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TMI Blog1985 (6) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... r periodicals which have earned income and this has been brought to tax by the authorities below rejecting the claim of the assessee for exemption. 4. The primary contention of the assessee is that the object of the trust is to educate people by various means including publishing of newspapers and other periodicals and that this is a 'charitable purpose' within the meaning of section 2(15). Alternatively, it was contended that publishing newspapers is for the advancement of an object of general public utility without the primary object of profit-making so as to fulfil the requirement of section 2(15). The case law relied upon by Shri S.P. Mehta, appearing for the assessee, will be referred to at the appropriate stage. Shri Roy Alphanso, the learned representative for the department stated that publishing of newspapers can in no wise be considered as a means of providing education in view of the statement of the Supreme Court while explaining the meaning of 'education' in Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234. Replying to the alternative submission of Shri Mehta, Shri Alphanso said that assuming that this activity is one which can be said to be of general pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1968-69, 1059 to 1064 of 1974-75 and 3803 of 1974-75], held the very issue against the assessee following the decision of the Supreme Court in the case of Indian Chamber of Commerce v. CIT [1975] 101 ITR 796. 6. We address ourselves to the first question to see whether the object of providing education to the people of India as specified in clause 2(a) of the declaration dated 11-12-1945 is in any way achieved by publication of newspapers. Dependence was placed upon the decision of the Supreme Court in Addl. CIT v. Surat Art Silk Cloth Mfrs. Association [1980] 121 ITR 1 and that of the Court of Appeal in the case of Incorporated Council of Law Reporting for England and Wales v. Attorney-General and Commissioners of Inland Revenue 47 TC 321. The binding precedent on the point of advancing the cause of education by publishing newspapers and journals in Sole Trustee, Loka Shikshana Trust's case and on this aspect the Supreme Court has not struck its dissent or disapproval in the subsequent decision in the case of Surat Art Silk Cloth Mfrs. Association. The decision of the Court of Appeals in Incorporated Council of Law Reporting for England and Wales' case is not of any usefulne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the second condition mentioned in section 2(15). 9. The declaration of 11-12-1945 specifies in clause (2) various items in which the trust would operate itself and many of them, such as conducting schools and colleges, providing medical and sanitary aid, relief to poor, helping societies and institutions having charitable objects, are per se charitable and beneficial to the society at large. But, strangely, the assessee is not engaging itself in any activity which would have doubtlessly advanced the cause of charity; but only in the field of publishing newspapers ever since its inception which has been yielding sizeable income. Two points arise here. One is whether the activity of publishing newspaper is an object of general public utility and if so, whether the same is 'not involving the carrying on of the activity for profit'. The Judicial Committee has in the case of In re. Trustees of the Tribune [1939] 7 ITR 415 (PC) held that the newspaper which the Tribune press was publishing was supplying the public with au organ of an educated public opinion and that such a purpose should prima facie be held to be an object of general public utility. It is not apparent whether the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a charitable purpose or profit-making. So long as the dominant purpose is advancement of a charitable purpose of the trust, the exemption from tax must be available even though during the course of such activity income had been derived. If, on the other hand, the object of the activity is profit-oriented, then it would be an activity for profit to be out of section 2(15). 10. The object of Saurashtra Trust in its activity of publishing newspapers has to be mainly gathered from declaration of the trustees dated 16-6-1942 as supplemented by the second declaration dated 11-12-1945. The first declaration stated that the trust was 'to work for and to conduct the activities for the welfare of the people of India in general and States people of Cutch, Kathiawad and Gujarat in particular.' This was amplified in the second declaration of 1945 and the preamble reads: "And whereas doubts have been raised as to whether the objects contained in the said declaration of trust are wholly charitable and whereas it is necessary to make it clear and specific in order to leave no doubt that the intent and purpose of the said declaration of trust was and is to secure the benefit of purely charitab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on newspapers' economics had furnished a report and as can be seen from para 27 of the order of the Tribunal, dated 9-11-1976, for the earlier assessments, the low pricing of the papers was due to manifold reasons and it has nothing to do with the object of the particular trust. 13. The trust has some house property which is also yielding substantial income by way of rent. As against this massive income, only a very minor part of it is being spent for the objects of the trust as can be seen from the statements filed by the assessee. We should not be understood to say that we are examining the application of the income for the fulfilment of section 11(1)(a) of the Act, but only to point out that the trust would have spent to substantially meet the charitable objects of the trust if the income to be derived by publishing newspapers was also to achieve that object. It appears to us that the trust has expended only in enlarging the fixed assets pertaining to the printing unit of the newspaper publication. No trust will be formed only to increase the capital of the trust itself and no charitable purpose will be served by mere enhancing its fixed assets. To know the object of an activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g income by way of publishing and selling newspapers and the charitable element is significantly absent in the pursuits of the trust. It passes one's understanding as how a trust which is solely engaging itself in the activity of publishing newspapers for value is different from any other business enterprise solely established for earning profit by similar activity. An activity of publishing newspaper for value cannot be said to be an activity of charity merely because it is included in the declaration, for the object of a trust cannot be camouflaged merely because the trustees are authorised to carry out that activity. As Bhagwati, J. observes in Surat Art Silk Cloth Mfrs. Association's case 'the charitable purpose should not be submerged by the profit-making motive ; the latter should not masquerade under the guise of the former. As we understand the preamble and clause 2 of the second declaration of 1945, it appears to us that the predominant object of the trust is to secure benefit purely of charitable object to the people of India and in particular to the people of certain States, namely, Cutch, Kathiawad and Gujarat. This particular activity cannot be linked to the predominan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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