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Addl Commissioner of Income-tax, Madras-i Vs. Gangabai Charities - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case Nos. 261 of 1974 & 9 and 10 of 1977
Judge
Reported in[1983]142ITR718(Mad)
ActsIncome Tax Act 1961 - Sections 2(15), 11, 13 and 13(1)
AppellantAddl Commissioner of Income-tax, Madras-i
RespondentGangabai Charities
Appellant AdvocateJ. Jayaraman, Adv.
Respondent AdvocateK.R. Ramamani, Adv.
Cases ReferredRunchordas Vandravandas v. Parvatibai
Excerpt:
direct taxation - trust - sections 2 (15), 11, 13 and 13 (1) of income tax act, 1961 - whether it has been rightly held that income of trust would be entitled to exemption under section 11 - law requires that trust should not have any object of general public utility which involves as object carrying on of activity for profit - law does not prevent activity for profit being carried on by charitable trust as means of furthering its objects charitable in nature - question answered in negative. - - 1. there is a well-known building complex in purasawalkam in the city of madras called dharmaprakash. the fund was augmented by her son, seetharama rao, who was a hotel owner, from his own contribution as well as from outside donations. 27,784 from the printing press in the year ended march.....balasubrahmanyan, j. 1. there is a well-known building complex in purasawalkam in the city of madras called dharmaprakash. the main building consists of a mandapam and other portions. similar is the layout for an annexe. the buildings are much sought after for celebration of weddings and reception for which they are let out on rent, for three days at a time, at certain rates. the buildings are much sought after for celebration of weddings and reception for which they are let out on rent, for three days at a time, at certain rates. the building was constructed with a nucleus of a trust fund provided therefor by a lady called ganga bai, who was at that time in her nineties. with that fund a plot of land was purchased and the construction begun. the fund was augmented by her son, seetharama.....
Judgment:

Balasubrahmanyan, J.

1. There is a well-known building complex in Purasawalkam in the City of Madras called Dharmaprakash. The main building consists of a mandapam and other portions. Similar is the layout for an annexe. The buildings are much sought after for celebration of weddings and reception for which they are let out on rent, for three days at a time, at certain rates. The buildings are much sought after for celebration of weddings and reception for which they are let out on rent, for three days at a time, at certain rates. The building was constructed with a nucleus of a trust fund provided therefor by a lady called Ganga Bai, who was at that time in her nineties. With that fund a plot of land was purchased and the construction begun. The fund was augmented by her son, Seetharama Rao, who was a hotel owner, from his own contribution as well as from outside donations. Ganga Bai's original outlay amounted to Rs. 34,000 in all. But the funds which went into completion of the building amounted to nearly Rs. 6,00,000. Even while the building was under construction, Ganga Bai executed a document described as a deed of trust on September 13, 1958, in which the trust was named as 'Ganga Bai Charities'. It is to this deed that practically every one connected with this case has turned his gaze to find out what the object of Ganga Bai was in providing the fund and in constructing the building and to what use the properties are to be put, even though she provided but the nucleus of the whole project and it was only a part of the total outlay on the building, her deed of trust is the basic document to which we have to address ourselves in order to ascertain the objects and functions of the trust.

2. Ever since the construction of Dharmaprakash, it was being let out as a marriage mandapam to be used by members of the public as such. The income derived from the letting out of this Kalyana Mandapam came to Rs. 1,06,392 in the year ended March 31, 1963. For the subsequent years also the income was substantial. Under the aegis of Ganga Bai Charities, a printing press was also being run. The trust earned a profit of Rs. 27,784 from the printing press in the year ended March 31, 1963, and a sizable income in the subsequent years as well.

3. The ITO took the view that the income from the letting out of Dharmaprakash as a marriage mansion and the income derived from the printing press must be charged to income-tax in the relevant assessment years. The trustees of Ganga Bai charities, however, contended that the income would stand excluded from the purview of taxation under s. 11 of the I.T. Act, 1961, as income derived from the property held wholly for public, religious and charitable purposes. The ITO rejected this contention and proceeded with the assessment. On appeal, however, the AAC held that Ganga Bai Charities was a charitable trust and its income was entitled to exemption as income derived from assets held for public, religious and charitable purposes. On appeal by the Department, the Tribunal upheld the decision of the AAC, but remitted the assessments to the ITO to find out to what extent in each year there had been application. of the trust income or accumulation of that income for application for charitable purposes.

4. In this reference made by the Tribunal at the instance of the Commissioner of Income-tax, the question for our consideration it whether the income of this trust in exempt from tax under s. 11 of the I.T. Act 1961. It is clear that the question falls to be decided on a construction of the deed of trust executed by Ganga Bai and on the application of the relevant statutory provisions.

5. Mr. Jayaraman, learned counsel for the Revenue, submitted that a study of the trust deed does not reveal any object of a public, religious or charitable nature that might property call for exemption of the trust according to the provisions of s. 11 Mr. K. R. Ramamani learned counsel for the assessee-trust on the other hand, submitted that the deed it clear enough in setting down the objects of the trust and those objects are within the exempted category.

6. The trust deed dated September 13, 1958, executed by Ganga Bai has been made a part of the case. We have given the document the close attention it deserves. Parts of it we have read more than once. At the end of it all we cannot withhold our comment that it is not a perfect piece of legal drafting. We cannot, however, throw up our hands in despair. As a court of construction we have to construe the dead even on its defective language. If the documents is clumsy, we have to tidy it up as we go along in our construction. We must iron out the creases as one learned English judge described the process, in another context. We must try to make out, as best as we may, what the author of the trust was driving at. In order to enable us to do so, we will have to take in the entire document and try to fit in all parts of the documents as of one piece, the operative portions as well as the recitals. Our endeavor is to get at the object of this trust and we must be thankful for these and other internal aids to construction wherever we may find them in the body of the document.

7. The deed executed by Ganga Bai starts by reciting that she had a long cherished desire to construct and provide a building in Purasawalkam, Madras, for the benefit of the public, to be used by them for religious, charitable, and or cultural and social purposes. The preamble also shows that the old lady intended thereby to secure a religious benefit for herself as well as to satisfy a long felt need of the public in that part of the city. After referring to the provision made by her of the initial fund for bringing into being the trust property, the trust deed proceeds to declare that the fund is being provided for the express purpose of constructing a building and dedicating the same for use by the public, inter alia, for religious, charitable and cultural purposes, by way of an irrevocable trust. After setting out the name of the trust as 'Ganga Bai Charities', the trust deed proceeds to reiteration of the objects of the trust by insisting on the trust property being used only for religion, charitable, social, cultural and other allied purposes. Seetharama Rao, the son of the author of the trust, is named the trustee. Provision is made for a succession to the office of trustee. The trustee is empowered to obtain further funds, and also to realise form the trust properties rents and profits. More specifically, the trustee is permitted to let or allow the trust building or such portion thereof for the use of the public for social, cultural, religious and educational purposes, free of charge, or at such rents and on such terms Without prejudice to the generality of this provision, it is further stated that the trustee has power to let, or allow, the building for holding and conducting religious discourses, and for running schools for the development of Sanskrit learning, free of cost or at such rents and on such terms and conditions as the trustee thinks reasonable and proper in the interests of the trust. Power is also given to the trustee to construct a few shops and let them out on rent to pay for the maintenance and upkeep of the trust properties. Appropriate provisions are also made in the deed for the maintenance of accounts, investment of surplus funds, and other sundry things.

8. The contention of Mr. Jayaraman, for the Revenue, was that on a true construction of this deed of trust, no clear or specific charitable object is discernible in the objects avowed by the founder. He referred to the oft repeated phraseology 'religious, charitable, cultural and social purposes' with variations on the same theme. He urged that the description of the purpose in this wide language does not meet with the requirements of the statutory exemption from income-tax. Learned counsel submitted that for the purpose of obtaining exemption from income-tax of income derived from any property held for public, religious or charitable purposes, it is essential that the objects must be defined in the operative portion of the document or memorandum with reasonable certainty, with reference to the particular purposes in view. Learned counsel referred, especially to the particular purposes in view. Learned counsel referred especially to the language of s. 11 of the Act, and submitted that the scheme of exemption under that provision is not to exempt the entire income from the property held under religious or charitable trust, but only that portion of the income which is actually applied for the charitable purposes avowed in the trust, or accumulated, for application to such purposes, subject to certain conditions. His thesis was that the scope of the exemption under s. 11 gives a clue to the manner in which the charitable or religious purposes have got to be avowed for any trust claiming exemption under the Act. Turning to the provisions of the document executed by Ganga Bai, the statutory words 'religious and cultural purposes' cannot be regarded as fulfilling the requirements of s. 11.

9. Adverting to the operative clauses in the trust deed wherein the trust objects are seemingly enumerated, Mr. Jayaraman submitted that religious, charitable or cultural and social purposes referred to in the trust deed, are not avowed as the very objects of the trust itself. what the maker of the trust really intended to convey was that the building to be constructed out of the funds provided by her and supplemented by other funds, must be held for the benefit of the public for being used by them for religious, charitable, cultural or social purposes. The argument of the Department's learned counsel was that on the terms of the trust deed what were set out were not the objects of the trust, but only the objects of those who wish to put the trust property to use.

10. Mr. Ramamani, for the assessee, on the other hand, submitted that, as a matter of construction. it would be an unnecessary refinement to distinguish between the objects of the trust, on the one hand, and the objects of those to whom the trust property has got to be made available for use, on the other. Learned counsel urged that having regard to the origin of the trust and the idea with which the founder had endowed the trust fund and properties, the statement of the objects of the trust must be found and elicited from the very words expressed therein for the user to which the properties of the trust are to be put by members of the public. Learned counsel pointed out that a reading of the document, as a whole, severally excluded any personal or private object of either the founder or any of the members of her family. He also pointed out that the trust itself was named as a charity and was intended to meet or satisfy the long-felt need of the residents of Purasawalkam who badly required a place for purposes of religious, charitable, cultural and social activities. Mr. Ramamani urged that an indication as to the nature and objects of the trust was rendered clearly when the founder expressly set out, amongst other objects, the holding and conducting of religious discourses the running of schools for the development of Sanskrit learning and the like. Learned counsel further submitted that an indication of objects of a charitable nature along the same lines must be found in the provision in the deed that the building must be offered free to the public for conducting their functions of a religious, educational, social and cultural character or only on such rent as the trustee might think proper in the interests of the trust. Summing up his submissions on the interpretation of the trust deed, learned counsel said that the approach of the court in a matter of this kind must be guided by what be described as equitable imagination, apparently indicating by that expression that the endeavor must be not to find flaws in the deed, but try to render the provisions of the deed workable in the way in which it might have been reasonably intended although the actual drafting of the deed might leave many things unsaid and many things to be desired.

11. As we have earlier indicated the construction of this deed is a matter for argument from beginning to end. On the submissions made on either side, the objects of the trust can be regarded in either of two ways, One way of construction in that suggested by learned counsel for the Revenue, namely, that the so-called objects in the deed do not pertain to the trust at all, but they only condition the objects which the user of the trust property are permitted to avow. The other line of interpretation, which has been advanced by the learned counsel for the assessee, is that the objects which advanced by the learned counsel for the assessee, is that the objects which they have been set out in the trust deed, must be regarded as the very objects of the trust itself.

12. At one stage of the arguments dealing with the objects purely as a matter of construction, there was a doubt, at least in the minds of one of us, whether the description of the objects in the sweeping words employed in the trust deed is not void for uncertainty. A reference to the evolution of the law on the subject of charities in India shows that where a charity is established for dharma or dharma such an object was, for long, not held as charitable. The reason was that the expression was thought to convey no fixed or definite meaning universally understandable as such. The position was that 'dharma' as an object must be dismissed as void for uncertainty. The Privy Council had expressed this view as early as in 1899 in Runchordas Vandravandas v. Parvatibai [1899] LR 26 IA 71 : ILR 23 Bom 725. Although the correctness of the decision of the Judicial Committee had been doubted by some of the learned judges in this country, by and large the expression of the opinion that dharma or dharma would be void for uncertainty as a charitable object, has uniformly been followed in subsequent decisions of this court. The Supreme Court had occasion to go into this subject in CIT v. Bijli Cotton Mills (P.) Ltd. : [1979]116ITR60(SC) . In that case the object of the charity in question was stated dharmada. The Supreme Court held that while dharma was a term which was vague, the expression dharmada or its variation, dharmadaya or dharmakarya cannot be so described, but will have to be regarded as out and charitable. The Supreme Court, however, hastened to hold that if the object was described, not as dharmam or dharma but had adopted the English expression 'charity' or 'charitable', then that object must be regarded as possessing sufficient certainty to be accepted and acted upon by courts and others, as a charitable object.

13. In the present case the trust deed is in English, and the objects were also set out in the English language, avoiding the vernacular. On the basis of the decision of the Supreme Court above cited the expression 'charitable' wherever it occurs in this deed cannot, therefore, be regarded as a word of uncertain meaning.

14. The construction of the deed which this court and the I.T. authorities are asked to undertake is not for the mere sake of construction, but for the purpose of finding out whether the income of the trust in question is or is not exempt from tax. Hence the answer to the question whether the expression 'charitable purposes' occurring in the trust deed is or is not void for uncertainty does not conclude the discussion in the case. We have got to find out whether the objects, assuming them to be objects of the trust, can be regarded as rendering the income of the trust exigible to tax exemption.

15. As we earlier pointed out, s. 11 is the operative provision for tax exemption. The section refers to 'income derived from property held under trust wholly for charitable or religious purposes'. The expression 'religious purposes' is not, in terms, defined under the interpretation clauses of the I.T. Act. But an indication as to what it means is to be found in s. 13. Section 13(1)(a) lays down that any part of the income from the property held under a trust for private religious purposes, which does not ensure for the benefit of the public, cannot claim tax exemption. Likewise, even in the case of a trust avowed for 'charitable purposes' any income of the trust where it is established for the benefit of any particular religious community or caste, will not be eligible for exemption. These provision in s. 13 indicate that a 'religious purpose' within the meaning of s. 11 of the Act must be a purpose which is not restricted to a particular religious community or caste or for any private religious purpose which does not ensure for the benefit of the public. The expression 'charitable purpose', however is the subject of definition in s. 2(15) of the Act. There it has been defined to include relief of the poor, education, medical relief, and the advancement of any other object of general public utility not involving the carrying of any activity for profit. The same expression was defined by s. 4(3) of the Indian I.T. Act. 1922. In that definition the rider expressed by the phrase 'not involving the carrying on of any activity for profit', was not present as part of the definition.

16. By and large the definition of charitable purpose in our taxation statutes has followed the basic classification accepted by the English law right from the Elizabethan times, if not earlier. It has always been understood that charitable purpose has at least four main sub-heads, namely (i) relief of the poor (ii) education, (iii) medical relief, and (iv) a residuary head which is variously described. In the English law the residuary head of charity is described as 'advancement of any other object for the benefit of the general public'. In the tax laws of our country the residuary head is described as 'advancement of any other object of general public utility', as distinct from 'public benefit'. The rider that the object of general public utility should not by itself involve the carrying on of any activity for profit is a qualifications which has been added when our income-tax statute was re-codified under the I.T. Act of 1961.

17. This definition of 'charitable purpose' under the I.T. Act, 1961, had often been the subject of judicial consideration. In the latest of a line of decisions of the Supreme Court in Addl. CIT v. Surat Art Silk Cloth Manufacturers Association : [1980]121ITR1(SC) , the Supreme Court had had occasion to point out that the rider introduced by Parliament that the object should not involve the carrying on any activity for profit, does not qualify the first three heads of charity, namely, relief of the poor, education and medical relief meaning thereby that even though relief of the poor, education and medical relief may be tainted with a profit motive or might be carried out with an eye on profits, still they would not thereby cease to be charitable purposes within the meaning of the statutory definition, The Supreme Court pointed out that where the head of charity falls within the residuary head of 'any other object of general public utility', then it is essential under the definition, that such an object should not involve the carrying on of any activity for profit.

18. The effect of this understanding of the statutory definition of 'charitable purposes' under the Act is that there must always be an enquiry whether any given object of general public utility does or does not involve the carrying on of any activity for profit. Because, upon that enquiry will depend the ultimate determination whether the purpose is or is not charitable. Basing himself upon this aspect of the definition of the expression 'charitable purpose', learned counsel for the Revenue submitted that the mere repetition of the statutory phrase and the mere description of the object of a given trust as a charitable object cannot meet with the requirements of the statutory definition. He pointed out that the trust deed in this case did not even indicate what major heads of charitable purposes are avowed by the founder in the deed in question. Merely stating that the trust is established for a charitable purpose might not by itself indicate whether the intention is either relief of the poor or education or medical relief or any other object of general public utility. Learned counsel proceeded to submit that particularising the charitable objects at least under major heads is essential as a minimal requirement of the statutory definition. The reasons urged by the learned counsel for the Revenue was that if there is no particularisation of the charitable object at least into one or the other of the main heads set out in the statutory definition, it could be difficult to understand whether any of the purposes to which the income is applied is or is not charitable. In this sense, learned counsel submitted that not only a court of construction, but even the trustee would be at a loss to know beforehand, that is to say, before they apply the income of the trust, to find out what are the really charitable purposes for which the trust exists. Learned counsel said that it was necessary to specify whether the expression 'charitable purpose' was employed in the trust instrument, to include the residuary head of general public utility, for, as mentioned earlier, according to the decision of the Supreme Court, such an object should not have any activity for profit. Therefore, merely stating that the purpose of the trust is a charitable purpose cannot per se give any indication that it does not thereby exclude an object involving the carrying on of any activity for profit. An enquiry will have to be made in every case to ascertain this point about the trust, not on a study or interpretation of the trust deed but only by going into the actual application of the income after it has been earned and applied. What is required under the statutory definition is that nature of a particular trust has got to be determined by reference to its objects and not by reference to the actual application of the income if and when an income is earned and if and when the income is applied. By not defining the purpose, he said, this mode of examining the nature of the trust is denied.

19. It seems to us that Mr. Jayaraman's criticism of the objects clause in this trust deed is well founded. We must remember that this trust deed was drafted and executed in the year 1958. When the founder used the expression 'charitable purposes', we might assume that either she used this expression in a general sense, or she used it in the sense in which the taxation law understood that expression. We have already referred to the definition of the expression 'charitable purpose' in the Indian I.T. Act, 1922, in which charitable purpose was defined to include 'any other object of general public utility', and it was not concerned whether the object of general public utility did or did not involve any activity for profit. It is reasonable to hold, as a matter of construction, that when the founder used the expression 'charitable purpose' in the deed she meant to include not only the relief of the poor, education, medical relief, but also advancement of any other object of general public utility in which no element of profit was at all excluded. We were informed at the hearing that the founder herself had occasion to execute supplemental deeds, but nothing was stated in the supplemental deeds to clarify that charitable purpose as avowed in the original trust deed did not exclude any activity for private profit. We must, therefore, proceed on the footing that the expression charitable purposes as employed in the trust deed had at least the generally accepted meaning which was attributed to it in law which was prevalent at that time. Moreover, if we grant that by the use of the expression 'charitable purpose' the founder intended to include within its fold not only the three named heads of charity, namely, relief of the poor, education and medical relief, but also the residuary object of general public utility, then, for the purpose of ascertaining whether the expression is out and out charitable, the court will have to make an enquiry outside of the trust deed, going beyond the construction of the terms of the trust of the trust deed. The court will have to go into the facts and find out from any given factual situation relating to the activities of the trust and to its earning and application of income in any given year to see, for itself, if the pursuit of the object of general public utility does or does not involve the carrying on of any activity for profit which would be destructive of the very charitable purpose. It is but a step in the further reasoning on these lines to refer to the provision in the trust deed which gives a complete discretion to the trustee to utilise the income for any one or some or all of the purposes of the trust. Indeed, a careful reading of the trust deed will show that there is no clear provision as to the application of the income. The inference is that application is to be at the entire discretion of the trustee or trustees for the time being. In such a situation, when the trustee has the discretion to use the trust income for any of the charitable objects, and such charitable objects must perforce be construed to include all the four heads of charity mentioned in the statutory definition, that would necessarily involve an enquiry into finding out whether any of the objects, namely, relief of the poor, education, medical relief or the advancement of any other object of general public utility involves any activity for profit.

20. Mr. Ramamani, as already pointed out, referred to the clause wherein the founder has taken up for special mention the conducting of religious discourses and running of schools for the development of Sanskrit learning as particularised object of the trust. It is true these two objects might fall under one of the heads of charity, namely, education. But there is no particularisation of the objects under the other two enumerated heads, namely, medical relief or poor relief. Much less can the deed be regarded as containing an embargo on any object involving any activity for private profit.

21. We also accept the initial submission made by the learned counsel for the Revenue that since the crux of the statutory exemption is not the income earned being derived from the property held under trust, for, in view of a charitable object, but the actual application, or the accumulation or setting apart of the income for application, for a charitable purpose, the objects in any given trust deed will have to be construed not in an abstract sense but with reference to the capability or amenability of that charitable object to be put into operation for the purpose of enabling the earning of the income to meet the object. In this view the necessity for and the importance of particularising the objects at least into their major heads cannot be gainsaid. It is in this respect that this trust deed finally fails. We are satisfied that on a proper construction of this trust deed the objects avowed by the founder do not meet the requirements of the statutory definition of the expression 'charitable purpose' and they do not certainly fulfill the conditions required for exemption under s. 11 of the Act.

22. The same result flows if we accept the other construction of the objects advanced by the learned counsel for the Revenue. It may be recalled that, according to him, the objects which were expressed in the trust deed, were not so much the objects of the trust as the purposes defined by the founder, as the purposes which alone would be valid in the hands of those who wish to put the trust property to use. In other words, the objects expressed in the trust deed were not the trust objects but the objects of those who would be allowed to put the trust property to use. In this sense, even if all the objects set out in the trust deed can be regarded as out and out charitable in themselves that cannot help the trust itself to obtain exemption, for the simple reason that they are not the trust's objects. What the Act requires is that the property must be held by the holder of the property for a charitable purpose and not those who are allowed the use of the property or those who manage the trust. The assessee's learned counsel, Mr. Ramamani, submitted that the language of the trust deed describing the objects intermixes both the object of the trust and also the limited uses which the public are permitted to put the property. He said that this is only a manner of expressing the objects of the trust by reference to the objects of those who are to use the trust property. According to learned counsel, the objects avowed in the deed cannot be literally interpreted as denoting only the objects of the users of property, but it also must be liberally construed as the objects of the trust itself.

23. We hold, on a careful consideration of the language of the trust deed, that the intention of the founder was that while the public should have the use of the building, they should only use the building for religious charitable, cultural or social purposes. Nowhere in the deed is it stated that the trust itself has come into being for the purpose of carrying out any social, cultural or religious purposes of its own. Even the reference in the body of the trust to the holding and conducting of religious discourses and for the running of schools for the development of Sanskrit learning are all references to the purposes to which the users of the trust property are expected to put the property. This is because these purposes are referred to in the context of the property being given to members of the public free or at such rents as the trustee may think reasonable. The point of view throughout the deed seems to be the point of view of the users of the trust and not the point of view of the founder of the trust.

24. Even apart from all these considerations, the introduction in the objects clauses of cultural and social purposes makes for a further difficulty. Although the expression 'charitable' standing by itself might be regarded as sufficiently certain and capable of investing the expression with a set meaning, we cannot understand what the idea being the expression 'cultural and social purposes' is. The expression 'cultural' is not necessarily something which encompasses the entire public Even if it does, it is a matter of debate whether any particular cultural milieu is for the general public utility or whether it would only subserve a particular class or segment of the population. What passes for 'culture', according to some, may look like snobbery, according to other. People might differ as to what a social purpose might be, might change from time to time and from place to place. They might not be uniform even with reference to the same classes of people at any given moment of time. The expression 'cultural and social' purposes, therefore, frustrate the trust objects, even those to which some meaning or sense can be attributed. Cultural and social purposes having been put in as trust object in the deed, cannot be ignored as a surplusage. These objects are found set out not only in the preamble, but also in the operative portions of the document in more than one place. Indeed, in one part of the trust deed, the founder, as if to make the objects thoroughly exhaustive, not only included social and cultural purposes, but also 'other allied purposes'. All these phrases add to the confusion of the purposes, the result of which is really destructive of the charitable purposes for which the learned counsel for the trustees has been arguing for.

25. As for the 'religious purposes' avowed by the trust deed, learned counsel for the Revenue referred to a subsequent deed executed by the founder herself. This supplemental deed has not been made a part of the case. It is, however, found from the records that in that supplemental deed the founder hastened to explain that the trust properties should not be given for the use of non-Hindus and for Harijans amongst Hindus. The AAC had occasion to deal with this supplemental deed, but he expressed the view that it was not valid. We hold that when once the objects had been defined such as they were in the original deed executed by Ganga Bai, and the dedication of the property was complete with the enumeration of the objects, the founder had thereafter no legal authority to add to or take away anything from the trust property or the objects with which the endowment was made. We do not, therefore, permit ourselves to look into the supplemental deed, even as an aid to the construction of the original trust deed. On the terms of the original trust deed, we are satisfied that the reference to religious purposes is not bad for uncertainty nor can its scope be restricted when there is no condition in that deed derogating from the generality of the religious purpose. However, notwithstanding this finding of ours on the validity of the religious object, since the founder, under the terms of the deed, had endowed the property with a complete discretion to the trustees to put the trust property either to religious or to charitable purposes, the fact that religious purposes are capable of being correctly and clearly understood will not set right the defect in the definition of the trust object, created by the inclusion of such vague phrases as 'cultural', 'social' and 'allied' purposes.

26. Mr. Ramamani urged that this manner of construing the charitable purposes as avowed in the trust deed cannot be regarded as the correct approach. He said that in the matter of exemption of income from the charities under the I.T. Acts there are really two steps involved. The first stage, according to him, is of ascertain the objects of the trust in a general way. The second stage, according to learned counsel, comes later, when the assessing authority has to proceed to quantify the income earned in given year to find out whether in that year any income has been applied to the avowed charitable purposes, and if so to what extent, or whether any part of the income is set apart or accumulated for application for such purposes, in the future. According to Mr. Ramamani, the second stage of the proceedings for exemption will not really arise at the stage of ascertaining what precisely are the objects of the trust. He submitted that the need for particularising the objects and especially the objects which fall under the residuary head will appropriately arise, not at the stage when the court wishes to understand what the objects are, but only at the sub-sequent stage when the ITO has to proceed to apply the provisions of s. 11 and to find out whether the income has to be exempted and if so, to what extent.

27. We cannot accept this submission of the assessee's learned counsel. The provisions contained in s. 11 are the provisions which grant the exemption. That provision says that the income derived from property held only for religious or charitable purposes is entitled to exemption from income-tax under certain conditions, one of which is that the income should be actually applied for those purposes. It is true that the charitable purposes are defined in a separate interpretation clause in s. 2(15) of the Act. But that does not mean that the process of exemption itself can be cut up and viewed as a two-stage operation, the first stage being meant to ascertain what the objects are and the second stage being devoted for finding out the quantum of income entitled to exemption. In our view, the proper way to understand the scope of the exemption is to find out what precisely are the objects, the income devoted to which are entitled to exemption. In this task it is not merely convenient, but absolutely essential, to scrutinise the objects of the trust at least from the standpoint of the well-known heads of charity, such as relief of the poor, education, medical relief, and the like. It is for this reason that we have accepted the submission of the Department's learned counsel that as a matter of construction of s. 11, we must require the trust deed to avow the objects with particularity in order to entitle the trust to relief as a trust established for religious or charitable purposes only. This has become necessary more than ever before, particularly after the statute has eschewed any kind of activity of private profit as a charitable object.

28. Before the Tribunal as well as the I.T. authorities the enquiry into the objects of the trust had taken both the trustees and the departmental representatives into a discussion as to whether the letting out of the trust property as a kalyana mandapam for performance of marriages can be regarded as a charitable object. The Department's view was that celebration of marriages cannot be regarded as a public charitable object. The Tribunal was inclined to hold otherwise. We have to observe that his approach to the question of ascertaining the object of the trust is a wrong approach. In the first place, there is nothing in the declared objects of the trust, such as they are, which states that one of the objects of the trust is to make available the trust property for the performance of marriages. The entire discussion had proceeded only from the fact that 'Dharmaprakash' had actually been made available by the trustees for being used as a marriage mandapam and the bulk of the income of the trust was realised by letting out the building for such purposes. This, however, only shows in what way the trust property was actually put to use and how the trust property was exploited for the earning of income. These facts cannot indicate to any extent that the trust object itself was to make the property available for performance of marriages. It may be that in one sense the provision of marriage mansions may be regarded as an object of general public utility. Equally, it may be urged that marriage is purely a private occasion, or at best an inter-family affair and has no element of public utility. Bernard Shaw said, it is a public exhibition of a purely private longing. Whichever view might be taken of marriage as an institution, or as a rite, so far as the discussion in the present case is concerned, it has no relevance, for, there is nothing in the trust deed itself which has adopted the provision of marriage mandapams as one of the avowed objects of the trust.

29. Likewise, the emphasis placed in the discussion of this case before the Tribunal and the I.T. authorities on the running of the printing press by the trust is also a misplaced discussion. The point of view urged on behalf of the Department before the Tribunal was that the running of a printing press was an activity which involved the earning of private profit. This may be true. But, if the running of a printing press as a business proposition is not one of the avowed objects of the trust, then the fact that such a business was actually run by the trustees for the purpose of earning income for the trust cannot have any relevance to the discussion, that is to say, to the discussion concerning objects. What parliament to convey when it excluded a purpose involving any activity for profit from the residuary head of charity was not that a charity should not carry on any business at all. Parliament's intention, as the Supreme Court pointed out in Addl. CIT v. Surat Art Silk Cloth Manufacturers Association : [1980]121ITR1(SC) was that an activity for carrying on private profit must not itself figure as one of the primary objects of the trust and if it does, the trust will not be eligible for exemption under the I.T. Act. In the present case, the objects of the trust, as set out in the document executed by Ganga Bai, do not anywhere state that a printing press or any other business should be run as one of the objects of the trust. The fact that a printing press was carried on only shows that it was one of the means adopted by the trustees to augment the income of the trust. The I.T. authorities had obviously confused the means with the ends. What the law requires is that a trust should not have any object of general public utility which involves, as an object, the carrying on of any activity for profit. The law does not frown against any activity for profit being carried on by a charitable trust as a means of furthering its objects, the objects themselves being indubitably charitable in nature.

30. We may observe in conclusion that the range of arguments which the stated case has provoked at the Bar before us has covered a wider field and pursued new directions which had perhaps not been presented before the Tribunal. There was a stage at the hearing when Mr. Ramamani even suggested that the matter had better be sent back to the Tribunal for a fuller consideration for the reason that arguments which were being urged in this reference had not had the opportunity of being heard by the Tribunal. We, however, do not think that this course is a proper one to pursue, having regard to the nature of the question of law, which is in the following terms :

'Whether it has been rightly held that the income of the trust would be entitled to exemption under s. 11 of the Income-tax Act, 1961 ?'

31. It cannot be disputed that the discussion of the case as it proceeded before the Tribunal was on the question of the applicability of s. 11 on a construction of the trust deed executed by Ganga Bai. The consideration of the question of law at the hearing before us was precisely on the same basis. It may be that the range and kind of arguments addressed on the one side or on the other as respects this question might not have been precisely the same as the Tribunal had been privileged to hear. We have apparently been served with a fuller fare. But that does not mean that this court when considering the arguments so addressed before it enters upon a consideration of a question which had not been before the Tribunal and which had not arisen out of the order of the Tribunal. A new argument open to either the one or the other party to a tax reference on the selfsame question, although the argument has not been put forward before or considered by the Tribunal, cannot itself be regarded as a new question of law. We have heard all the arguments addressed by both sides of the Bar on the question of law before us on all its aspects only in the view that it deserves such a consideration and was not outside the scope of the reference by any means.

32. For the reasons we have already set out we answer the reference in the negative and against the assessee. The Department is entitled to its costs. Counsel's fee Rs. 500 one set.


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