BEAUMONT, C. J. - This is a reference made by the Commissioner of Income- tax under Section 66 (2) of the Indian Income-tax Act, 1922, and it raises two questions :
(1) Whether the Income-tax Officer was correct in holding that the income of the trust dies not fall within the purview of Section 4 of (3) (i) of the Act. ?
The trust, with which we have to deal, is a trust known as the 'Lokamanya Tilak Jubilee National Trust Fund', and the principal question which arises is, whether the funds of the trust are held for cahritable purpose within Section 4 (3) (i). Its objects are set out in the trust deed dated December 31, 1920, clause 11 of which is in these terms :-
'The objects of the said Trust Fund shall be.-
' (a) The advancement of any purpose which might in the uncontrolled opinion of the Managing Committee be national or of national importance for the inhabitants of British India by any means which in the like opinion of the Managing Committee be constitutional.
' (b) The political advancement of Indian having for its goal the acquisition of complete national autonomy or Swarajya to be attained by all constitutional agitation and means.
' (c) The diffusion of political education and knowledge as to the political affairs of India and propagandist work both in India as well in my part of the world outside India having for its aim the acquisition of complete national autonomy or Swarajya as aforesaid.
' (d) Any object which may conduce to any of the aforesaid object.'
The Court in Subhas Chandra Bose v. Gordhandas Patel (1940) Bom. 254 has occasion to consider the general questions which arise in cases of this kind as to whether trusts for a national or political purpose can be regarded as charitable. The actual case, with which we had to deal there, was a trust for the political uplift of India, and we held that the trust was not charitable. As I expressed my opinion in that case on the general principles which apply to cases of this character, it is not necessary that I should repeat them.
There is, I think, no doubt on the authorities that trust for the benefit of the inhabitants of a particular locality are regarded as charitable, and I will assume that that principle would apply to the inhabitants of British India. On the other hand, it is clear that trusts for the benefit of a particular political party, or for the advancement of particular political opinions, are not regarded as charitable. The objects specified in the four paragraph of clause 11 of the trust deed, with which we have to deal are in my opinion, clearly distributive. The whole of the trust fund can be applied for any one or more of the objects specified, and if any of those objects do not fall within the purview of the legal definition of 'charity', the trust cannot be regarded as a good charitable trust. One has, of course, to bear in mind the definition of 'charitable purpose' in Section 4 (3) of the Indian Income-tax Act, which provides that 'charitable purpose' includes relief of the poor, education, medical relief and the advancement of any other object of general public utility. That goes further than the definition of charity to be derived from the English verses, because it embraces purposes of general public utility; and if all the purpose in clause 11 could be regarded as of general public utility for the benefit of the inhabitants of British India, then trust would be, in my opinion, a good charitable trust. But, to my mind, sub-clause (a) and (b), at any rate, cannot be brought within those limits. Sub-clause (a) includes the advancedment of any purpose which may in the in controlled opinion of the Managing Committee be national or of national importance for the inhabitants of British India by any means which is the like opinion of the Managing Committee be constitutional. IT is impossible to say that the Managing Committee may not regard purposes, which are not according to law charitable, as being nevertheless of national importance for the inhabitants of British India, and the Committee may regard methods as constitutional which the law would not regard as constitutional. Assuming the object specified in sub-clause (a) to be charitable, this is not the case of a gift for such charitable purposes as the Managing Committee may think fit. A gift of that sort would, not doubt, be good, because the Managing Committee would be bound to keep within the ambit of charity, and if they go beyond the legal boundary, they can be controlled by the Court. But I known of no authority for the proposition that a gift for such purposes as a particular individual or individuals may consider to be charitable is good. There are many purposes which an individual, acting quite bona fide, may regard as charitable, but which the law does not so regard. THerefore, I think sub-clause (a) goes too far; and I think, sub-clause (b) goes too far also, because it is really a gift for political purposes. Assuming that the attainment of national autonomy may be regarded as a national purposes accepted generally by, and for the good of, the inhabitants of British India, there is a very keen divergence of opinion as to the methods by which that national autonomy should be attained; and it is impossible, I think, to avoid the conclusion that gift for the attainment of that object by such method as the Managing Committee may approve is really a gift for political purposes, and as such falling within the ruling i Bowman v. Secular Society Limited (1917) A. C. 406 In my opinion, therefore, it is impossible to say that the Income-tax Officer was wrong in holding, that the income for the trust dies not fall within the purview of Section 4 (3) (i), and we must answer the first question in the affirmative.
With regard to the second question, it seems to me that the first proviso to Section 41 (1) of the Indian Income-tax Act is perfectly plain. I provides in connection with funds held by a trust that where income, profits or gains or any part there of are not specifically receivable on behalf of any one person, or where the individual shares of the person on whose behalf they are receivable are indeterminate or unknown, the tax shall be lived and revocable at the maximum rate. It may be rather hard on this trust fund that is should be charged at a higher rate than the amount of its income would attract if it belonged to an individual. But that is not a matter with which the Court can deal. In my opinion, it is perfectly plain that the case falls within the first proviso to Section 41 (1), and therefore, we must also answer the second question in the affirmative.
The assessee to pay costs.
KANIA, J. - I agree, In order to get an exemption the assessment must bring his case within Section 4 (3) (i). The words there used are that the income should be derived from property held under trust wholly for religious or charitable purposes. By this explanation added at the end the term 'charitable purpose' is stated to included an object of general public utility. Even so, is so for the assessee to show that his case falls within that extended meaning.
Certain propositions of law now appear to be well settled as a result of authorities. First, that when there is general charitable intention, the Court will uphold it, and if within that limit desecration is given to the trustees to select an object the trust will not fail because of the discretion so given. If a trustees selects an objects, which is not charity ables according to law, the Court can intervene and rectify the error. Secondly, there are cases, which are compediously described as 'locality cases', of which Smith, In re : Public Trustee v. Smith (1932) 1 Ch. 153 is a good issulation. In that case, the gift was 'unto my country England' It was held that every area ad purpose which would fail within that gift was charitable, and the gift was upheld. Thirdly, it is held that i=f the dominant purpose of the trust is political, it is not a charitable object which the meaning of the Income-tax Act. That was held in Tribune Press Trustees, Lahore, v. Income-tax Commissioner 415). It was lied down in the same case that propagandist work does not from part of educational work and is not within the ambit of charity.
Having regard to these principles, the four sub-clauses in the trust deed in question have to be considered. It may be noticed that under Clauses 14 and 19 of the trust deed the Managing Committee is made the sole judge as to whether any particular object falls within the category of any of the object and purpose of the trust fund. Bearing that in mind, when clause 11, sub-clause (a), is looked at, it is clear that the word 'national or of national importance fro the inhabitants of.......... India' are controlled by the preceding words which state the object of the trust. They are 'The advancement of any purpose which might in the uncontrolled opinion of the Managing Committee be...'. The object of the trust, therefore, is the advancement of the purpose, the selection of which is left to the uncontrolled opinion of the Managing Committee, and the purpose according to that uncontrolled opinion has to be national or of national importance of the inhabitants of the British India. It is not possible to hold that the words as used in sub-clause (a) amount to a gift for an object national or of national importance of the inhabitants of British India simpliciter. It is the gift for the advancement of any purpose, and the selection thereof is left to the uncontrolled opinion of the Managing Committee. I do not think under the circumstances it can be properly argued that clause amount to a general charitable bequest, and only the manner of the aplication has to be selected by the trustees. Sub-clauses (b) is clearly for the political advancement of India. That is pre-eminently a political purpose and falls within the rule stated in the Tribune case. Sub-clause (c) whilst containing the words 'political education and knowledge' couples the same with 'propagandist work both in India as well as in any part of the world outside India' and also falls within the rules stated in the Tribune case. The fourth sub-clause, clause (d), is the general clause dealing with objects subsidiary to the three objects mentioned in the preceding sub-clauses. The construction of the clause shows that the three object in sub-clauses (a), (b) and (c) have to be separately read, and if any of those objects is not charity, the whole gift must fail, because if the trustees choose to apply the whole of the fund to the particular object, which according to the law of the land is not charitable, then they will not be committing the bench of trust, and they trust could be said to be properly administred. The law does not permit to administration of a trust which can be so used entierly for a non-charitable object and hold it as charitable on construction. Therefore, clause 11 of this trust deed, which defines the object of the trust, is not within section 4 (3) (i) of the Indian Income-tax Act charitable, and the answer to the first question must be against the assessee.
As regard the second question, the Court has to administer the law as found in the Act of the Legislature, and hard case cannot make a different law. The answer to the question must also go against the assessee.
Reference answered accordingly.