TMI Blog1972 (6) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... s : " 3. The objects and functions of this institution shall be as under : (1) to manage the immovable and movable properties of the Rana community of the city of Ahmedabad; (2) to do such acts as would spread education in the community and to render all possible help in that connection; (3) to render medical assistance to the community; (4) to do acts which would be useful to the community; (5) to do all acts according to capacity which promote unity and brotherhood amongst the members of the community and bring about complete development of all aspects of life of each male and female member of the community ............ 8. (4) The management and administration of the properties, etc., of the entire community shall be done as profitably assessible in the interest of the community and Havan and Bhandaro in the month of Chaitra, procession and Bhandaro in the month of Shravan every alternate year and the Sangh going to Bahucharaji Mata every third year and the Bhandare taking place there-all these shall be prudently managed." The beneficiaries of these purposes were all male and female members of the Rana community of Ahmedabad as defined in the constitution. We had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue challenged the view taken by the Tribunal on both the points on which the Tribunal decided in favour of the assessee. The revenue contended that the purposes set out in sub-clauses (4) and (5) of clause 3 and sub-clause (4) of clause 8 were not charitable purposes within the meaning of the definition of " charitable purpose " contained in section 4(3)(i) of the Indian Income-tax Act, 1922, and section 2(15) of the Income-tax Act, 1961, and that in any event the beneficiaries who were the objects of the bounty did not constitute the public or a section of the public and the necessary element of public benefit, was, therefore, lacking and on these two grounds, the revenue urged that the properties could not be said to be held by the assessee under legal obligation wholly for charitable purposes so as to qualify for exemption under section 4(3)(i) (1922 Act) or section 11(1)(a) (1961 Act). We were of the view that the second ground urged on behalf of the revenue was wellfounded and since the beneficiaries were confined only to the members of the Rana community in Ahmedabad, fulfilling one or the other conditions set out in the definition clause, they could not be said to const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence to section 4(3)(i) and whatever we say in regard to the interpretation and application of section 4(3)(i) will apply equally in relation to section 11(1)(a). Before we proceed to examine the language of section 4(3)(i), we may clear the ground by pointing out that there is a fundamental difference between English and Indian law of charity and it would, therefore, be dangerous to accept blindly English decisions on the subject as authoritative in determining whether a particular purpose is charitable according to Indian law. The English law of charity has grown round the Statute of Elizabeth (43 Eliz. c. 4). This statute did not contain any definition of " charity " but its preamble gave a varied and comprehensive list of objects which were then recognised as charitable. The court did not regard this list as exhaustive. It treated the objects enumerated in the preamble as particular instances to which additions might properly be made from time to time. It became the practice of the court to refer to the preamble " as a sort of index or chart " in order to determine whether or not a given purpose was charitable. That which began as a rule of practice became in course of time a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " which is the most difficult ", advancement of objects of general public utility. This classification was substantially accepted by Lord Macnaghten in Commissioners for Special Purposes of Income Tax v. Pemsel , with two significant variations. The learned Law Lord in a justly celebrated speech gave the following classification of charitable purposes which has now become classical : " ' Charity ' in its legal sense comprises four principal divisions: trusts for the relief of poverty; rusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community, not falling under any of the preceding heads. " The first significant variation he made was the subsitution of " advancement of education for " advancement of learning " and the second was the substitution of other purposes beneficial to the community " for advancement of objects of general public utility ". This classification of Lord Macnaghten has almost acquired the sanctity of a definition over the the years and whenever a problem arises in English law whether a particular purpose is a charitable purpose, the question is immediately asked, does it fall wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in All India Spinners' Association v. Commissioner of Income-tax , " particularly the inclusion in the Indian Act of the word ' public ' is of importance. The Indian Act gives a clear and succinct definition which must be construed according to its actual language and meaning. English decisions have no binding authority on its construction and though they may sometimes afford help or guidance, cannot relieve the Indian courts from their responsibility of applying the language of the Act to the particular circumstances that emerge under conditions of Indian life." The definition of " charitable purpose " in the Indian statute goes further than the definition of " charity " in English law; whereas in the English law it is not enough that the purpose is beneficial to the community bat it must also be within the spirit and intendment of the preamble to the Statute of Elizabeth, it is sufficient, according to the definition in the Indian statutes, that the purpose is for advancement of an object of general public utility. Every object of general public utility is, therefore, a charitable object according to the definition in the Indian statute even though it does not fall within the sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the purposes of the trust were not charitable. They did not fall within the first three heads of charities set out in Commissioners for Special Purposes of Income-tax v. Pemsel, nor did they fall within the fourth head " other purposes beneficial to the community ", since they were expressed in language so vague as to permit the properties to be used for purposes which the law did not regard as charitable and which did not satisfy the necessary element of public benefit. This decision would seem to suggest that promotion of religious, social and physical well-being of members belonging to a section of the public is not a charitable purpose and if that be so, the purpose, set out in the second part of sub-clause (5) of clause 3, would not be a charitable purpose, because complete development of all aspects of life of each member of the community contemplated there means the same thing as promotion of religious, social and physical well-being of members belonging to the community. But, we cannot regard this decision as furnishing any help or guidance in the determination of the question whether the purpose set out in the second part of sub-clause (5) of clause 3 is charitable wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utility and would be covered by the statutory definition. So far as sub-clause (4) of clause 3 is concerned, there can be no doubt that it embodies an object of general public utility. It speaks of acts useful to the community and by its very terms, falls within the definition. When the object is to do acts beneficial to the community, it is plainly an object of general public utility. This much indeed was not disputed on behalf of the revenue but the real controversy between the parties centred round the question whether the purposes set out-in sub-clause (5) of clause 3 could be said to be charitable purposes. Sub-clause (5) of clause 3 consists of two parts. The first part sets out the object of doing acts which would promote unity and brotherhood amongst the members of the community. Now there can be no doubt that if there is strife and disharmony amongst the members of a community, that would seriously affect the happiness and well-being of the community. The community can flourish as a community only if its members are living in peace and harmony with one another and there is a deep and abiding sense of unity and fraternity amongst them. That alone can secure to them the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aspects of life would comprise economic, physical, intellectual as well as spiritual well-being and would normally be a purpose beneficial to the public and the purpose set out in the second part of sub-clause (5) of clause 3 must also, therefore, be held to be a charitable purpose within the meaning of the statutory definition. That leaves only sub-clause(4) of clause 8. Now, admittedly, exemption under section 4(3)(i) or section 11(1)(a) is available even if the purposes for which property is held under legal obligation by the assessee are not charitable but religious. It would, therefore, not be sufficient to deny the benefit of the exemption to the assessee merely by saying that the purposes set out in sub-clause (4) of clause 8 are not charitable. The question would still remain to be examined whether the purposes are religious, and if they are, the assessee would qualify for exemption under section 4(3)(i) and section 11(1)(a). The only objection taken against the purposes set out in subclause (4) of clause 8 was in regard to Bhandaro. It was not disputed before us that performance of Havan, procession in the month of Shravan and going of the Sangh to Bhahucharaii Mata woul ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
