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TMI Blog2020 (11) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... objectives of the trust or institution, then it is incidental to the attainment of the objectives of the Trust. We have to follow the above dictum of the Hon'ble Supreme Court which is binding on us under Article 141 of the Constitution of India. The observation of the Delhi High Court: It would in our opinion be disastrous to extend the sweep of the observations made by the Supreme Court (quoted above) in the case of Thanthi Trust (supra), on the facts of that case, to all cases where the trust carries on business which is not held under trust and whose income is utilised to feed the charitable objects of the trust'; according to us, does not subserve judicial discipline. We are of the opinion that the first Proviso brought in the same effect as spoken of in Dharmaposhanam, on exemption which respect to carrying on a public utility. But 'medical relief' is not qualified with those words; as has been found in Dharmadeepti as affirmed in Surat Art Silk Manufacturers' Association [ 1979 (11) TMI 1 - SUPREME COURT ] On the above reasoning we answer the question of law in the negative and in favour of the assessee and against the Revenue. - THE HONOURABLE MR. JUST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trust [(2013) 357 ITR 560 (Delhi)] distinguished the decision in Thanthi Trust; the facts and law declared therein being applicable here. 4. The first appellate authority found that the activity carried on by the assessee of conducting Chitty business, in its outcome, had mutual benefit to the subscribers and assessee. Substantial profit earned was passed on to the subscribers and there was only a minor profit shown by the assessee. Even if the said profit is applied fully to the main object of the assessee, it would not be an incidental activity for the attainment of the main objectives. The Tribunal agreed with the finding of the first appellate authority and specifically referred to the first proviso to Section 2(15) to find that the Chitty business cannot be considered as incidental to the primary object of the assessee-Trust and hence, they are disentitled from claiming exemption under Section 11. The reliance placed on the judgment of the Hon'ble Supreme Court in Dharmodayam Company was negated. The Tribunal was of the opinion that the said decision applies only to its facts and the same has been distinguished by the Hon'ble Supreme Court itself in Dharmaposhanam Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f and other matters of public good'. The application of profits were also amended as 'The profit left after meeting the expenses of the Company will be utilised for purposes of common good like charity, education and medical relief as are resolved by the general meeting'. It was held that the employment of the words 'industries, 'public good' and 'common good' in the Articles, evidently makes it referable to the residual clause in Section 2(15) ie: 'the advancement of any other object of public utility', which is qualified by the restrictive words 'not involving the carrying on of any activity for profit'. It was held that 'Whether a trust is for charitable purpose falls to be determined by reference to all the objects for which the trust has been brought into existence' and there the exemption was declined. Here, in the instant case the main object is only provision of medical relief. 8. In Surat Art Silk Manufacturers' Association a Constitution Bench, again considered the effect of the words 'not involving the carrying on of any activity for profit'. It was categorically held in Para 8 that: 'This question a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te so as to exclude from the total income of the previous year of the person in receipt thereof xxx xxx xxx (bb) in the case of a charitable trust or institution for the relief of the poor, education or medical relief, which carries on any business, any income derived from such business, unless the business is carried on in the course of the actual carrying out of a primary purpose of the trust or institution; It was held so in paragraph 12: 12. A public charitable trust may hold a business as part of its corpus. It may carry on a business which it does not hold as a part of its corpus. But it seems to us that the distinction has no consequence insofar as Section 13(1)(bb) is concerned. Section 13(1)(bb) provides, so far as it is relevant to this case, that the provisions of Section 11 shall not operate so as to include in the total income of the previous year of a public charitable trust for the relief of the poor, education or medical relief which carries on any business, any income derived from such business unless the business is carried on in the course of the actual carrying out of a primary purpose of the trust. Section 13(1)(bb), therefore, will apply to a public charitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to a trust or institution than was the scope of sub-section (4A) as originally enacted. In fact, it seems to us that the substituted sub-section (4A) gives a trust or institution a greater benefit than was given by Section 13(1) ( b b). If the object of Parliament was to give trusts and institutions no more benefit than that given by Section 13(1)(bb), the language of Section 13(1)(bb) would have been employed in the substituted sub-section (4A). As it stands, all that it requires for the business income of a trust or institution to be exempt is that the business should be incidental to the attainment of the objectives of the trust or institution. A business whose income is utilised by the trust or the institution for the purposes of achieving the objectives of the trust or the institution is, surely, a business which is incidental to the attainment of the objectives of the trust. In any event, if there be any ambiguity in the language employed, the provision must be construed in a manner that benefits the assessee. The Trust, therefore, is entitled to the benefit of Section 11 for Assessment Year 1992-93 and thereafter. It is, we should add, not in dispute that the income of it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s extracted herein above (paragraph 25) was distinguished on the following reasoning: 25. In our opinion these observations have to be understood in the light of the facts before the Supreme Court. Thanthi Trust carried on the business of a newspaper and that business itself was held under trust. The charitable object of the trust was the imparting of education which falls under Section 2(15) of the Act. The newspaper business was certainly incidental to the attainment of the object of the trust, namely that of imparting education. The observations were thus made having regard to the fact that the profits of the newspaper business were utilised by the trust for achieving the object, namely education. The type of nexus or connection which existed between the imparting of education and the carrying on of the business of a newspaper does not exist in the present case. There is no such nexus between the Katha business and the objects of the assessee-trust that can constitute the carrying on of the katha business an activity incidental to the attainment of the objects, namely advancing of education, patriotism, Indian culture, running of hospitals and dispensaries, etc. It would in our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in Thanthi Trust held that if the income from the business is utilized for achieving the objectives of the trust or institution, then it is incidental to the attainment of the objectives of the Trust. We have to follow the above dictum of the Hon'ble Supreme Court which is binding on us under Article 141 of the Constitution of India. The observation of the Delhi High Court: It would in our opinion be disastrous to extend the sweep of the observations made by the Supreme Court (quoted above) in the case of Thanthi Trust (supra), on the facts of that case, to all cases where the trust carries on business which is not held under trust and whose income is utilised to feed the charitable objects of the trust'; according to us, does not subserve judicial discipline. 16. We also notice that the definition clause under Section 2(15) for the relevant year stood as below: 2(15) charitable purpose includes relief of the poor, education, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility ..... X X X X Extracts X X X X X X X X Extracts X X X X
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