Skip to content


Commissioner of Income-tax Vs. All India Hindu Mahasabha - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtDelhi High Court
Decided On
Case NumberIncome-tax Reference No. 29 of 1973
Judge
Reported in(1982)29CTR(Del)137; [1983]140ITR748(Delhi)
ActsIncome Tax Act, 1961 - Sections 2(3), 2(15), 2(31), 4, 11, 11(1), 12, 13, 60, 86, 160(1) and 164(1)
AppellantCommissioner of Income-tax
RespondentAll India Hindu Mahasabha
Cases ReferredLloyds Bank Ltd. v. Baker
Excerpt:
direct taxation - exemption - sections 2 (15), 2 (31), 4, 11, 12, 13, 60, 86, 160 and 164 of income tax act, 1961 - assessed-religious organization claimed exemption under section 11 - income of organisation should be spent in charitable objects in order to be eligible for exemption under section 11 - in present case assessed organization was spending money in both charitable and non charitable purposes - assessed not entitled to exemption under section 11. - - 2. (15) charitablm 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. (1) to remove alm forms of ineqalities and disabilities and thus to establish an order in which all nationals will enjoy.....s. ranganathan, j.1. the eligibility of the all india hindu mahasabha (hereinafter referred to as 'the sabha') to exemption under s. 11 read with s. 2(15) of the i.t. act, 1961, is the question at issue in these cross references. the relevant portions of these provisions as they stand at the relevant time, were in the following terms: '2. (15) charitablm 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.' '11. income from property held for charitable or religious purposes. -(1) subject to the provisions of section 60 to 63. the following income shall not be included in the total income of the previous year of the person in receipt of the income- (a).....
Judgment:

S. Ranganathan, J.

1. The eligibility of the All India Hindu Mahasabha (hereinafter referred to as 'the Sabha') to exemption under s. 11 read with s. 2(15) of the I.T. Act, 1961, is the question at issue in these cross references. The relevant portions of these provisions as they stand at the relevant time, were in the following terms:

'2. (15) Charitablm 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.'

'11. Income from property held for charitable or religious purposes. -(1) Subject to the provisions of section 60 to 63. The following income shall not be included in the total income of the previous year of the person in receipt of the income-

(a) income derived from property held under trust wholly for charitable purposes to the extent to which such income is applied in such purposes in India;.....

(b) income derived from property held under trust in part only for such purposes..... to the extent to which such income purposes in India;......

2. Before proceeding further, we have to clarify that we are actually concerned in these references with the assessment years 1958-59 to 1962-63 but the parties have all through proceeded on the footing that the provisions of the 1961 Act will be applicable to decide the issue of exemption. It does not also matter whether the question is considered in the light of the 1922 Act or the 1961 Act because the relevant provisions in so far as they are material for our present purposes, are identical, the change introduced in the definition of 'charitable purpose' by the addition, in the 1961 Act of the last ten words of the definition, is not material for the purposes of the present case. It may also be mentioned that the only income which has been assessed and for which exemption was sought was the income derived by the Sabha from a house property situated in Reading Road (now Mandir Marg), New Delhi, known as 'Hindu Mahasabha Bhavan'. The ITO denied exemption completely but the Appellate Assistant Commissioner (for short, 'AAC'), considered the assessed eligible for exemption in respect of 25% of the income, the Tribunal upheld the order of the AAC and both parties are in reference before us, the assessed contending that it is entitled to full exemption and the Revenue, that the Tribunal erred in holding even 25% of the income to be exempt.

3. In order to appreciate the contentions of the respective parties, it is necessary at the outset to refer to the ' constitution, aims, objects and rules' of the Sabha (briefly referred to hereinafter as 'its constitution'). It is not clear from the papers before us when the Sabha was constituted and what its original constitution was, the statement of case includes only a copy of the constitution as amended at a special session held in April, 1952, and it is this that is referred to below.

4. The assessed is a society registered under the Societies' Registration Act (XXI of 1860). Clause 1 of the constitution sets out the name of the society and its All India character. Clause 2 is important. It reads:

'Aim

The aim of the Hindu Mahasabha is to establish a really democratic Hindu State in Bharat, based on the culture and tradition on Hindu Rashtra and to re-establish Akhand Bharat by all constitutional means.'

5. Clause 3 sets out the objects of the Sabha. There are:

'Objects

3. The objects of the Hindu Mahasabha are:

(1) To remove alm forms of ineqalities and disabilities and thus to establish an order in which all nationals will enjoy equal opportunities to serve the State.

(2) To assure to each national full freedom of thought, expression, association and worship.

(3) To make Bharat militarily strong and self-reliant in defense.

(4) To promote the glorious ideals of Aryan womanhood.

(5) To make Bharat politically, economically, morally and materially strong and self-reliant.

(6) To remove gross inequalities in the distribution of wealth, to assure a decent standard of living to each national and to secure to the workers and peasants their rightful share in the economy of the country.

(7) To industrialise the country as rapidly as possible.

(8) To re-claim all those who have left the Hindu fold and welcome others into it.

(9) To promote cow-protection and to stop cow-killing.

(10) To establish Sanskritised Hindi as the National Language and Devanagari as the National Script, with due regard to regional languages.

(11) TO cultivate friendly relations with other nations with a view to maintain international peace and progress.

(12) To lay down from time to time suitable programmes with a view to accomplish as soon as possible the above objects.

Clause 4 defines a 'Hindu' and also the requirements for a membership of the Sabha, it reads:

'Definition of a Hindu Membership

4.(a)A Hindu means a person who regards this land of Bharat varsha from the Sindhu to the Seas as his Fatherland, regards it also as his Holyland and professes any religion of Bharatiya origin.

(b) Every Hindu who declares himself to be a Hindu as such, is above eighteen years of age and accepts in writing the aims and objects of the Hindu Mahasabha is entitled to become a primary member of the Hindu Mahasabha on payment of annas four year.'

6. The document then proceeds to describe the component elements of the Sabha and its organisational structure with village and town sabhas and above them an All India Committee and a working committee. The full details of these provisions are not relevant for our purposes. It may be sufficient to indicate some of them. The powers and duties of the All India Committee include, inter alia, the laying down of general policy and passing of resolutions on 'current topics' and the exercise of all the powers and duties of the Mahasabha including amendments to its constitution; under clause 13(i), the powers and duties of the working committee included, inter alia, the following power:

'13. (i) The working committee shall have power to :-... (b) consider and pass resolution on current topics, recommend resolutions on general policy to the All India Committee and implement resolutions passed by the sessions and by the All India Committee.

(c) collect and invest or borrow funds, acquire, hold, sell, mortgage or lease, properties, movable or immovable, and sign necessary documents for and on behalf of the Sabha, for the object of the Sabha. But this shall not apply to the property of the Hindu Mahasabha Bhawan situate in Reading Road, New Delhi, which shall be held in trust by the working committee during its tenure of office for and on behalf of the All India Hindu Mahasabha......'

7. There were a number of office bearers among whom were the president who had the power to issue statements, laying down policies and carry on all negotiations with the Government or with the other parties either himself or through his delegates and the duty to undertake tours in different provinces 'for organisational and propaganda work'. The general secretary had also limited powers of issuing policy statements and was expected to undertake tours for organisational and propaganda purposes. The organising secretary was to raise a volunteer corps and was expected to lay stress on and reiterate policies already laid down. Zonal secretaries were put in charge of organisational work in various zones with a view to establish Sabha where they were not in existence and revitalise them where they were:

8. For the assessment years 1958-59 to 1962-63 (the relevant previous years being the immediately preceding financial years), the Income-tax Officer ('ITO', for short) brought to tax the property income derived by the assessed. Rejecting its claim for exemption under s. 4(3)(i)/s. 11 of the 1923/1961 Act. In his view the assessed was a political party and, as its dominant objects were political, they could not be said to be charitable. He relied for this conclusion on the decision in the case Lokamanya Tilak Justice National Trust Fund, In re : [1942]10ITR26(Bom) , and distinguished the cases of All India Spinners' Association [1944] 12 ITR 482 (PC), and Tribune Trust [1938] 7 ITR 415 (PC), relied on for the assessed. He pointed out that in the case of the All India Spinners' Association, the court had to consider an organisation, which, though a creation of the All India Congress Committee, had nothing to do with the political aims of the latter and had purely social objects which were charitable. In the Tribuno case, against, the Privy Council drew a distinction between the case of a trust for conducting a newspaper as a mere vehicle for the promotion of a particular political or fiscal opinion which will not be entitled to exemption under s. 4(3)(i) as a charity and the case where a newspaper in conducted with the object of disseminating news and ventilating opinion on matters of public interest but acquires a particular political complexion in doing so, which would be. In his view, the dominant object of the Sabha was political and all the other aims and objects mentioned were subsidiary to the main political aim.

9. The assessed preferred to the AAC. Before him as affidavit was filed by Prof. Ram Singh, the secretary of the Mahasabha, to the effect that the dominant purpose for which the assessed stood was of general public utility and benefit of the poor and that 70% of the income of the assessed was applied to works of public utility or for charitable purposes. As the ITO had not examined this aspect, the AAC remanded the matter to the ITO. The ITO submitted a remand report in the following terms:

'The assessed was requested to furnish accounts in order to see whether the income was really spent on charitable purposes such a relief of the poor, education, medical relief and advancement of any other object of general public utility. From the books produced. The assessed could not say what amount was actually spend for charitable purposes. It may be remarked that the Bhawan is used for commercial purposes. Most of the rooms are let out to shopkeepers as godowns and most of the rooms are let out to different tenants. Since the All India Hindu Mahasabha is a political organisation and the building is used for commercial purposes and not for any charitable purposes, the institution does not fall within the purview of section 4(3)(i) of the Indian Income-tax Act, 1922.'

10. The appeals then came on again for hearing before the AAC. The AAC found some force in the appellant's submission that 'the institution was of general public utility in view of its objects enumerated at (1) and (6)'. The assessed was an institution open to all Hindus and certain other religious sections and so it could not be said that its dominant motive was not for the utility of general public at least in India, in this view of the matter, he proceeded to consider how much of the expenses were incurred on objects of general public utility and observed:

'An examination of the accounts of the Mahasabha has not shown clearly as to what was the amount actuals spent by it for religious and charitable purposes. apart from the affidavit of Shri Ram Singh. Shri Ram Singh had appeared before me and was asked by me to show specifically from the books of the Mahasabha the details of the expenses, so that it could be knows as to which expenditure was incurred and for what purpose. It was noticed that a large portion of the expenditure was incurred on traveling by the office-bearers of the Mahasabha or other persons connected with it. It was submitted that no details were kept regarding the specific items but these were included in the total expenses under various heads. Shri Ram Singh submitted that whenever he or his colleagues, or other members connected with the Mahasabha had the occasion of traveling, it was normally for the welfare of the people and that it was difficult to give any specific illustration. He also said that it was well known that the appellant, Mahasabha, was spending money on the relief of the poor in case of earthquakes, floods, etc. Further, the Sabha was spending money on the shudhi of non-Hindus, which, according to him was one of the greatest ideals.

I do not agree with Shri Ram Singh, in the absence of any evidence that 70% of the total income of the appellant was spent for public charitable purposes or on matter of general public utility, even though its dominant motive may have been that (apart from its political aim). Normally, thereforee, the appellant could not have been allowed any deduction regarding the expenses for charitable purposes or for purposes of general public utility. But considering the nature of the activities of the Sabha, I hold that roughly 25% of its income may be treated as so used and so the appellant is being allowed a relief of Rs. 4,000 for this year. The balance of the appellant's income will be assessed to tax in view of section 11(1)(a) of the I.T. Act. 1961. The appellant gets relief of Rs. 4,000 in the computation of his income.'

11. On this basis, the AAC gave the assessed relief of Rs. 4,000 in the assessment year 1960-61. Rs. 2,000 in the assessment year 1961-61, Rs. 2,000 in the assessment year 1961-62 and Rs. 3,500 in 1962-63.

12. Dissatisfied with the orders of the AAC, both the assessed and the ITO appealed to the Tribunal. At the outset. The Tribunal disposed of certain objections of a preliminary nature, one of which is material for the purposes of the present reference. On behalf of the Department, it was claimed that the assessed was not entitled to exemption because there was no written deed of trust. This argument was rightly rejected by the Tribunal, for, it is now well established that a written deed is not an essential requirement either for creating a public trust or for claimed exemption under s. 4(3)(i)/s. 11 and this point is no longer in issue before us. the assessed, however, raised a contention that 'the entire general public of India who was a Hindu or professed a religion which had its origin in India' constituted the beneficiary under the constitution of the Hindu Mahasabha and it could not be described as a 'person' within the meaning of s. 2(31) of the I.T. Act. 1961. The Tribunal rejected this argument as proceeding on a fallacy. It observed that the beneficiary under clause 13(c) of the constitution was the Sabha itself and it came under the category of' association of persons' in s. 2(31). It pointed out that, perhaps itself conscious of this aspect, the assessed had shown this 'status' in the returns of income filed by it. The assessed i agitating the correctness of this finding of the Tribunal in this reference, as will be seen later. Turning to the merits of the assessed's claim for exemption, the Tribunal addressed itself to three questions -

(i) Was the assessed a political or charitable institution

(ii) Whatever be the nature of the assessed as an institution, what was the dominant purpose for which it income was applied

(iii) What was the extent to which the income of the assessed was actually applied for charitable purposes

13. On the first question, the Tribunal came to the conclusion that the assessed was a political organisation referring to the aim of the Sabha as set out in clause 2 of its constitution and the meanings ascribed to the expression 'political' in Webster's Dictionary. In regard to the second question. The Tribunal gave its answer in two parts. It first observed:

'The Appellate Assistant Commissioner has held that at least objects Nos. 1 & 5 were charitable in nature. In our opinion, all the object, aforementioned, would in a way be of a charitable nature being objects of general public utility for the people of India. Removal of inequalities and debilities or enabling the people of the State to have freedom of thought, expression, association and workship, making Bharat politically strong and self-reliant, promoting of good ideals, so on are all objects of general public utility. They would benefit the people of India in general and consequently all the objects can only be characterised as charitable in nature, charitable as defined u/s. 2(15) of the I.T. Act, 1961. As a matter of fact the definition is only an inclusive definition and not exhaustive or exclusive, but even within the limited connotation of charitable purposes as laid u/s. 2(15), we must say that the objects are charitable.

It then proceeded to consider whether the dominant purpose of the Sabha was politics or charity. Relying on the All India Spinners' Association's case [1944] 12 ITR 482 (PC) and the Bonar Law's case [1933] 17 TC 508 (KB) the Tribunal formulated the principle applicable in such cases:

'If charity is dominated by political considerations, it is purely political and not charitable, but if the dominant purpose is charity and yet it is linked with a political organisation, it will still bear the character of charity and be exempt from tax.'

14. The Tribunal proceeded to observe:

'13... Question, thereforee, is whether by means of the charitable objects laid down under article 3 of its constitution, the Sabha was merely advancing its political objects. If that was so, the dominant purpose behind the charities would be political and no portion of the income spent on such charities would be exempt u/s. 11(1)(a) of the Act. If, however, the dominant purpose was charity and yet incidentally such charity was distributed by the assessed, a political organisation, to the extent that the income arising from the property had been applied to some charities would be exempt.

14. As stated above, the Income-tax Officer rejected the assessed's case on the ground that it was a political organisation. He did not apply his mind to the question as to whether even though the assessed was a political organisation, the purpose for which any portion of the income from the trusts property had been applied was dominantly charitable. When the matter came before the Appellate Assistant Commissioner, he appreciated this aspect of the matter and, thereforee, applying his mind thereto came to the conclusion that notwithstanding the character of the assessed being that of a political organisation, two of its objects disclosed charity as the dominant purpose over its politics. Since he could not as certain the exact extent of the income applied for such charities, he had to go by a rough and ready method and hod that only 25% of such income had been applied to such a charity. In face of such a finding given by the Appellate Assistant Commissioner, we expected the department to point out to us some evidence on record which would show that even these two professed charitable objects were wholly dominated by political considerations. No such evidence has. However, been pointed out to us. We have accordingly to hold that the finding given by the Appellate Assistant Commissioner, namely, that notwithstanding the political feature of the assessed some of the objects over which it applied its income arising from the trust property was dominantly charitable stands unassailed. In such view of the matter we cannot but reject the appeal filed by the department.'

15. As to the third question. The Tribunal dealt with it as follows:

'18. The manner in which the income has been applied or the purpose for which it had been kept accumulated cannot be ascertained on the basis of any affidavit. However respectable be the person swearing the affidavit for the purposes of income-tax assessments, expanses or accumulations of income and the objects over which such expenses had been incurred or kept accumulated must be proved by relevant details in the accounts in respect of each item of such expenses or accumulations and not by an affidavit.

19. In the instant case, as it appear from the remand report of the Income-tax Officer, the books produced did not indicate the actual nature of the expenses. Most of them were on traveling and such other things. Naturally under these circumstances the assessed made itself vulnerable to an estimate of the expenses over charitable purposes. The Appellate Assistant Commissioner estimated such expanses at 25% of its total income. Although this may, to some extent, seem to be a subjective estimate, but in the absence of any other data, we are unable to say that such estimate was in any way wrong. In this view of the matter, we see no ground for interfering with the Appellate Assistant Commissioner's order. Which is accordingly confirmed.'

16. In the result the Tribunal dismissed both the appeals. Both the assessed and the Commissioner applied to the Tribunal for a reference to this court of certain questions of law said to arise out of the Tribunal's order. The questions referred to us are the following:

'1. Whether, on the facts and in the circumstances of the case. The Appellate Tribunal was right in holding that the assessed was a political organisation

2. Whether, of the facts and in the circumstances of the case, the Tribunal was right in holding that the objects of the assessed were predominantly for charitable purposes as defined in section 2(15) of the Income-tax Act, 1961

3. Whether, of the facts and in the circumstances of the case. The whole or any portion or no portion of the income of the assessed from Hindu Mahasabha Bhawan' was exempted from tax under section 11 and 12 of the Income-tax Act, 1961

4. Whether the assessed was a 'person' within the meaning of section 2(31) of the Income-tax Act, 1961, and could be charged to tax under section 4 of the said Act ?'

17. It will be seen that question Nos. 1 and 4 have been raised at the instance of the assessed and question No. 2, at the instance of the Revenue. Question No. 3 covers a controversy raised at the instance of both the parties, for, while the Department contends that no portion of the assessed's income is exempt and the AAC and the Tribunal have held that only a part of the income is exempt. We have to decide which of these three view-points is correct.

18. It will be convenient to dispose of the last question first, particularly as it goes to the root, questioning the validity of the assessment itself. The argument addressed on behalf of the assessed on this question before the Tribunal has been set out earlier. The argument was that there can be no assessment of the income in the hands of the Sabha because the beneficiary of the income from the trust property was the entire cross-section of the general public of India represented by every person 'who was a Hindu or who prefaced a religion which had its origin in India'. Such a beneficiary, it was argued, was not contemplated as a chargeable unit under the provisions of s. 4 of the I.T. Act, 1961. The Tribunal answered the contention by saying that the beneficiary of the trust was the Sabha under clause 13 of the constitution and this was an 'association of persons'. We think that both the lines of reasoning are erroneous in two respects. The first is that the beneficiary benefiting under the legal obligation in this case (which we shall briefly refer to as the trust is neither the Sabha, as stated by the Tribunal, nor Hindus only of the categories mentioned in the assessed's argument. The Sabha is in the position of a trustee holding it properties and income there from under a legal obligation to utilise the same on its objects. The Hindus, of the categories referred to in the assessed argument, are persons eligible to become members of the Sabha under clause 4 of its constitution. The true beneficiaries of the trust are the Indian public at large (whether members of the Sabha or not) or at least that cross-section of the Indian population that might like to see the aim of the Sabha fulfillled. But the second and more important aspect which seems to have been overlooked by both the assessed's counsel and the Tribunal is that the assessment is not being sought to b made on the beneficiaries of the income from the trust property. Nor is it being made on the Sabha as the representative at such beneficiaries. The Sabha may not even be capable of being treated as a 'representative assessed' for them within the meaning of s. 160(1) of the Act but, if it were, the assessment as an 'association of persons' would be clearly justified under s. 164(1) as the shares of the beneficiaries are indeterminate and unknown. It is unnecessary to elaborate this aspect further, for, the assessment here is being made on the Sabha as the owner of the properties which are the subject-matter of the trust or legal obligation and as the owner-recipient of the income of which exemption is sought. The short question for consideration. thereforee, is whether the Sabha is a 'person' within the meaning of s. 2(31) of the Act.

19. The answer seems to us clear that the Sabha, which is a society registered under the Societies Registration Act clearly falls within one or other of the categories of 'person' enumerated in s. 2(31) of the Act. The nature of the personality of a registered society has been well brought out in the judgment of Bhagwati J. (as he then was), in Satyavarat Sidhantalankar v. Arya Samaj, Bombay, AIR 1946 Bom 516. At p. 521, the learned judge, after discussing the provisions of the Societies Registration Act, comes to the conclusion that by reason of these provisions the society enjoys the status of a legal entity apart from the members constituting the same and is capable of suing or being sued as such and points out a little later in the judgment that, though the society i neither a corporation nor a limited company, it is a registered society of individuals which acquires a legal status by reason of its registration. Hence, whether viewed as a legal entity by itself or as a 'society' - which is the same as an 'association' - of persons who have come together to constitute it, the Sabha clearly falls within the term of the charging section, whether of the 1922 Act or the 1961 Act. That apart, it we are considering the provisions, not of the 1922 Act but of the 1961 Act then the association will clearly be, if not an association of persons, a bode of individuals, which is a wider term than 'society of individuals' referred to by Bhagwati J. Reference may also be made in this context to the discussion of the scope and meaning of the expression 'body of individuals' in Deccan Wine and General Stores v. CIT : [1977]106ITR111(AP) , CIT v. Harivadan Tribhuvandas : [1977]106ITR494(Guj) , Meera and Co. v. CIT and CIT v. Deghamwala Estates : [1980]121ITR684(Mad) .

20. Sri P. N. Monga, learned counsel for the assessed, urged before us that the assessed could not be described as an 'association of persons' for two reasons. His first point was that, in order to constitute an association of persons, a number of persons 'should join in a common purpose or action with the object of producing income' and that this common purpose or intention to make income was absent in the present case. Learned counsel referred in this context to the decisions of the Supreme Court in the case of CIT v. Indira Balkrishna : [1960]39ITR546(SC) and of this court in the case of CIT v. Memo Devi : [1978]113ITR335(Delhi) . But those cases are clearly distinguishable. In the case of Indira Balkrishna, the question initially arose both in regard to the property income and income from other sources. So far a property income was concerned, no assessment as association of parsons was possible as the co-owners were liable to tax individually under s. 9(3) of the 1922 Act, their individual shares in the property being clearly definite and ascertainable. In the present case, however, if the property is viewed as that of all the members of the Sabha, the resultant position will be that the property is owned by a large number of person who have no specified or ascertainable share in it. The income there from has, thereforee, to be assessed not individually in their hands but in the hands of the Sabha as such. In Memo Devi's case : [1978]113ITR335(Delhi) , it was held that there was initially an association of persons to acquire and trade in land but this purpose became impossible as the lands were acquired by Government and it was held that the compensation paid to the owners of the land for acquisition cannot be said to have accrued to the association. In the present case, however, there can be no doubt that the members of the society have come together with certain objects, for, without a common purpose or object, no society can be registered under the 1860. Act (vide ss. 1 & 20). In our opinion, there can be equally no doubt that the members of the Sabha also envisaged and contemplated that the Sabha should earn income from the several activities and utilities the income and other funde for the achievement of its aims and objects. It is true that the constitution of the Sabha does not specifically refer to the earning of income from this property as one of its objects. But this is an object which is necessary and inevitably implied. The Sabha could hardly have intended or expected to achieve any of its objects without funds and these funds had to come from subscriptions, donations and various kinds of activities including exploitation of and dealing in properties. In particular, para. 13(i)(c) of the constitution clearly envisages that this property was to be retained and utilised for the purposes of the Sabha. The terms of the clause clearly show that the income from the property was to be utilised for the objects of the Sabha, for, while this clause empowers the working committee to collect and invest or borrow funds, acquire, hold, sell, mortgage or lease properties, movable or immovable, and sign necessary documents for and on behalf of the Sabha and for the objects of the Sabha, it prohibits these powers being exercised in respect of this property which, it is directed, should be held in trust by the working committee during its tenure of office for and on behalf of the Sabha. In other words, the Sabha Bhawan is intended to be utilised for the purpose of the Sabha. This can be and has been done not only by using the premised itself but also by deriving income there from by way of letting out. The objects, thereforee, clearly imply, in our opinion, that the group of parsons who constitute the Sabha have as one of their common purposes and objects the earning of income from the property and the utilisation of that income for the purposes of the association. The Sabha is, thereforee, an association of persons for income-tax purposes within the meaning of the decision in Indira Balkrishna's case : [1960]39ITR546(SC) . It is, certainly, a 'person' within the meaning of s. 2(31) of the Act.

21. The second point made by Sri Monga is that the Act contemplates, in the case of an association, an assessment of the association on its income and also the inclusion, in the assessment of every member thereof, of his share of income from the association though only for rate purposes, vide s. 86(v) of the Act. He contends that, in this case, since no member of the Sabha has any definite or ascertainable share in the income and since, on the other hand, the enjoyment or distribution of the Sabha's income by or to the members is prohibited (vide v.44 of the Act of 1860), it would not be correct to treat the Sabha as an association of persons for the purposes of the Act. We confess our inability to appreciate this argument. The Act makes an association of persons a taxable entity directly and from the additional provision that, where such a member is entitled to receive a portion of its income, such income, shall also be included in his hands for rate purposes, an inference cannot follow that there can be no taxation on the association unless the shares of its members therein are definite and ascertainable. Such a construction would not only be unnatural but would defeat the very purpose of making an association of persons a taxable entity. It would facilitate and encourage persons earning income jointly without specifying, at least overtly, the share in which the income is to be shared among them and thus escape tax both on the association and themselves. We have, thereforee, no hesitation in rejecting this contention of Sri Monga.

22. In the result, question No. 4 is answered in the affirmative and against the assessed.

23. Turning next to the first question, we think that the answer given by the Tribunal was clearly correct. The aim of the Sabha, as set out in its constitution, is 'to establish a really democratic Hindu State in Bharat, based on the culture and tradition of Hindu Rashtra and to re-establish Akhand Bharat by all constitutional means'. As we shall point out later, the objects of the Sabha enumerated in clause 3 also correspond to several articles of the Constitution of India and really set out various objects which the Sabha as a political party has in mind and which it intends to achieve in course of time. The other clauses of the constitution which outline its organisation and enumerate the powers of the several office bearers and committees also reinforce this view. They talk of resolutions on current topics and matter of general policy, public sessions from time to time in different States, tours and travels for organisationl and propaganda purposes, negotiations with Government and other parties and cultivation of friendly relations with other countries. The document, read as a whole, leaves one in no doubt that it is the constitution of a political party which intend to outline its own social, economic and political policies, canvass for theme, work for legislative and constitutional amendments to implement them and eventually establish in the country a Government and a political State of its choice.

24. The following meaning given to the word 'political' in Webster's New International Dictionary referred to by the Tribunal is quite apposite:

'1. Of, or pertaining to polity, or politics, or the conduct of Government, referring in the widest application to the judicial, executive and legislative branches; of, or pertaining to, or incidental to, the exercise of the functions vested in them charges with the conduct of government, relating to the management of affairs of State; as, political theories.

2. Having, of conforming to, a polity, or settled system of administration; as a political body or government.

3. Of, or pertaining to, the exercise of the rights and privileges or the influence by which the individuals or a State seek to determine or control its public policy; having to do with the organisation or action of individuals, parties, or interests that seek to control the appointment or action of those who manage the affairs of a State; as, his political affiliations were the Republicans.'

25. Reading the constitution of the Sabha in the light of the above discussion and this definition, we agree with the Tribunal that the Sabha is a political organisation. Incidentally, we may also mention that, during the course of the hearing, it was stated that the Hindu Mahasabha was one of the parties recognised by the Election Commission as a political party at the relevant time. We, thereforee, answer the first question in the affirmative and against the assessed.

26. The principal question for our decision in this reference is really question No. 2. As mentioned earlier, the assessed is claiming exemption for its income from property under s. 11 read with S. 2(15) of the I.T. Act. 1961. In order to be eligible for this exemption the assessed must first show that the income in question is derived from property held under trust wholly for charitable purposes or that the income from the property is held under trust in part only for such purposes. Before proceeding further, we may clarify two aspects of this that will be relevant.

27. In the present case an objection was raised by the Revenue at an earlier stage that the property of the assessed cannot be said to be held under trust as there was no written or registered trust deed. But this objection is not now pressed, if we may say so, correctly for the purposes of s. 4(3)(i)/s. 11, a trust deed is not necessary. It is sufficient if there is a legal obligation on the part of persons deriving the income to apply it wholly or in part for the charitable purposes. This is now clear from Expln. 1 to s. 13 and was previously clear from s. 4(3)(i) of the 1922 Act. Such a legal obligation can be created by the rules and regulations under which the owner of the income functions. This in indeed a proposition well settled by the decision of the Privy Council in All India Spinners Association v. CIT [1944] 12 ITR 482. The second aspect is that, for the purposes of exemption, the assessed should prove either that all its objects are charitable within the meaning of s. 2(15) or that a specific or identifiable part of its income is obligatory applicable for such purposes. It is not sufficient that some of the object are charitable and some noncharitable. In that event, if the trustees have a discretion to apply the income to any of the objects charitable or non-charitable, they could legitimately utilise the income for the non-charitable purposes and so cannot be aid to be under a legal obligation to apply the income wholly or in part for the charitable purposes. In a case where the objects are distributive, each and everyone of the objects must be charitable in order that the trust may be upheld as a valid charity. These propositions are well settled by the decisions of the Supreme Court in CIT v. Krishna warriar : [1964]53ITR176(SC) , East India Industries (Madras) P. Ltd. v. CIT : [1967]65ITR611(SC) and Addl. CIT v. Surat Art Silk Cloth Mfrs. Association : [1980]121ITR1(SC) . Hence, it is necessary for the present assessed to establish either that all the objects of the Sabha are charitable or, that even though there are some charitable and some non-charitable objects, the executive committee of the Sabha is obliged, by its constitution, to apply a definite portion of its income for such of the purposes as may be aid to be charitable. With these preliminary notions cleared up, we may not proceed to consider the situation in the present case.

28. The first question that naturally arises is whether the fact that the assessed has been held to be a political institution deprives it of its eligibility for exemption under the statutory provision relied upon. The answer to this question is clearly in the negative. There is, in law, nothing to prevent a purely political organisation from carrying on certain activities of general public utility in such a manner as to entitle the organisation to exemption in respect of the income held in trust for such charitable purposes. The best illustration of this is the case of All India Spinners' Association [1944] 12 ITR 482 (PC), in which the Privy Council held that where an association was set on foot by a political organisation and was connected with it but still had for its real object the relief of poverty, its connection with the political organisation did not make its real object any the less charitable. On the other hand, if the object of an organisation are primarily political in character, then the mere fact that there may be a subsidiary motive of carrying on activities of public utility will not be sufficient to make it a charitable trust. This situation is exemplified by the decision in the case of Bonar Law Memorial Trust v. IRC [1933] 17 TC 508 (KB). In this case a trust was created under a deed of trust which was executed after the death of the donor in order to set out the objects which he had in mind in making certain gifts. These objects were, inter alia, (a) to honour the memory of Mr. Bonar Law, a great statesman, and a former leader of the Conservative Party, (b) to preserve a historical building from destruction, and (c) to use it as a college for the education of persons in economics, political and social science, etc., with special reference to the development of the British Constitution and such other subjects as the governing body (by whom the trust was administered) deemed desirable. The intention of the governing body, as stated in evidence, was to educate students in political principles and to exclude propaganda in support of a particular party. Some students were admitted to the college without any reference to their political beliefs or inclinations. It was at the same time admitted that the governors of the college an the education committee were wholly composed of members of the Conservative Party and included as ex officio members, the leader and the chairman of the party for the time being; that lectures were given on the Conservative Party organisation but not on liberal or socialist organisation, that at vacation times there were courses exclusively for Conservative members of Parliament and their wives, and that conferences with the central office of the Conservative Association were held as to the courses to be included in the college syllabus. The claim of the trust for exemption was rejected by the Commissioners and the Special Commissioners. The Special Commissioners addressed themselves to the question 'whether the Bonar Law Memorial Trust, under the deed which constituted it and the pamphlets which purport to explain it, is an institution for the advancement of education and mental improvement which is limited by political and party principles to a degree insufficient to prevent it from being a perfectly good charity, or whether the political and party 'limitation' is so strong as to become the primary object '. On a case being stated for the decision of the High Court, Finally J. first rejected the contention put forward on behalf of the assessed that a trust for the promotion of conservative principles would be a good charitable trust. He then formulated the question for his decision in the following terms (p. 517):

'The question, I think, is this, and one is guided by authorities. One is the case of Scowcroft, In re [1898] 2 Ch 638; one is the case of Temperance Council [1926] 10 TC 748 (KB); one is the case Hood v. Public Trustee [1931] 1 Ch 240; and I think that the result is that one has got to look at the deed and one has got to ascertain if one can,is the dominant purpose which is disclosed in the deed a good charitable purpose or is it not I think that, looked at from that point of view, the problem in the present case may be stated as being this, is the correct view that this was a trust for education, the duty of carrying out the education being entrusted to a particular party, the education was entrusted to the Conservative Party would not, I think, affect the validity of the Trust if in truth it was a trust for education; but, on the other hand, if the true view is that the trust was a trust for the promotion of Conservative principles - by that I mean. I need hardly say, the principles of the political party commonly called the Conservative Party - and that the education. The lectures, and so forth, were subsidiary to that which was the main and dominating purpose, then the fact that the lectures, and so forth. would be educative would not be sufficient to make the Trust a trust for charitable purposes only.'

29. Looking to the main purpose with which the trust was formed and the constitution of the governing body, he pointed out that under the terms of clause (c) as to education the governing body would be perfectly in order and could not be said to be departing from the trust deed if they decided to give lectures which were really nothing but propaganda of the Conservative Party. One could not doubt that the place was in fact being used as an educational centre for the Conservative Party, as a place where person believing in the conservative principles may be trained in an intelligent appreciation of those principles, and where political candidates may learn, where agents may learn, and where those who are disposed to work in the interests of the Conservative Party may go, in order that they may learn, what are the principles of the party to which they adhere. He, thereforee, confirmed the findings of the Special Commissioners.

30. The above two illustrations show the two extreme situations. One was the case of a political party setting up an association or institution whose dominant purpose was charity. The other was an institution ostensibly for the purpose of education but in fact and truth nothing but as instrument of propagation of the principles of a political party. The former was held to be eligible fore exemption despite its affiliation with the political party, while the latter was disentitled to exemption despite its ostensible object of education. What, thereforee, matters is not the character of the body in question but the dominant object and purpose with which the body is established. If the dominant object or purpose is a charitable object then the assessed would be entitled to exemption notwithstanding that the origin or character of the body in question may be considered to be political in character. On the other hand, if the dominant object is a political object, then the claim for exemption will fall unless a political object can also be said to be a charitable object in India within the meaning of s. s 2(15). This, thereforee, raised two questions for consideration: (1) Can a political purpose be said to be a 'charitable' purpose and (2) If not, can it be said that the dominant object of the present assessed was not political but charitable We shall proceed to discuss these two questions which form the crux of the present case.

31. So far as the first question is concerned, we have the benefit of a direct decision of the Supreme Court in the case of Laxman Balwant Bhopatkar (since deceased) by another trustee Dr. Dhananjaya Ramachandra Gadgil v, charity Commissioner : [1963]2SCR625 . But, before referring to this case, it will be useful to briefly refer to some English authorities. In re Scowcroft's case [1898] 2 Ch 638 avoided direct answer to the question whether a political purpose would be a charitable purpose. There, a bequest had been made of a particular property to be set apart 'to be maintained for furtherance of Conservative principles and for religious and mental improvement and to be kept free from intoxicants and dancing'. Stirling J. did not consider it necessary to express any opinion on the question whether or not a gift for the furtherance of Conservative principles was a charitable purpose because he came to the conclusion that, in the case before him, there was a gift for the furtherance of Conservative principles in such a way as to advance religious and mental improvement in combination and that since it was a gift in one form or another for religious and mental improvement, the limitation imposed by the reference to Conservative principles was not sufficient to prevent it from being a perfectly good trust. However, in Bowman v. Secular Society Ltd. [1917] AC 406 (HL), the following observation of Lord Parker were clear and categorical (p, 442):

'The abolition of religious tests, the disestabilshment of the Church, the secularization of education, the alteration of the law touching religion or marriage, or the observation of the Sabbath. Are purely political objects. Equity has always refused to recognize such objects as charitable. It is true that a gift to an association formed for their attainment may, if the association be unincorporated, be upheld as an absolute gift to its members, or, if the association be incorporated, ass an absolute gift to the corporate body; but a trust for the attainment of political objects has always been held invalid, not because it is illegal. For every one is at liberty to advocate or promote by any lawful means a change in the law, but because the court has no means of judging whether a proposed change in the law will or will not be for the public benefit, and, thereforee, cannot say that a gift to secure the change is a charitable gift. The same considerations apply when there is a trust for the publication of a book. The court will examine the book, and if its objects be charitable in the legal sense it will give effect to the trust as a good charity: Thornton v. Howe [1862] 31 Beav. 14; but if its object be political it will refuse to enforce the trust: De Themmines v. De Bonneval [1828] 5 Russ. 288. If, thereforee, there be a trust in the present case it is clearly invalid. The fact, if it be the fact, that one or other of the objects specified in the society's memorandum is charitable would make no difference. There would be no means of discriminating what portion of the gift was intended for a charitable and what portion for a political purpose, and the uncertainty in this respect would be fatal.'

32. Then followed In re Tetley [1923] 1 Ch 258 (Ch D) & (CA), where Russell J, observed that though 'subsiding a newspaper for the promotion of particular political or fiscal opinions would be a patriotic purpose in the eyes of those who considered that the triumph of those opinions would be beneficial to the community, it would not be an application of funds for a charitable purpose'. The Court of Appeal and the House of Lords in Attorney- General v. National Provincial & Union Bank of England [1925] AC 262 (HL), affirmet the judgment of Russell J. In IRC v. Temperance Council [1926] 10 TC 748 (KB), the learned judge held that the object of the trust to secure a certain line of legislation represented a political purpose whether or not the organisation was of a non-party character and that it would not be a charitable trust. And, finally, as already indicated, Finally J. expressed himself clearly in Bonar Law Memorial Trust v. IRC [1933] 17 TC 508 (KB). He observed (pq 516):

'....... on the principle of the thing, it is impossible to hold that a trust which is simply a trust for the propagation of the political principles of a particular party is a good charitable trust.'

33. The position thus appears to have been so well settled that by 1926, it was not disputed that trust to secure legislative reform was not a charitablm trust. Rowlatt J. observed in IRC v. Temperance Council [1926] 10 TC 748 (KB), that the fact the organisation was not connected with any political party was irrelevant. He said (p. 752):

'The work of the Council, it was provided, was to be of a strictly non-party character. That is a wholly irrelevant consideration. When it has been said that a political purpose is not a charitable purpose, that conclusion is not relevant, because political purposes are or may be purposes mixed up with party politics; the word 'political' does not mean that in that connection at all. Any purpose of influencing legislation is a political purpose in this connection.

Under these circumstances, this is mainly a trust to secure a certain line of legislation, and if that is so, I do not understand it to be disputed that that would not be a charitable trust. I think the authorities are clear upon it and I am not going to say anything more about it.'

34. and rejected the argument that legislation came in only in a subsidiary way in their object of promoting temperance. On the strength of the above decisions, the position in England is well settled that a 'political purpose' using the word in a wider sense is not a charitable purpose and has been summed up in Halsbury, 3rd Edn., Vol. 4, p. 523 (article contributed by Danckwerts J.) in the words of Lord Parker extracted earlier.

35. Turning now to the Indian decisions, the question how far a political purpose would be a charitable purpose came up for consideration in the context of the will of Subhash Chandra Bose in Subhash Chandra Bose v. Gordhandas Patel, 2nd 1941 Bom 254: AIR 1940 Bom 76, and in respect of the trust created to give effect to the aspirations and will of Late Lokmanya Bal Gangadhar Tilak in In re Lokamanya Tilak Jubilee National Trust Fund [1943] 10 ITR 26 (Bom). Certain observations have also been made on this respect of the matter by the Privy Council in Trustees of the Tribune Press v. CIT [1938] 7 ITR 415 (PC) and All India Spinners' Association v. CIT [1944] 12 ITR 482 (PC. In the former came Sir George Rankin, dealing with the main objection that the Tribune newspaper was intended by its founder to carry on political propaganda and wab intended to be devoted to the advocacy of particular legislative measurers considered by its founder to be measures of reform that it was this political character that prevented the trust from being held to be an 'object of general public utility', observed, after referring to the various English decisions on the subject, that it was not the case of the Revenue that the newspaper was intended to be a mere vehicle of political propaganda. That it was to be an instrument for the dissemination of news and for the ventilation of opinion upon all matters of public interest and questions of politics and legislation were discussed in the paper only as may other matter were discussed and that it had not been made out that a political purpose was the dominant purpose of the trust, in the other case, Lord Weight, who delivered the judgment of the Board, emphasised the necessity to apply the language of the Indian Act to the particular circumstances that emerge under conditions of Indian life, having said this, he observed (pp. 487, 488, 489):

'The statement of the object excludes... any question of profit making and also excludes any element of party politics. Any participation in political propaganda would be ultra vires....... the real underlying object of the Association was to benefit the poor agriculturists in the villages. Specifically at that time of the year when they were not actively engaged in agricultural operations....... Though the connection in one sense of the Association with Congress was relied on as not consistent with 'general public utility' because it might be for the advancement primarily of a particular party, it is sufficient clear.... that the Association's purposes were independent of, and were not affected by, the purposes or propaganda of the Congress.'

36. It is in this background of authorities that the Supreme Court came to consider the question in the context of the will and trust in honour of Lokamanya Tilak and this has to be referred to in some detail.

37. In the above case Laxman Balwant Bhopatkar v. Charity Commissioner, Bombay : [1963]2SCR625 , the question raised for the consideration of the Supreme Court was whether ' the Kesari and Maratha Trust' was of was not public trust within the meaning of the Bombay Public Trusty Act (Bombay Act XXIX of 1951). Section 2 of the Act defined a public trust in s. 2(13) as 'an express or constructive tursty for either public, religious or charitable purpose or both....' Section 9 of the Act defined 'charitable purpose' as including 'relief of poverty or distress. Education, medical relief and the advancement of any object of general public utility' the last head not including purposes related exclusively to sports or to religious teaching or worship. The trust in question had been created by a deed dated August 16, 1920, by three persons, the first two of whom were the sons of Lokamanya Bal Gangadhar Tilak and the third was thi executor under the will of the Lokamanya dated April 5. 1918. The trust deed referrd, in tit preamble, to teh execution of the will and its acceptance by all the three executantes and proceeded to State that a trust deed was being executed in order that the objects recited in the will may be fulfillled, the trust deed contained thirteen clauses, but of those, only cls. 1 and 8 were relevant fot the matters arising in the appeal before the Supreme Court. Clause 1 specified the objects of the trust adn clause 8 made a provision for contingencies arising from the trustees becoming incapable of discharging their duties ass well as from the institution ceasing to exist. Clause 1 of the trust deef which was in Marathi read as follows (p. 1592 of AIR 1962 SC.):

'This trust deed had been made as a means to the fulfillment perpertualy ad uninterruptedly after the death of the late Lokamanya Bal Gangadhar Tilak of that very object of his with which he took all activities after he took charge of the newspapers-the Kesari and Maratha-such as of spreding political education through the newspapers adn thereby making people alive to their political rights and carrying on other multifarious public activities conducive to the national ideal, etc.'

38. The will of late Lokamanya TIlak was also specific that the policy of thi papers (editorial policy) should be kept as it was and should not be changed under any circumstances. The question for the consideration of the Supreme Court was whether, under clause 1 of the deed of trust, a public charitable trust had been created.

39. It may be mentioned here that the interpretation of this trust deed had come up earlier for consideration before the Bombay High Court in the context of s. 4(3) of the Indian I. T. Act, 1923, under which the trust had claimed exemption from income-tax. The learned judges (Beaumont C.J. and Rangnekar J.) rejected the claim for exemption on the ground that the trust ' contained in cl 1 of the deed was too vague and wide to be regarded as a charitable trust within the meaning of the I. T. Act. Some of the purposes were, no doubt, charitable but others ware not and the whole of the funds could be applied to non- charitable purposes. The purposes included organising public movements and even if those words were limited by the words 'calculated to promote the national ideal' it was impossible to say that the promotion of the public movements calculated in the view of the trustees to promote the national ideal could be regarded as necessarily of public utility'. It must be mentioned that this judgment (quoted at pp. 634-635 of [1963] 2 SCR; AIR 1962 SC 1593), is perhaps and is different from the decision of the Bombay High Court in Lokamanya Tilak Jubilee National Trust Fund, In re [1943] 10 ITR 26, referred to earlier and also decided under s. 66(2) of the Indian I. T. Act, 1922, by Beaumont C. J. adn Kania J. which has also beef referred to by the Supreme Court in Laxman Balwant Bhopatkar v. Charity Commissioner : [1963]2SCR625 , and also earlier referred to in this judgment.

40. When the same question arose in the context of Bombay Act. No. 29 of 1920, in the matter that was under appeal before the supreme Court, the learned judges of the High Court came to a different conclusion. The learned judges observed that the activities contemplated by clause 1 of the objects of the trust were two in number: (1) the awakening gin the minds of the people a consciousness of their political rights by spreading the knowledge of politics through the newspapers Kesari and Maratha; and (2) organising various public movements calculated to promote the national ideal; and held that while the second of these purposes could not be considered a charitable purpose, the first could be. In this context they considered that the decisions of the English Courts that the attainment of political purposes would not be a charitable purpose as advancing an object of general public utility could not be applied in India and that. Even if the same were applicable, the awakening of political consciousness among the people referred to in the deed before them was not identical with the advancement of political objects. The awakening of such consciousness need not necessarily be for achieving a political purpose and the awakening of such consciousness would be the advancement of an object of public utility.

41. On behalf of the appellant-trustees it was contended before the Supreme Court that the learned judges of the High Court had erred in considering that there were two objects to be subserved by the trust for the attainment of which it was founded. According to them, there was only a single object and that object was political in nature and consequently not a charitable purpose within the meaning of the law. His next submission was that, even if there were two objects held by the High Court. They were not really independent objects but both of them were dominated by a single purpose which was political in nature. At the base of both the interpretations of the deed lay the submission that the object to be attained by the trust was political and if so it was not charitable. It is this contention that the court had to deal with.

42. The five judge Bench of the Supreme Court came to the conclusion (Subba Rao J. dissenting) that there was considerable force in the submission of the learned counsel for the trustees and that the trust had been founded to achieve a single objective or purpose. It was pointed out that though the activities for which the newspapers were utilised after the late Lokamanya took charge of them disclosed more than one purpose, the common link between every such line of activity was that it stemmed from a political purpose, for the newspapers were made to serve as the vehicle for achieving his objective, examining the various activities in which the late Lokamanya engaged himself and the object with which he engaged in them, the court surveyed the public life and activities of the Lokamanya and, in particular, his relationship with the two newspapers and came to the conclusion that hiss purpose in taking over adn conducting the newspapers was clearly political in the sense of seeking to achieve by means of rousing the consciousness of the people to their condition, a political awareness, by which adjustment of a political character would be demanded adn enforced by the persons who imbibed those truths or were influenced by such writings.

43. Having come to the conclusion the court addressed itself to the next question: 'whether a political purpose. I. e. for educating People not on theories of political or social sciences ass a subject of academic study, but for moving them to practical action to achieve governmental changes is or is not a charitable purpose '.

44. After a survey of the English decisions and the two decisions of the Privy Council earlier referred to, the Supreme Court expressed its conclusion in the following words ( : [1963]2SCR625 :

'We consider that these twx decisions of the Privy Council in so far as they hold that a political purpose, in the sense of a propaganda for the achievement of a political objective, is not a charitable purpose, i. e. not one for the advancement of an object of general public utility correctly interpret the Indian statute and the law in India. Whatever difference there might be between the definition of 'charity' and 'charitable purpose' in the English and Indian Law, we consider that there is none as far as regards 'political purposes' in the sense in which we have indicated earlier, in this context, it is significant that Chichester Diocesan Fund v. Simpsop [1944] AC 341 (HL), in which Lord Wright, speaking in the House of Lords, expounded the uncertainties of the English law as to the meaning of 'charity' and the appeal of the All India Spinners' Association [1944] 12 ITR 482 (PC, before the Judicial Committee were heard at about the same time, and in consequence the view of Lord Wright expressed in the latter decision that a political purpose is not an object of general public utility even on the wider language of the Indian statute reinforces our conclusion on the point, even though the concept of charity under the Indian Law might be wider than as understood in England, particularly under the residuary head 'advancement of an object of general utility', we consider that it would not include a 'political purpose' in the sense indicated already.'

45. The Supreme Court, in this context, adverted to the decision of Vaisey J. in Re. Hopkinson: Lloyds Bank Ltd. v. Baker [1949] 1 All ER 346 (Ch D). Where Vaisey J., had pointed out after referring to earlier English decisions and the Tribune's case [1939] 7 ITR 415 (PC), that (p. 1602 of AIR 1963 C), 'political propaganda masquerading, using the word not in nay sinister sense, a education is not charitable' and went on to add (p. 1602), 'the principle that legitimate adn proper political aims and ambitions are not charitable is far too well settled for me at this stage to attempt to depart from or refine upon it'.

46. The Supreme Court again reiterated (p. 1602 of AIR 1963 (SC)):

'We are clearly of the opinion that a 'political purpose' is not a charitable purpose ass being one 'for the advancement of any other object of general public utility' within section 9(4) of the Act.'

47. Subba Rao J. dissented. He summarized his views as follows (p. 1613 of AIR 1962 (C)):

'(1) The English decisions are based upon a pragmatic approach to the problems that arost before them, having regard to the historical development of the law of charities in that country; there is no common thread discernible in the large volume of English decisions. (2) Under the Act, unlike in England, the advancement of the object of common public utility is declared to be a charitable purpose, and it is not permissible to curtail its scope with reference in English decisions, (3) The expression 'object of general public utility' is very comprehensive and it includes all purposes, whether political or otherwise, provided it is an object of general public utility.'

48. But, in view of the conclusion arrived at by the majority of the judges. It has to be held that a political purpose cannot be said to be a charitable purpose.

49. This taken us on to the second aspect referred to earlier. The assessed contends that, in the present case, the purpose of the assessed, Sabha, was not political at all. Learned counsel seeks to make a distinction between the 'aim' of the Sabha (which may be political in character), on the one hand and its objects on the other. He contends that the aim of the Sabha i the ultimate and distant goal for which it was founded but that the immediate objects and the purposes for which its funds were to be utilised are as set out in clause 3. According to him, everyone of the objects mentioned in clause 3 as the objects of the Sabha are objects of general public utility. He refers to the fact that AAC had come to the conclusion that at least objects Nos. 1 adn 6 were charitable in nature. As we have already pointed out this will not be of great help to the assessed and the assessed cannot succeed unless all the objects can be said to be charitable. Learned counsel, thereforee, invites out attention to the finding of the Tribunal (which has already been set out earlier), that all the objects of the Sabha can be only characterised as charitable in nature. Learned counsel, thereforee, submits that we should ignore the aim set out in clause 2 of the constitution of the Sabha and concentrate on clause 3. Since all the objects set out in clause 3 are objects of general public utility, he contends there can be no justification for denying exemption under s. 11 to the Sabha.

50. We have carefully considered this submission but, having regard to the aim of the Sabha and the various clauses of its constitution, we ars of opinion that this interpretation does not bring out the true intent and purpose with which the Sabha was formed. As already mentioned adn, as found by the Tribunal, the All India Hindu Mahasabha is a political party. We are concerned here not with the nature of some association or institution floated or sponsored by this political party itself. It is, thereforee, impossible to ignore the aim of the Sabha set out in clause 2 as a mere ideal expression of some distant aim different from the objects enumerated in cl, 3. In our opinion, clause 2 is the most dominant clause in the constitution and it is this clause which sets out the whole purpose and function of the Hindu Mahasabha. It is an association formed to take steps 'to establish a really democratic Hindu Rashtra and to re-establish Akhand Bharat by all constitutional means'. We do not think that much turns on the description of this clause as representing the 'aim' of the Sabha. According to the dictionaries the principal meaning of the worse 'aim' is: 'an object or purpose aimed at'. Clause 2, is thereforee, as much an object of the Sabha as cl 3 is. In trying to understand the objects and purposes of the sabha, thereforee, it is not possible to completely ignore the aim as belonging to a realm outside the purview to the immediate objects and purposes of the Sabha.

51. The part, on a reading of the constitution as a whole, we are also unable to agree with the construction sought to be placed on behalf of the assessed that cls. 2 and 3 should be read totally independent of each other. The attempt of the learned counsel for the assessed is to construe cl 3 as if it set out for the sabha certain objects of general public utility which have nothing to do with the political character and aim of the HIndu Mahasabha, but we are unable to accept this as a proper interpretation of the document. It appears to us that clause 3 only further explains the aim set out in clause 2. A little consideration would show that clause 3 only elaborates the ingredients and the steps necessary for the establishment of a State of the nature aimed at. To rapidly industrilise the country, to secure to worker and peasants their rightful share in the country's economy, to remove all forms of inequality and disabilities including those in the matter of wealth. To assure full freedom of thought, expression, association and worship to all nationals and to assure decent standards of living to all nationals (cl, 3 (1), (2), (5) and (7), are the objects to be pursued to establish a really democratic State. The establishment of Akhand Bharat as a Hindu State based on culture and tradition of Hindu Rashtra is possible only by making Bharat strong militarily, politically, economically, morally adn materially. By reclaiming those who have left the Hindu fold and by promoting the glorious ideals of Aryan womanhood (cls. 3 (3), (4), (5) and (8)). Cow-protection, establishment of Sanskritised Hindi as national language adn development of friendly relations with other countries (cls. 3 (3) and (11)) are also necessary concomitants of that State, sub-clause (12) authorises are Sabha to do everything necessary to achieve these objects and that would clearly include contesting elections. Carrying on propaganda for its political notions as well as organising meetings and movements to arouse public conscience of its ideals and gain popular support for these objects. The reference to constitutional means for achieving the desired aim also shows that the Sabha will have to propagate, canvass for and attempt to achieve legislative and constitutional changes. It is not possible to convert India. Which is a secular state, into a Hindu State without sponsoring and promotion legislation including the amendment of the COnstitution in this respect. Also, a pointed out by the learned Solicitor-General, several of the object clauses bear a close correspondence to clauses and article sin the Constitution of India. Object No. 1 bears a close analogy to arts. 14 and 16 of the Constitution, object No. 2 to arts. 19, 22 and 23, object No. 4 to art. 15 of the Constitution adn object No. 6 to 38. 39, 43 of the Constitution. The wording of the objects are of one significance. The words 'remove', 'establish', 'assure', 'make', 'to industrialise' and 'lay down', are of a dogmatic nature telling the people what the party would do if returned to power and would strive for in order to achieve it. Though normally one may not attach much significance to such words in the object clause of an institution they assume a special significance and importance in the context of the character of thi organisation in the constitution of which they appear and of the aim set out in clause 2. For all these reasons it seems to us clear that the objects set out in clause 3 are all the objects which the Mahasabha intends to achieve as a step-in-aid to achieve its object or goal set out in clause 2. They are not independent objects envisaging acts of charity such as the giving of relief in cases of famine or earthquake or giving succour to the poor, the suppressed and the disabled though even such works can and, in all probability, will be undertaken in the process of obtaining popular support and as incidental to the objects sought to be achieved. Just as the supreme Court, while dealing with the Lokamanya Trust, disapproved the attempt of the learned judges of the Bombay High Court to read two separate purposes for the trust and interpreted the entire thrust deed as one integral whole with thi sole object of fulfillling the aims and aspirations of the late Lokamanya, which were of a political character, so also here, we do not think it would be a correct, fair or just construction of the constitution of the Hindu Mahasabha to read the two clauses independently and to project the Sabha ass an essentially charitable organisation with its political aim only subordinate or subsidiary to these charitable object. On the other hand, logically and naturally, c. 3 occurs in the constitution of the Sabha ass an integral part of clause 2; it is an elaboration and sets out the immediate practical steps necessary to be implemented to achieve the Sabha's aim. Viewed in this light we would hold that the objects set out in clause 3 are also political objects and not mere objects of general public utility.

52. Even if the above view is considered to be too extreme and even if cls. 2 and 3 are read separately we are unable to find any justification for concluding that the dominant object of the Sabha is charitable not political. There is no warrant for completely ignoring clause 2 and not treating it as one of the objects of the Sabha. Clause 2 clearly sets out the political object or purpose for which the Sabha was formed and to ignore it will be to tear apart the living soul from the organisation. That apart, even in clause 3 all the objects are not charitable objects. The reference to the country's political self-reliance and strength in sub-clause (5) is a political object. The drawing up of suitable programs with a view to accomplish the various objects in sub-clause (12) will certainly include the objects of contesting elections, advocating legislation, drawing up programs for the development of the country and trying to get sufficient political backing to form a Government and implement those objects ars certainly part and parcel of the objects which are political in character. Even if we leave this consideration out of account we have a constitution with two objects - one of a political nature set out in clause 2 and another of a charitable nature envisaged in cl, 3. But what is there to show that c. 3 dominates and clause 2 is only subsidiary The factual indications are to the contrary. As we shall mention when dealing with question No. 3, no material was placed to show that any activities were indulged in during the previous year or at any time which were purely charitable objects unmixed with political considerations. A general statement was made before the AAC that it was well known that the Sabha was spending money on the relief of the poor hit by calamities and on the shudhi of non-Hindus. But if this was the dominant activity of the Sabha, surely, it must have been possible to prove it from the accounts or by citing tangible instances of specific items.

53. 'In this state of things, it is difficult to agree that it is the charitable purposes set out in clause 3 and not the political purpose set out in clause 2 that is the dominant purpose of the institution. To be eligible for exemption, it should be established that the charitable purpose clearly has the dominating role. It is not sufficient to merely say that the Constitution envisages both kinds of purposes. Even if, to borrow a phrase used by Pathak J., in a slight in different context in Surat Art Case : [1980]121ITR1(SC) , even if the political and charitable purposes are 'equal components' of the trust deed, the claim for exemption will not be satisfied. For, as has been pointed out by us earlier. A trust will not be eligible for exemption if it has both charitable and non-charitable objects and there is nothing compelling the trustees to earmark any part of the income for the charitable as distinct from the non-charitable purpose. To give an illustration there is nothing to prevent the executive committee of the Sabha from spending all the income from the property for conducting election meetings, for carrying out election propaganda and for achieving strength as a political party in the country. The expenditure on such objects would be clearly intra virus and so long as it is open to the working committee to spend the entire income without any limit or restriction on such purposes as the one illustrated above, it is difficult to say that the assessed is eligible for exemption. This principle, as already mentioned, has been settled by the decision of the Privy Council in Mohammad Ibrahij Riza Malak v. CIT [1930] LR 57 is 260; AIR 1930 PC 226, and has been reaffirmed in several decisions of the Supreme Court subsequently.

54. For the reasons discussed above we are of opinion that, whether cls. 2 and 3 are considered independent of each other or whether they are treated as mutually inter-dependent and parts of an integral whole, the assessed's claim for exemption fails. We. thereforee, answer questions Nos. 2 and 3 referred to us in the negative and by saying that the Tribunal was not right in holding that the objects of the assessed were predominantly for charitable purposes.

55. This brings us to a consideration of the third question. As already mentioned, the ITO denied the assessed any exemption but, on appeal, the AAC, taking into account the affidavit filed by the secretary of the Sabha. Came to the conclusion that 25% of the income could be estimated to have been applied for charitable purposes or for purposes of general public utility. The criticism of the learned Solicitor-General of the findings of the AAC is that this conclusion did not follow from the facts found by him. He had found that an examination of the accounts had not shown clearly as to what was the amount actually spent by the Sabha for religious or charitable purposes. The affidavit of the secretary well as his oral evidence was only to the effect that a large portion of the expenditure had been incurred on the traveling of the office bearers of the Sabha or other persons connected with it but the secretary could not furnish any details in respect of these travels. Though the secretary stated that the travels were normally for the welfare of the people, he was not able to give any specific illustrations. He merely stated that it was well known that the Sabha was spending money on relief of the poor in case of earthquakes, floods. etc., and on the shudhi of non-Hindust Thus, there was no material before the AAC to show that any expenditure had in fact been incurred on objects of public utility, the learned Solicitor-General points out that even this position was not accepted by the Tribunal. The Tribunal clearly observed that the mere affidavit of the secretary was not sufficient and that the manner in which and the purpose for which the income had been spent must be proved by relevant details in the accounts in respect of each item of the expenses and not by mere affidavit. But, in spite of that, the Tribunal confirmed the estimate of the AAC regarding the extent to which exemption could be granted. The contention of the learned Solicitor-General is that when there was nothing to show the manner in which the expenditure had been incurred or the nature of the expenditure or the purposes thereof the question of allowing something on the basis of an estimate does not arise. The question of an estimate can arise only if there is material to show that some expenditure was incurred on objects of general public utility but the assessed is unable to establish the full extent of such expenditure by tangible or satisfactory evidence. But where the account do not at all give any details, it was argued, the question of making any allowance on the basis of an estimate also could not arise.

56. The AAC and the Tribunal proceeded on a mis-apprehension in granting an exemption in respect of 25% of the income, it seems to us that, in a case of this type, the assessed is entitled either to full exemption or none; there is no via media. If, as has been held by the Tribunal. The assessed's purposes are dominantly charitable, then its entire income is exempt, there being no allegation that any part of the income has been spent on purposes other than those mentioned in the constitution or on any specific non-charitable purposes. On the other hand if as held by us and the AAC, the assessed's objects are charitable in part and non-charitable in part, the assessed would not be entitled to any exemption at all, the question of allowing an exemption in respect of a portion of the income does not at all arise. Under s. 11 of the Act, the entire income of the trust would be exempt where the property is wholly held for charitable purposes. But this exemption can be denied in respect of any portion of the income which is not spent for such purposes. So also in a case where there is a trust in part for charitable purposes, then the part of the income which in obliged to be spent for such purposes, would be exempt but this will again be subject to the condition that the actual application is for such purposes. But in either event there should be an obligation to apply the income for the charitable purposes contemplated and specified by the trust deed itself. In the present case we have come to the conclusion that clause 3 sets out, not independent objects of general public utility. But merely certain purposes on which the Sabha concentrates in order to achieve it principal aim set out in clause 2. In this view, the assessed is not eligible for any exemption. Alternatively, we have held that the Sabha has two objects - one political and so not charitable (clause 2) and the other (clause 3), which can be said to be a charitable purpose. In the case of such a trust, where the trustees can utilise the income for both charitable and non-charitable purposes the entire income is liable to tax on the principle of Mohd. Ibrahim Riza's case , already referred to. There is no scope in such a case for exempting any portion of the income merely because it is in fact applied for charitable purposes.

57. We, thereforee, hold that the was not justified in holding that a portion of the income of the Sabha was exempt under s. 11. In our opinion. Having regard to our answer to questions Nos. 1 and 2, the answer to question No. 3 had to be that neither the whole nor any part of the income of the Sabha can be said to be exempt under ss. 11 and 12 of the I. T. Act, 1961.

58. In the resulm the reference is disposed of in the manner already indicated. However, having regard to the circumstances of the case, we make no order as to costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //