust was trying to project and perpetuate image of the Acharya Rajneesh. According to him, unless the object is wholly charitable, as held by the Supreme Court in Addl. CIT v. Surat Art Silk Cloth Manufacturers Association , the trust could not be entitled to exemption under Section 11.

6. On the other hand, Mr. Inamdar, the learned Counsel for the respondent vehemently contended that there are material changes in the situation and structure of the trust after the amendment in the year 1989 and the primary . object of the trust is to spread and impart preaching of the philosophers, thinkers and scholars, both past and contemporary, including Acharya Rajneesh, pertaining to all the religions and/or main principles thereof for the mental, spiritual, moral and physical betterment of human beings with the ultimate object of self-realization. He also contended that publication of books is no more undertaken by the respondent-trust and it is handed over to another trust which separately pays income-tax. He also strongly placed reliance upon Surat Art Silk Cloth Manufacturers Association's case (supra) and CIT v. Ahmedabad Rana Caste Association and contended that taking into consideration all the facts and circumstances, predominant object of the trust is charitable and, therefore, even if it makes income, it is entitled to exemption. He contended that the very provision for exemption supports the view that the trust may make income and it may be exempted from income-tax.

11. In the proceedings for the asst. yrs. 1975-76 and 1976-77, the Tribunal had noted that philosophy and teachings of Acharya Rajneesh were not of general public utility and in fact were controversial. Same line was adopted by the AO for the relevant assessment year and by the CIT in his report dt. 8th Oct., 1993 to the Director General (Exemption) and in respect with application under Section 10(23C)(v). He actually contended that the trust did not fulfil the conditions laid down in Section 2(15) of the IT Act as it is not for the relief of the poor, education, medical reliefs and advancement of any other object of general public utility because it was involved in carrying on activities for profit. Further, he observed that whatever amount was spent was for providing amenities to the persons attending the rituals and large investment was made in the purchase of movable and immovable assets. He noted that this trust is like a health club where course has been prescribed for removing stress and strain and therefore, it could be said to be a health club in the modern sense and nothing more. He also observed that even removing the stress by charging a lot of payment does not amount to advancement of any other object of general public utility and, therefore, the objects of the trust were not charitable. It appears that on the basis of this report, application for exemption under Section 10(23C)(v) came to be rejected by letter dt. 3rd Oct., 1996.