ORDER
M.C. Agarwal, Judicial Member
1. These are two appeals by the Revenue arising out of the assessee’s assessments for assessment years 1981-82 and 1983-84.
2. We have heard the learned Departmental Representative and the learned counsel for the assessee and have perused the material placed before us. The identical ground raised in the two appeals is as under: –
On the facts and in the circumstances of the case, the learned CIT(A) erred in allowing the exemption Under Section 11 of the Act to the assessee as the object of the assessee are political.
As is evident from the ground raised by the Revenue the revenue’s contention merely is that the assessee is not a charitable institution.
3. The assessee is a trust society established by the late Lala Lajpat Rai, a great national leader and freedom fighter, somewhere in the year 1921 and has all along been treated as a charitable institution. The objects of the assessee society are narrated in para 4 of its constitution as below: –
4. The object of the society shall be to enlist and train national missionaries for the service of the motherland. It shall be their duty to work for the educational, cultural, social, economic and political advancement of the country under the supervision of the society.
4. The ITO while dealing with the aforesaid clause observed that it is a political society and not a charitable society. For this view he took note of the fact that the assessee publishes a daily newspaper named “Samaj” and it is running a foundry in which types for the printing presses are manufactured and the society is also running a printing press in the name of Satyawadi Press. These activities, according to the ITO, were being carried on as commercial activities and for profit. The ITO, however, has not observed that any part of the income of the assessee is being ultimately applied for purposes that are not charitable. The ITO in the two years under consideration held the income of the assessee to be not exempt from tax and in determining a taxable income he excluded from the gross total income as shown by the assessee in its income and expenditure account only the agricultural income and a few expenses. In other words even voluntary contributions from other persons, donations and grants received from the Government itself have been held to be taxable, although they are patently not of the nature of income. Voluntary contributions have the nature of income only in the case of a charitable institution and not otherwise. The assessee appealed to the CIT(A) who accepted the assessee’s claim of exemption Under Section 11 by a brief order, in which he purports to have followed an earlier order of his predecessor for assessment years 1973-74 to 1979-80.
5. The Revenue had come to this Tribunal against the orders of the CIT(A) for assessment years 1973-74 to 1979-80. The appeal for assessment year 1973-74, being I.T.A. No. 2857 (Del)/85 was decided by a Bench of this Tribunal vide order dated 23-6-1989 and was dismissed. The appeals for assessment years 1974-75 to 1979-80, being I.T.A. Nos. 2858 to 2863(Del)/85 were also decided on the same date and were dismissed following the order in ITA No. 2857/85.
6. At the hearing before us while the learned Departmental Representative did not argue the matter as he felt that the matter stood already covered, the learned counsel for the assessee argued the matter at some length as he felt that in the earlier orders of the Tribunal the assessee’s contentions have not been fully discussed.
7. The learned counsel for the assessee referred to the object clause of the Society and contended that it was a Society for the educational, cultural, social, economic and political advancement of the people of India and did not indulge in any political activities whatsoever. He has placed in the paper book at pages 3 and 4, a list of the various institutions run by the Society. Such institutions are educational institutions, libraries, hospitals etc. The Society is also maintaining hostels for working women and girl students and is also running tailoring centre. Thus, according to him the Society’s activities are totally charitable and the mere fact that it was founded by a national leader who could also be said to be a politician or that some politicians may be involved in the activities of the society, being its office bearers, would not change the character of the society.
8. The learned counsel for the assessee relied upon the judgment of Hon’ble the Privy Council in All India Spinners’ Association v. CIT [1944] 12ITR 482, in which the assessee association was constituted by the All India Congress Committee as an integral part of the Congress but yet for purposes that were held to be charitable. The Hon’ble Privy Council held that the dominant purpose of the society was a charitable purpose and its connection with a political party did not rob it of that character. Reliance was also placed on another judgment of Hon’ble the Privy Council in the case of Trustees of the Tribune, In re [1939] 7 ITR 415, in which a person, who owned a press and a newspaper, created a trust by his will by which his property in the stock and goodwill of the press and newspaper was made to vest permanently in a committee of certain members. The surplus income of the press was to be utilised for the maintenance of a college. It was held that the object of the settlor was to supply the province with an organ of an educated public opinion and was prima facie an object of general public utility and the fact that the paper may have, or may acquire, a political complexion could not take away its exemption.
9. On the basis of these rulings the learned counsel for the assessee contended that the mere involvement of some persons connected with national politics was immaterial while considering the charitable character of the present society and, in our view, the larned counsel is right in contending so. Charitable purpose has been defined in Section 2(75) of the Act as under : –
“Charitable purpose” includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility not involving the carrying on of any activity for profit.
Thus, any activity for the relief of poor, for the advancement of education, for the provision and advancement of medical relief and the advancement of any other object of general public utility not involving the carrying on of activity for profit is a charitable purpose. As pointed out above, the assessee’s objects are the advancement of education, culture, social, economic and political level of the people of the country. The Revenue has no grievance so far as the educational, cultural, social and economic advancement is concerned. The ITO purports to have raised a grievance about the political advancement and that appears to be one of the reasons for him to hold that the society’s objects are political. Patently the Society is not engaged in any political activity in the country. Political advancement means advancement of political awareness, imparting the people of the country with knowledge latest political thought and happening in India and abroad, informing the people of their political rights and telling them how to exercise and defend them. All activities directed towards that end would be activities of general public utility and, thus of a charitable nature. If it were not so, a department in a college or a university that teaches political science could be said to be indulging in activity, which is neither charitable nor of general public utility. We, therefore, are of the opinion that the use of the word ‘political advancement’ in the objects clause is itself a charitable object and not a political object devoid of character as an activity of charitable nature or of general public utility.
10. As regards the publication of newspaper – Samaj is concerned, that is not being done by the assessee in direct furtherance of any of its objects. Its objects as narrated above do not involve the publication of a newspaper. The said paper was being earlier published by one Pt. Gopa Bandhu Das of Orissa, who bequeathed the asset relating to the publication of newspaper-Samaj to the assessee in the following words: –
The short cut that appears to me at the present moment that I shall make over the whole press to the Servants of the People Society so that a permanent institution of the society may continue in Orissa. I hope the society will see to its strict management and will spend all its proceeds on the social, educational, moral and political uplift of Orissa.
Thus, according to the testator the newspaper was a source of income for finding out funds to be spent on the social, educational, moral and political uplift of the people of Orissa. These objects for the reasons given above are all charitable objects and the publication of newspaper is not an object according to the constitution of the assessee nor does it appear to be so according to the terms of the will dated 17-6-1928 of late Pt. Gopa Bandhu Das.
11. We have reproduced the definition of charitable purpose above. The words “not involving the carrying on of any activity for profit” were included in this definition in 1961 Act and it has been held that these words govern the phrase “the advancement of any other object of general public utility” and do not govern the other objects, i.e., the relief of poor, education and medical relief. It was so held by Hon’ble the Supreme Court in CIT v. Dharmodayam Co. [1977] 109 ITR 527. In that case it was held that a business, which is held in trust, cannot by reason of the amendment become a business started for the purpose of advancing an object of general public utility. In that case the assessee was running a chit fund business, which itself was held under trust for religious or charitable purposes. The Hon’ble Supreme Court, therefore, held that the said business was not carried on in the execution of a charitable purpose.
12. Reliance was also placed by the learned counsel for the assessee on Addl. CIT v. Surat Art Silk Cloth Mfrs. Association [1980] 121 ITR 1 (SC) in which the provisions of Section 2(75) again came for interpretation and it was held that when the purpose of a trust or institution is the advancement of an object of general public utility. It is that object of general public utility and not its accomplishment or carrying out which must not involve the carrying on of any activity for profit. So long as the purpose does not involve the carrying on of any activity for profit, the requirements of the definition would be met and it is immaterial how the moneys for achieving or implementing such purpose are found, whether by carrying on an activity for profit or not. Relying on these rulings, the learned counsel for the assessee contended and, in our view, rightly that the assessee’s object of educational, cultural, social, economic and political advancement did not involve the carrying on of any activity for profit and, therefore, even if the newspaper, the foundry and the printing press were run on commercial lines the assessee was yet within the definition of charitable purpose. We are in agreement with this view. Therefore, we hold that the assessee is a charitable institution existing for a charitable purpose, as defined in Section 2(75) of the Income-tax Act, 1961.
13. The newspaper the foundry and the press are the properties held by the assessee under trust and, therefore, the income therefrom would be exempt under Section 11. Consequent to the interpretation of Section 2(15) by Hon’ble the Supreme Court in Dharmodayam Co. and Surat Art Silk cases (supra) the legislature amended Section 13 by adding to Sub-section (1) Clause (bb) as follows: –
13(1) Nothing contained in Section 11 or Section 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof-
(bb) in the case of a charitable trust or institution for the relief of the poor, education or medical relief, which carries on any business, any income derived from such business, unless the business is carried on in the course of the actual carrying out of a primary purpose of the trust or institution.
Thus, by virtue of this clause exemption would be denied to a charitable trust which carries on any business even if such business does not arise out of the advancement of an object of general public utility provided the business is such that it is not carried on in the course of actual carrying out of a primary purpose of the trust or institution. Under the amended law only income from such business would be exempt as is carried on in the actual carrying out of a primary purpose of the trust or institution. For example, if there is an institution teaching carpentry or black-smithy to students, then the business carried on by such trust in selling the products made by the institution would be a business which is carried on in the course of actual carrying out of a primary purpose of the trust or institution.
In the case before us the ITO appears to have made a faint effort to invoke the said Section 13(1)(bb) by saying that the publication of the daily newspaper is not done in the course of carrying out the primary purpose/objects. He however, did not complete the exercise and did not demonstrate that the newspaper ‘Samaj’ was not published in the course of actual carrying out of a primary purpose of the trust. Such purpose being the educational, cultural, social, economic and political advancement of the people. As regards the printing press and the foundry the ITO does not speak about them with reference to the objects of the trust. The learned CIT(A) also did not touch that aspect of the matter and the grounds of appeal set up by the Revenue, which we have reproduced above, also do not rely on Section I3(1)(bb). The Revenue’s challenge to the order passed by the CIT(A) is merely that the object of the assessee trust being political, it is not entitled to exemption under Section 11. We have discussed above this aspect of the matter and held that the object of the assessee trust is not political but is of a charitable nature, as defined in Section 2(15) of the Income-tax Act, 1961. In our view, therefore, these appeals have no force and are hereby ordered to be dismissed.