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TMI Blog1981 (10) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... ls in Nagpur or any other place in Bharat and/or abroad and to sell, manage, transfer, exchange, mortgage, demise, dispose of or otherwise deal with any property whatsoever belonging to the Society; (ii) to put up suitable memorials, buildings and other constructions, to maintain, alter and equip them suitably and at its discretion to permit their use on license or lease to institutions or organisations which in the opinion of the Society are devoted to same or similar objects; (iii) to receive donations in cash or kind from individuals or associations in the country or outside for the purpose of carrying out the objects of the Society; (iv) to do all such things as the society may think proper and necessary for the attainment of the objects with a view to perpetuate the memory of the late Dr. Keshave Baliram Hedgewar, who dedicated his life for the rejuvination of the Hindu Society. 2. It was registered as a society under the Societies Registration Act, 1860. It is also registered by the Charity Commissioner as a public-trust under the Bombay Public Trust Act, 1950, and by the Commissioner under section 12A of the Income-tax Act, 1961 ("the Act"). When notice under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 76-77 that the assessee was a charitable trust whereas for the years under consideration which were before and after these two years, the department was fighting tooth and nail for treating the assessee as a taxable entity. Referring to the decision of the Supreme Court in the case of Sole Trustee, Loka Shikshana Trust relied upon by the Commissioner (Appeals) for upholding the assessments, the learned counsel pointed out that in that case, the Supreme Court held that the activities of that trust of printing and publishing newspapers may not be educational in nature but they were of general public utility. The activities of the assessee in the instant case were, therefore, of a general public utility even according to the definition of the term "charitable purpose" under section 2(15). Unless the assessee carried on all activity for profit, the assessee was to be held as a charitable trust. Referring to the registration granted by the Charity Commissioner under the Bombay Public Trust Act, 1950, it was pointed out that this registration was granted after a public hearing and after calling for objections from members of the public. The registration granted by the Charity Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip or for charitable purposes was exempt from municipal taxes. The Madhya Pradesh High Court decided the issue in favour of the trust. On a parity of reasoning, the assessee should be held to be exempt from income-tax under section 11. 8. On behalf of the revenue, the learned departmental representative has submitted that the fact that the assessee was exempted as a charitable trust for the income-tax assessments for 1975-76 and 1976-77 was no bar for subjecting the assessee to income-tax for the other years, which were before us. It was further stated that under object clause (d), diffusion of political knowledge was a political purpose. Mere registration by the Charity Commissioner under the Bombay Public Trust Act was not enough for supporting the assessee's claim that it was a charitable trust. 9. We have carefully considered the facts and circumstances of the case and the submissions on either side. The assessee was a society with the objects as laid out in para 1 of this order. Though the declared objects were diverse, the only activity carried on by the society was running a hostel for students and recently, though not in any of the assessment years under consideration, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if there is any clause in the articles offending against the charitable nature of the trust as in the instant case, one would be guided by the following observations of the Supreme Court in the case of Dharmodayam Co. : "It is undisputed that the respondent-company, which was registered on January 21, 1959, under the Cochin Companies Act, has never engaged itself in any industry or in any other activity of public interest. It is notorious that the memoranda and articles of association of companies usually cover a variety of activities, only a few of which are in fact undertaken or intended to be undertaken. That obviates the necessity for applying for amendment of the articles from time to time and helps to rule out a possible challenge on the ground that the company has acted beyond its powers in undertaking a particular form of activity. The only activity in which the respondent is engaged over the years is the conduct of kuries. On this aspect of the matter the High Court rightly observed---CIT v. Dharmodayam Co. [1974] 94 ITR 113, 119 (Ker.) : 'There is no case that Dharmodayam Company ever started any industry; there is also no ground for saying that the object of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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