2001 (10) TMI 297 - AT - Income Tax

Charitable Or Religious Trust, Exemption Of Income From Property Held Under, Procedure For Registration, Registration Of

Issues Involved:
1. Whether the assessee is a public charitable trust eligible for exemption under sections 11 and 12 of the Income-tax Act.
2. The impact of the amendments made to the Trust Deed on the eligibility for exemption.
3. The significance of the registration under section 12A.
4. The relevance of the changed public perception of the teachings of Acharya Rajneesh.
5. The effect of the earlier Tribunal decisions on the current assessment year.

Detailed Analysis:

1. Public Charitable Trust and Eligibility for Exemption:
The primary issue is whether the assessee qualifies as a public charitable trust eligible for exemption under sections 11 and 12 of the Income-tax Act. The Tribunal examined the aims and objects of the Trust as outlined in the Trust Deed and subsequent amendments. The original Trust Deed included various activities aimed at spreading the teachings of Acharya Rajneesh and other philosophers, which the Tribunal previously found to be partly non-charitable due to the nature of the teachings and the profit-oriented activities.

2. Impact of Amendments to the Trust Deed:
Significant amendments were made to the Trust Deed in 1989, including:
- Deletion of the clause appointing Acharya Rajneesh as a life-time advisor.
- Removal of clauses that gave Acharya Rajneesh de facto control over the Trust.
- Deletion of the clause authorizing the Trust to print and sell books, which was seen as a profit-oriented activity.
- The amended clause 5(a) now reads: "To spread and impart preachings of philosophers, thinkers, and scholars both past and contemporary (including Acharya Rajneesh) pertaining to all religions, and/or main principles thereof for the spiritual, mental and/or moral and physical betterment of human beings with the ultimate object of self-realisation."

The Tribunal found these amendments significant as they addressed the objections raised in earlier decisions, particularly the clauses giving control to Acharya Rajneesh and the profit-oriented activities.

3. Significance of Registration under Section 12A:
The Trust was granted registration under section 12A by the CIT, Pune, effective from 18-12-1997. The Tribunal noted that this registration, granted after the amendments to the Trust Deed, indicated that the CIT was satisfied with the charitable nature of the Trust's objects and the genuineness of its activities. This registration was seen as a strong ground for treating the Trust as charitable in nature.

4. Changed Public Perception of Teachings of Acharya Rajneesh:
The Tribunal acknowledged the changed public perception of Acharya Rajneesh's teachings. His works have been widely studied, translated into various languages, and accepted by reputed institutions such as the Parliament Library and universities that have established chairs for the study of his philosophy. This change in perception was considered significant in determining the charitable nature of the Trust's activities.

5. Effect of Earlier Tribunal Decisions:
The earlier decisions of the Tribunal, including the TMB's order, were based on the original Trust Deed and the then-prevailing perception of Acharya Rajneesh's teachings. The Tribunal recognized that the amendments to the Trust Deed and the changed public perception of the teachings warranted a fresh evaluation of the Trust's eligibility for exemption. The Tribunal concluded that the earlier decisions could not be automatically applied to the current assessment year due to these significant changes.

Conclusion:
The Tribunal, considering the amendments to the Trust Deed, the grant of registration under section 12A, and the changed public perception of Acharya Rajneesh's teachings, concluded that the assessee Trust is eligible for exemption under section 11 of the Income-tax Act. The appeal by the Revenue was dismissed, and the issue was decided in favor of the assessee.

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