TMI Blog1935 (6) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... in an efficient condition keeping up the liberal policy of the said newspaper and devoting the surplus income of the said press and newspaper, after defraying all current expenses, in improving the said newspaper and placing it on a footing of permanency. This reference is concerned only with the Tribune Trust. There was some litigation between the trustees and the reversioners of Sardar Dayal Singh. In that litigation there was a compromise which added that if the paper should cease publication, the property then exist ing would go to one of the other trusts. Apart from the question whether this compromise is a valid one (as it does not form a part of the will) it is obvious that it amounts to little or nothing. It is only if the paper should cease to function, that the property is to go to one of the other trusts, and the trustees are bound to see that the paper continues to be published until they exhaust all reserves and accumulations. Only then could they allow it to cease to function. It is not likely, therefore, that anything will ever go to one of the other trusts unless it be an old press. The Tribune Newspaper was founded by the testator to set forth the liberal p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication, thereto........... .......In this sub-section 'charitable purpose' includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility . It was asserted before us by the learned counsel appearing for the Tribune Trust that the intention of the testator was to benefit the community by setting before it liberal views and, therefore, the surplus income come within the sub-section set out, as being income derived from property held under trust wholly for charitable purposes, the object being one of general public utility, It was admitted that if this was so, a trust for the supply of canal water or electricity must also be held to be a charitable trust, the objects being of general public utility, but it was premised that such trusts in order to be held charitable, must not pay anything out of the surplus profit to individuals. It may be pointed out here that this would be a difficulty easy to get over. It was said that in the case of the Tribune Trust nothing was so paid and, therefore, the trust was a charitable one. Such a distinction, however, is not set out in the section and this argument loses sight of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e charitable and some which might not . For example, philanthropic objects have not been held to be charitable objects. In (1931) 11 K.B. Dn. 465, an association which had widely philanthropic objects was held not to fall within any of the four principal divisions into which charity was divided by Lord MACNAGHTEN. In Plowden v. Lawrence [1929, 1 Ch. D. 557], it was said There are two questions that must be asked and answered: (1) Is the trust for a purpose beneficial to the community? and (2) If it satisfied that first test, is it charitable? A trust for a philanthropic purpose would satisfy the first question but not the second . Again, it has been held that trust for political purposes are not charitable. In Bonar Law Memorial Trust v. Inland Revenue Commissioners [41 Times Law Reports 220] Mr. Justice FINLAY said it was impossible to hold that a trust for the furtherance of the principles of a particular political party was a good charitable trust. In Inland Revenue Commissioners v. Temperance Council of Christian Churches of England and Wales [42 Times Law Reports 618], the case of a society whose main object was 'united action to secure legis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petuation of a newspaper is an object of general public utility, and that is all that the testator intended. The Commissioner of Inland Revenue v. Falkirk Temperance Cafe Trust (11 Tax Cases 353) was referred to as showing that a charitable trust may trade; which is undoubtedly so. In that case the profits of trading went to give cheaper meals to the poor and indigent and the trading activities were carried on at a loss which was made good out of the income of the investments of the trust. That obviously is charity. There may, of course, be charities, the benefits of which are not wholly gratuitous, but not one reported case has been referred to, in which there is not some benefit in cash, in free or better and cheaper education, or medical relief, or in some other way whereby mankind derives some benefit without payment or for less payments. In the present case it was not contended before us that such a benefit accrued to anybody. All that was contended was that the dissemination of liberal ideas in politics by means of a newspaper sold at the ordinary market price was an object of general public utility. In the case of the present trust there is in fact no gift to the public, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h attention to them. In such a question the subtlety of legal argument may often obscure the point for decision. I would therefore consider this point as a question of fact and in accordance, I hope, with common sense. In the first place is this property as described above held wholly for religious or charitable purposes? The emphasis in the sections is obviously laid upon the word wholly. It may be that the Tribune advances the cause of Hindu religion in articles published by it, but no one can say the paper is published wholly for religious purposes. Is it published for a charitable purpose? There is no charity in charging the public or the advertiser the ordinary commercial rate. It is unnecessary to consider the various definitions of charity as laid down in the English authorities. The ordinary meaning of charity is clear and I would define it as giving or providing something useful or necessary to individuals or the public at large without payment, or for a payment below the real value of the goods or services given. An example of the latter would be the famous ninepence for fourpence of pre-war British politics. It is obvious that the Tribune Newspaper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lastly, the trustees of the Tribune are men of ability. It had not occurred to them for over 35 years to suggest that the Tribune was either a charity or public utility. Like good citizens they have hitherto paid taxes without protest. As a matter of fact therefore, I hold that the Tribune Newspaper and the Tribune Press cannot be said to be held by the Trustees wholly for religious or charitable purposes which includes the advancement of education or any other object of general public utility. I would answer the question put to us in the negative. The Commissioner of Income Tax to have his costs. TEKCHAND, J.- On a difference of opinion between JAI LAL and SKEMP, JJ., the following question has been referred to the Full Bench for decision under Clause 26 of the Letters Patent:- Whether the property in this case is held under trust for charitable purposes as that expression is defined in Section 4 (3) of the Indian Income Tax Act . The property in question consists of the Tribune newspaper and the Tribune Press, which admittedly vest in a Committee of trustees, appointed under the will of the founder, the late Sardar Dayal Singh Majithia, Rais and J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or for any other reason its surplus income as well as that of the press could not be applied to the objects mentioned in Clauses 20 and 21 of the will they would be applied for the maintenance of the College, for establishing which another trust had been created by the Sardar as mentioned above. This compromise was accepted by the Court and its terms embodied in the decree passed by it. The Tribune trust has been functioning from the death of the Sardar and both the press and the newspaper appear to have flourished under the management of the trustees. It seems that since 1917-18 there has been surplus income, which has been assessed annually to income tax. The trustees paid the tax without demur till the year 1931-32. In 1931-32, however, they objected to the assessment, urging that the Tribune newspaper and press was property held under trust for the advancement of an object of general public utility and, therefore, its income was exempt from assessment under Section 4(3) (i) of the Indian Income Tax Act. The Assistant Commissioner overruled the objection and confirmed the assessment. The Commissioner also upheld the order, but under Section 66 (2) of the Act he referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es concerned is to be utilized for the maintenance of the Arts College, founded out of the other benefactions of the Sardar. Under no circumstances, are the trustees, or the heirs or representatives of the deceased founder, or any other person, to derive any private or personal gain from the trust properties or the income thereof. The dedication is complete and full. If, therefore, the trust can be said to have been established for one or other of the purposes mentioned in (b) above the first part of condition (c) also must be taken to have been satisfied. The real point in controversy is whether the trust falls within one of the classes mentioned in (b). Its purpose is certainly not religious, nor is it claimed to be so by, or on behalf of, the assessee. The question is whether it is charitable as defined in sub- section (3) of Section 4 of the Act. Now, if the word charitable were used in the Indian Income Tax Act in its ordinary popular sense, I have no doubt that the question must be answered unhesitatingly in the negative. In common parlance. charitable always involves the idea of help to the poor and the needy; of relief of destitution and distress; it is associat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning of word 'charitable' are so far apart that it is necessary almost to dismiss the popular meaning from the mind as misleading, before setting out to determine whether a gift is charitable within the legal meaning . It has been argued that the definition of charitable purposes as given in Section 4 of the Indian Income Tax Act appears to have been taken from the well-recognised classification of charities in English Law, and, therefore, the section must be interpreted subject to the limitations and reservations laid down in the various English rulings bearing on the subject. This argument is not wholly correct and cannot be accepted in its entirety. It is no doubt true the wording of the definition in the Indian Act is in several respects similar to that used in some of the leading English cases on the subject, but the two are not identical in all respects. There is a material difference in the description of the fourth head or classification and it seems to me that this makes all the difference in cases like the one before us. In England the locus classicus on the subjects is famous case of Commissioners for Special Purposes of Income Tax v. Pemsel [1891 A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be public, that is, that those to be benefited shall form a class worthy, in numbers of importance, of consideration as a public object of generosity; and that it shall be philanthropic or benevolent, that is, directed by a desire to do good: Webb v. Oldfield [(1898) 1 Ir. Rep. 431 (446)] . I do not think much useful purpose will be served by referring to the other English cases dealing with the subject, or in attempting to reconcile the dicta of eminent Judges contained in some of them. It will be sufficient for our present purposes to say that the Indian Legislature appears to me to have steered clear of these difficulties by using phraseology which is much wider and more comprehensive than that of Lord Macnaghten's fourth head of classification-It was in 1896 that Lord Lindley and the other Law Lords held in Macduff's Case that the words general public utility were very wide in their scope, that every object of public utility was not necessarily a charitable purpose, and yet twenty-two years later, in 1918, when the Explanation to Section 4 (3) of the Indian Income Tax Act was placed on the Statute-book, the Indian legislature, while practically adopting Lord Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... understood in law. It is worthy of note that under the more restricted provisions of the English Law, a gift for the purpose of maintaining a periodical called the Voice of Humanity , was held to be charitable (Marsh v. Means, 108 R.R. 939). In para. XXI of the will the testator has laid down that the trustees shall keep the liberal policy of the said newspaper and there was much discussion before us as to whether this meant the policy of the Indian National Congress of the time when the testator created the trust, which corresponds, more or less, to the policy of what is now known as the Moderate School of politicians in India, and whether the Tribune has actually pursued that policy since the death of Sardar Dayal Singh. In my opinion, these matters are not relevant to the decision of the point referred to us, and I do not think it necessary to express any opinion on them, even if it were possible to do so, in the absence from the record of any materials bearing thereon. It is not for us to decide whether the particular ideas which the founder wanted to be propagated through this newspaper and the policy which he desired to be kept up by it, are in fact beneficial to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure that the profits earned by it should escape assessment. I think, none of these circumstances affects the matter. The fact that the newspaper is not supplied free to the poor and the needy, or that it is not sold to the public at cost price, would be material only if the word charitable were to be taken to have been used in the Act in the popular meaning; but it has been shown above that this is not the case. It is probable though there is no proof of it on the record, that a part of the income, now sought to be assessed, was derived from advertisements in competition with other newspapers and presses, whose profits are liable to be assessed. But this again seems to me to be immaterial, for the Tribune stands on an entirely different footing. Admittedly the property of the Tribune is held in trust in which the possibility of private gain is completely eliminated while most of the rival presses and papers are run by private persons or limited companies, in which the whole or a part of the profit eventually passes into private pockets. The Indian Legislature has exempted from assessment trusts of a public character, founded for the advancement of objects of general public utilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... '. In the English reports numerous cases are to be found which are not reconcilable with these decisions, but I do not think it necessary to pursue the discussion, as in India we have clear statutory provisions which do not expressly or by necessary implication exclude trusts for 'political' or 'patriotic' purposes from objects of 'general public utility' as used in Section 4 (3). Another set of English cases cited, related to the question whether certain trusts, alleged to have been created for public or charitable purposes were void for uncertainty or other causes. This matter is not raised in this reference, and therefore these cases are irrelevant. In the order of reference the learned Commissioner relied on Umar Bakhsh v. Commissioner of Income Tax, [I.L.R. 12 Lah. 725] but that case is clearly distinguishable, as there the income of the waqf property was spent on the maintenance of the founder and his children. Similarly, in Hotz Trust of Simla v. Commissioner of Income Tax [11 Lah. 725] referred to by Mr. Jagan Nath, the trust concerned was for the continuance and maintenance of a certain hotel business, the profits of which were to be acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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