1. The assessee is a company and the proceedings relate to its assessment for the assessment year 1974-75. During the previous year, the assessee donated a sum of Rs. 1,00,000 to a trust known as "Vishwamangal Trust" (hereinafter referred to as "the trust").
Deduction under Section 80G of the Income tax Act, 1961 ("the Act"), was claimed in respect thereof and allowed by the ITO while completing the assessment under Section 143(3), read with Section 144B, of the Act. Subsequently, the Commissioner, after allowing the assessee an opportunity of being heard, passed an order under Section 263 of the Act, inter alia, directing the ITO to withdraw the deduction granted to the assessee under Section 80G in respect of the aforesaid donation of Rs. 1,00,000 to the trust.
2. Aggrieved by the aforesaid order of the Commissioner, the assessee has come up in appeal. There are a number of grounds in the appeal memo, particularly, against the other directions given by the Commissioner to the ITO. However, at the time of the hearing of the appeal before the Division Bench on 18-3-1981 all other grounds were specifically given up. The ground that survived for consideration in this appeal, thus, is- That the learned Commissioner erred in disallowing the relief allowed to the company in respect of donation to Vishwamangal Trust.
3. This question, it is common ground, had come up for consideration before the Tribunal in the case of New India Sugar Mills Ltd., and in some other cases, and has been decided in favour of the assessee.
However, the Division Bench, which* heard the appeal originally, felt that the Tribunal's decision in those cases, perhaps, required reconsideration. Reference was made to the President, ITAT, for constituting a larger bench under Section 255(3) which was done. This is how the appeal has come up before the Special Bench.
4. Before proceeding with the appeal, it may be stated, in fairness to Shri R.N. Bajoria, the learned counsel for the assessee, that he requested the Special Bench to verify from the records whether the other grounds were really given up by the assessee before the Division Bench. We informed him that there was such a note in the file and he readily agreed to confine his submissions to the aforesaid surviving question only.
5. It may be stated that the relief has been allowed by the ITO under Section 80G on the aforesaid amount without any discussion in the assessment order. On the other hand, the Commissioner has, mainly, given the following reasons for holding that the relief under Section 80G is not allowable on the donation to the aforesaid Trust : 1. The ITO allowed the assessee deduction under Section 80G on the basis of an exemption certificate issued to the trust under Section 15 of the 1922 ACL He had neither examined the deed of the trust nor had he noted the material difference in the language of Section 4(1)(a) of the 1922 Act and Section 88 of the 1961 Act, particularly, after its amendment with effect from 1-4-1964 and the provisions of Section 80G subsequently revising the provisions of Section 88 ; 2. Clause 3 of the deed of trust gave the trustees the discretion to apply the whole or any part of the income or assets of the trust to any of the objects of the trust and in terms of Clause 2(h) of the deed of trust, one of the objects of the trust is : To establish, maintain and to grant and/or aid to public places of worship and prayer halls.
Accordingly, he held that the trust did not fulfil one of the conditions laid down in Section 80G(5)(ii) read with Explanation 3 and that the relief allowed under Section 80G by the ITO in respect of the donation to the trust was erroneous and prejudicial to the interests of the revenue.
6. Shri R.N. Bajoria, the learned counsel for the assessee, referred to the scope of powers and jurisdiction of the Commissioner under Section 263 to show that there were some flaws in the manner the Commissioner acquired jurisdiction in this case and passed his impugned order. He also referred to the scope of powers of the Tribunal in an appeal under Section 263. Since, however, eventually, the learned counsel has confined his arguments to the merits of the Commissioner's decision, it is not necessary for us either to refer to those aspects or deal with them in this order.
1. Objects of a trust should be read as a whole and, if so read, it would appear that the object contemplated in Clause 2(h) of the deed of trust is only an ancillary object and not a separate and independent one.
2. Assuming that it is not so, the object contemplated therein is so wide that it does not even smack of religious nature as the "religious nature" is understood in common parlance or in the strict legal sense.
3. Explanation 3 to Section 80G though clarifies "charitable purpose" used in Section 80G(5)(ii), the effect of qualification has been very much diluted on account of the expression used therein, namely, "any purpose the whole or substantially the whole of which is of a religious nature.
7 A. For the purpose of showing that the object referred to in Clause 2(h) of the deed of trust is not an independent object of the trust, Shri Bajoria placed reliance on the decision of the Supreme Court in the case of CIT v. Bar Council of Maharashtra  130 ITR 28, the relevant observation, being at page 37, is as under : ... It is true that Sub-section (2) provides that a State Bar Council may constitute one or more funds for the purpose of giving financial assistance to organise welfare schemes for the indigent, disabled or other advocates ; but it is an optional or discretionary function to be undertaken by the council. Apart from that, admittedly, the assessee-council has not so far constituted any such fund for the purpose specified in the instant case. As and when such a fund is constituted, a question may arise for consideration and the court may have to decide whether the function so undertaken by a State Bar Council has become the dominant purpose for which that council is operating. Having regard to the preamble of the Act and the nature of the various obligatory functions including the one under Clause (d) enjoined upon every State Bar Council under Section 6(1) of the Act, it is clear that the primary or dominant purpose of an institution like the assessee-council is the advancement of the object of general public utility within the meaning of Section 2(75) of the Act, and as such the income from securities held by the assessee-council would be exempt from any tax liability under Section 11 of the Act.
Reliance is also placed on the observations of their Lordships of the Supreme Court in another case of Addl. CIT v. Swat Art Silk Cloth Manufacturers'" Association  121 ITR 1 to show that it is necessary to examine all the objects of the trust for the purpose of finding out the primary or the dominant purpose of the trust in contradistinction with the objects which are merely ancillary or incidental to the primary or dominant purpose. Lastly, Shri Bajoria has referred to the following observations of the Gujarat High Court in the case of CIT v. Swastik Textile Trading Co. (P.) Ltd.  113 ITR 852 : Held, that Clause 4(g) should be viewed in the context of the entire charitable object of advancement of education, medical relief, helping the blind, deaf and dumb, disabled and aged human beings and people in distress. In that context and setting, Clause (g) has been set up for establishing, running and helping gaushalas and panjarapoles and other similar institutions for animals, etc.
Gaushalas would be for preservation and improvement of breed of bovine animals, while panjarapoles would be for protection and preservation of infirm animals. It is thus obvious that the object of Clause (g) is highly charitable and in line with the earlier clauses where the distress of human beings was sought to be relieved. The whole object of Clause (g) was to go to the rescue of dumb and infirm animals.
It is, thus, urged that the object in Clause 2(h) in the deed of trust should not be considered in isolation and if all the objects of the trust are taken together, there would be no difficulty in holding that the object contemplated in this clause is not really a separate and independent object.
8. Referring to Clause 2(h) of the deed of trust, the learned counsel submitted that it was impossible to read anything religious in the said object. The said clause does not refer to any religious as such. On the other hand, it contemplates establishing and maintaining public places of worship and prayer halls, available to all without any restriction whatsoever. Anything established or maintained for the purpose of all religious communities, according to him, is not and cannot be held to be of religious nature in the sense in which the expression "religious nature" is understood in common parlance or in strict legal sense.
Stating that Clause 2(h) was very wide and highly secular, Shri Bajoria referred to the instances of Mahesh Yogi, Ramakrishna Mission, etc., to show that though all those institutions were religious in the sense that their ultimate aim was to uplift the humanity or to awake or arouse spiritual and/or moral instincts, such institutions were held to be for wholly charitable purpose as they were not confined to any particular religious community.
9. Taking us through Explanation 3 to Section 80G, Shri Bajoria pointed out that mere reference to religion was not sufficient to bring the case within the purview of Explanation 3. Explanations, on the other hand, clearly provided that only such cases where the purpose, the whole or substantially the whole of it, was of religious nature would fall within Explanation 3. He stated that, firstly, the language in which Clause 2(h) of the deed of trust was couched showed very clearly that the purpose was not of religious nature at all and, alternatively, assuming that it had some element of religious nature, it was difficult to hold that the whole or substantially the whole of such purpose was of religious nature. Accordingly, Shri Bajoria urged that there was no reason for the Special Bench to take a view different from the view taken by the different Benches of the Tribunal.
10. The learned departmental representative, on the other hand, has strongly relied upon the order of the Commissioner under Section 263.
In particular, he invited our attention to the provisions of Section 15B of the 1922 Act, and Sections 88, 80G and 297(2)(k) of the 1961 Act. He submitted that the ITO was obviously wrong in allowing the assessee relief under Section 80G on the basis of the certificate of exemption granted to the trust under Section 15 of the 1922 Act in 1960. In this connection, he referred to the circular letter dated 22-8-1977 of the ITO to the other ITOs (placed at page 24 of the department's paper book) to show that it was on the basis of the said letter that the facts came to the notice of the learned Commissioner who has, after allowing the assessee an opportunity of being heard, passed the impugned order under Section 263. However, in response to a query from the Bench, the learned departmental representative fairly admitted that the trust has qualified for exemption under Section 11 of the 1961 Act up to and including the assessment year 1979-80 though it was stated that no certificate under Section 80G had yet been granted to the trust within his knowledge.
11. The departmental representative then referred to the memo explaining the provisions in the Finance (No. 2) Bill, 1965, as a result of which Explanation 3 was added to the provisions to show that each one of the objects of the trust has to be charitable in nature and that the object was to nullify the High Court's decision under the Gift-tax Act where it was held that the expression charitable purpose was wide enough to cover religious purpose also. For this purpose, he also referred to, and relied upon, the observations of the Supreme Court in Surat Art Silk Cloth Manufacturers' Association's case (supra) at page 3, which read as under : (2) Where the main or primary objects are distributive, each and every one of the objects must be charitable in order that the trust or institution may be upheld as a valid charity. But if the primary or dominant purpose of a trust or institution is charitable, another object which by itself may not be charitable but which is merely ancillary or incidental to the primary or dominant purpose would not prevent the trust or institution from being a valid charity.
And the observations of the Delhi High Court in the cases of Jaipur Charitable Trust v. CIT  127 ITR 620 and Jagdamba Charity Trust v. CIT  128 ITR 377 for the purpose of showing that where the main or primary objects are distributive, each and every one of the objects must be charitable in order that the trust may be upheld as a valid charity. Taking us through the various objects of the deed of trust, he urged that Clause 2(h) was an independent object in itself, that Clause 3 of the deed of trust provided that it was within the discretion of the trustees to spend the income or the funds of the trust on any or all of the objects and that, therefore, unless the said object also stood the test of "charitable purpose", it will have to be held that the donation of the trust did not qualify for relief under Section 80G. In this connection, the departmental representative stated that divorced from religion, worship and prayer have no meaning. In other words, it is difficult to conceive a place of worship and prayer hall without religion. He strongly argued that Explanation 3 was not diluted because of the particular expression used, as contended by the assessee's counsel.
12. Having heard the parties and after carefully going through the cases relied upon, the deed of trust and the provisions of Section 80G, we find that the precise issue in this case is whether the donations to the trust, on the facts and in the circumstances of the case, satisfy the conditions as laid down in Clause (iv) of Sub-section (5) of Section 80G read with Explanation 3 to that section. In this connection, it may be desirable to refer to the scheme envisaged for granting relief on donations under Section 80G as such. Sub-section (1) provides for deduction in respect of certain sums paid by an assessee.
Sub-section (2) indicates in what category such sums would fall.
Sub-section (5) lays down five cumulative conditions which will have to be satisfied to qualify for deduction/relief under Section 80G, if the sums donated fall within Sub-clause (iv) of Sub-section (2)(a).
13. It is common ground that the sum of Rs. 1,00,000 donated by the assessee to the trust in this case falls under Sub-clause (iv) of Sub-section (2)(a) and, therefore, it becomes necessary to examine whether the five cumulative conditions laid down in Sub-section (5) of that section are satisfied. Here again, it is common ground that other conditions are satisfied and that only condition laid down in the said Clause (ii), and that too because of the restrictive definition of the expression ''charitable purpose" in Explanation 3, may or may not have been satisfied.
14. For this purpose, it would be necessary to refer to Clause 2(h) and Clause 3 of the deed of trust and Section 80G(2)(iv), Section 80G(5)(ii) and Explanation 3 to that section which read as under : 2(h) To establish, maintain and to grant and/or aid to public places of worship and prayer halls.
3. The trustees shall from time to time collect funds which and/or the income thereof will be utilised for the objects aforesaid. All investments and properties of the trust for the time being held by the trustees is hereinafter referred to as the trust fund.
80G(1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section,- (2) the sums referred to in Sub-section (1) shall be the following, namely :- (a) any sums paid by the assessee in the previous year as donation to- (iv) any other fund or any institution to which this section applies ; or (5) This section applies to donation to any institution or fund referred to in Sub-clause (iv) of Clause (a) of Sub-section (2), only if it is established in India for a charitable purpose and if it fulfils the following conditions, namely :- (ii) the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund or any purpose other than a charitable purpose ; Explanation 3 : In this section, 'charitable purpose' does not include any purpose the whole or substantially the whole of which is of a religious nature.
15. In view of the decisions relied upon by the counsel for the assessee there cannot possibly be any quarrel about the proposition that the objects of the deed of trust should be read as a whole to decide whether a particular object or objects is/are separate and independent objects or whether such objects are merely ancillary or incidental to the primary or dominant object. On going through the deed of trust carefully, however, we find that the various sub-clauses of Clause 2, including Sub-clause (h) of the deed of trust, contemplate separate and independent objects and it is not possible to accept that one or more objects are ancillary or incidental to the other objects'.
In any event, this cannot certainly be said of the object referred to in Clause 2(h). We also find that Clause 3 of the deed of trust gives discretion to the trustees to spend the income or fund of the trust on any of the objects. Therefore, the revenue, in our opinion, is right in urging that these clauses must satisfy the conditions laid down in Section 80G before it can be held that the assessee is entitled to the relief under Section 80G on the donation to the trust.
16. It, thus, becomes necessary to understand the meaning and scope of the object contemplated in Clause 2(h) of the deed of trust. In other words, we have to understand the purport and scope of the expression "public places of worship and prayer halls" used in this clause. It is pertinent that the deed of trust does not at all indicate, directly or indirectly, that such public places of worship and prayer halls would be available to persons of a particular caste, creed, sect or religious community, etc. In this premises, it may not be reasonable and justifiable to assume that such public places of worship and prayer halls would be available to persons of all religion, caste, sect, creed, etc. This being the meaning of the object referred to in Clause 2(h) of the deed of trust, we are inclined to accept Shri Bajoria's submission for the present that the object contemplated in this case is secular. It does not become religious merely because the expressions "worship" and "prayer" are very much associated with religion in common parlance, there being no suggestion that these expressions are associated with a particular religion only in contradistinction with other religions.
17. As stated by us earlier, the donation made by the assessee to the trust in this case falls under the category referred to in Clause (iv) of Sub-section (2) of Section 80G and, therefore, all the five conditions laid down in Section 80G(5) have to be satisfied before such a donation will qualify for relief under Section 80G(1). There being no dispute that all conditions except condition No. (ii) are satisfied, it becomes necessary to examine what exactly is the nature and scope of that condition. Here again, it is common ground that but for Explanation 3 which has restricted the meaning of the expression "charitable purposes" used in this condition ; the condition would have been satisfied. Accordingly, it would be proper to focus our attention to Explanation 3 for the purpose of seeing the extent to which the expression "charitable purpose" has been narrowed down in scope.
18. The Explanation uses the expression "religious nature" which has not been defined in the Income-tax Act, nor the word "religion" defined. Therefore, we have to understand the meaning of this expression according to the plain dictionary meaning.
According to Stroud's Judicial Dictionary, "religion" means : "(1) What is religion Is it not what a man honestly believes in and approves of and thinks it his duty to inculcate on others, whether with regard to this world or the next A belief in any system of retribution by an overruling power It must, I think, include the principle of gratitude to an active power who can confer blessing." And "religious" means : (1) A testamentary gift for 'religious purposes' or for 'religious societies', without naming them, is prima facie for a charitable purpose, and creates a good charity. So, of the phrase 'any other religious institution or purposes', Secus, where the society indicated is only for prayer and devotion by its own members for 'there is, in truth, no charity' in attempting to Improve one's own mind, or save one's own soul. Charity is necessarily, altruistic, and involves the idea of aid or benefit to others." According to Shorter Oxford Dictionary, ''religion" means : "...1. A state of life bound by monastic vows ; the condition of one who is a member of a religious order ; the religious life. 2. A particular monastic or religious order or rule ; a religious house. Now rare, ME.3. Action or conduct indicating a belief in, reverence for, and desire to please, a divine ruling power ; the exercise or practice of rites or observance implying this. Also pl., religious rites. Now rare exc. as implied in 5, ME. 4. A particular system of faith and worship ME. ; the Reformed Religion, Protestantism-1674. 5. Recognition on the part of man of some higher unseen power as having control of his destiny, and as being entitled to obedience., reverence, and worship ; the general mental and moral attitude resulting from this belief, with reference to its effect upon the individual or the community ; personal or general acceptance of this feeling as a standard of spiritual and practical life-1535. 6. trans. Devotion to some principle ; strict fidelity or faithfulness : conscientiousness ; pious affection or attachment-1691.
7. The religious sanction or obligation of an oath, etc.-1704," And "religious" means : "A adj. 1. Imbued with religion ; exhibiting the spiritual or practical effects of religion ; pious, godly. 2. Of persons : Bound by monastic vows ; belonging to a religious order ME.b. Of things, places, etc. : Of, belonging to, or connected with, a monastic order ME. 3. Of the nature of, pertaining or appropriate to, concerned or connected with, religion 1538. b. (Chiefly poet.) Regarded as sacred-1618. 4. transf. Scrupulous exact, strict, conscientious-1599." According to Black's Law Dictionary "religion" means :-"Man's relation to Divinity, to reverence, worship, obedience, and submission to mandates and precepts of supernatural or superior beings, In its broadest sense, it includes all forms of belief in the existence of superior beings exercising power over human beings by volition, imposing rules of conduct, with future rewards and punishments. Bond uniting man to God, and a virtue whose purpose is to render God worship due him as source of all being and principle of all Government of things.
As used in constitutional provisions of First Amendment forbidding the 'establishment of religion', the term means a particular system of faith and worship recognized and practised by a particular church, sect, or denomination." Taking guidance from the above, what appears to us is that in a broad sense, "religion" means and includes anything that is done to uplift higher values and instincts in human beings and reach the supreme being though, ordinarily, and in the constitutional sense, religion means some system of faith and practice resting on the idea of existence of one God, etc. In other words, "religion" ordinarily means and refers to a "religion" in contradistinction with other religions. Similarly, the expression "religious" would mean and refer to religious according to a particular religion, order or system. If something is done for the benefit of persons of all religions of the world or say for the uplift of the humanity by raising the general standard of morality in the matter of honesty, truthfulness, etc., just because all the religion also place emphasis on these aspects of life it will not be possible to say that such objects or purposes are of religious nature in the sense the word "religion" or "religious" are used in the Income-tax Act.
Moreover, Explanation 3, in our view, does not cover a case of an object which is of a religious nature in the technical sense. It will cover a case only if the whole or substantially the whole of the purpose is of a religious nature. As we understand, the language in which Explanation 3 is couched sufficiently indicates that Explanation 3 will cover a case in which one or more of the objects of the trust fund or institution are of religious nature as commonly understood, i.e., meaning the religious nature according to a particular religion in contradistinction with other religions.
19. Having regard to the above discussion, we have no difficulty in holding that the object of Clause 2(h) of the deed of donee-trust is not a religious object in the legal sense. This object may be stated to encourage people of all religions of the world and is, thus, of universal application. Anything that is available to people of all religions cannot be held to be of religious nature in the strict legal sense. Assuming there is any scope for holding it to be so, the language of Explanation 3 makes it clear that it is not so.
Accordingly, "We hold that the second condition laid down in Section 80G(5)(ii) read with Explanation 3 is also satisfied in this case and the assessee is, therefore, entitled to deduction under section BOG.