TMI Blog2005 (7) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... is appeal may be briefly stated thus: "The respondent is a trust registered under the Bombay Public Trusts Act. Earlier it was known as Rajneesh Foundation. However, after amendment in the trust deed, it came to be known as Neo Sannyas Foundation. The respondent filed returns of income for the assessment year 1991-92 showing certain income and claimed exemption from income-tax under section 11 of the Income-tax Act. The Assessing Officer rejected the claim on the ground that a similar claim of the trust was rejected earlier for the assessment year 1975-76 and the assessment year 1976-77 on the grounds that the trust was not for educational or religious purposes and the activity of the publication of books was intended for profit. For the assessment year 1976-77, it was observed that as long as Acharya Rajneesh was alive, one could not predict what he would preach and hence, the object of the trust could not be said to be charitable and secondly, affairs of the trust were dominated by the single person Acharya Rajneesh and the object of the trust was to preach and propagate philosophy of Acharya Rajneesh and perpetuate image of Acharya Rajneesh whose vague and contradictory views ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the trust after the amendment in the year 1989 and the primary object of the trust is to spread and impart preaching of the philosophers, thinkers and scholars, both past and contemporary, including Acharya Rajneesh, pertaining to all the religions and/or main principles thereof for the mental, spiritual, moral and physical betterment of human beings with the ultimate object of self-realization. He also contended that publication of books is no more undertaken by the respondent-trust and it is handed over to another trust which separately pays income-tax. He also strongly placed reliance upon Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1 (SC) and the CIT v. Ahmedabad Rana Caste Association [1973] 88 ITR 354 (Guj) and contended that taking into consideration all the facts and circumstances, the predominant object of the trust is charitable, and therefore, even if it makes income, it is entitled to exemption. He contended that the very provision for exemption supports the view that the trust may make income and it may be exempted from-income-tax. Learned counsel have taken us through the order passed by the Assessing Officer, Commissioner of Income-tax (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 members of which 5 members would be nominated by Acharya Rajneesh. This gave de facto control to Acharya Rajneesh over all the activities of the trust. This clause was amended so that the management of the property and other business of the trust shall be carried out by the board of trustees, of not less than 2 and not more than 6 members. The power given to Acharya Rajneesh as per the original clause 11 to nominate five members was also deleted. As per the original clause 28, Acharya Rajneesh was to guide and advise on the disputes regarding administration of trust. This clause was suitably amended so that all the disputes arising in the administration of the trust and all questions relating to interpretation of the trust deed, etc., shall be decided as per the wishes of the majority of the trustees. In view of these material amendments, it could be no more said that Acharya Rajneesh alone was controlling the whole of the trust as well as the trustees. It may be pointed out that when the amendments were made in the trust deed, Acharya Rajneesh was alive. At that time, the constitution of the trust was so changed that neither Acharya Rajneesh could nominate any trustee nor he c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lved in carrying on activities for profit. Further he observed that whatever amount was spent was for providing amenities to persons attending rituals and large investment was made in the purchase of movable and immovable assets. He noted that this trust is like a health club where courses has been prescribed for removing stress and strain and therefore, it could be said to be a health club in the modern sense and nothing more. He also observed that even removing the stress by charging a lot of payment does not amount to advancement of any other object of general public utility and, therefore, the objects of the trust were not charitable. It appears that on the basis of this report, the application for exemption under section 10(23C)(v) came to be rejected by letter dated October 3, 1996. The Commissioner of Income-tax (Appeals) as well as two of the three members of the Appellate Tribunal have rightly observed that the perception of the people towards the preaching of the philosophy of Acharya Rajneesh has undergone a sea change during the last few years. While earlier, he was supposed to be a controversial personality and most of the people of this country were averse to his th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neesh had developed several techniques of meditation for improvement of mind and body. Over the ages, meditation has been the bed-rock of the Indian philosophy. Important religions like Hinduism, Buddhism, Jainism have emphasised the importance of meditation as a means towards attainment of eternal peace. The respondent contended that the trust activities are for the benefit of general public at large with its fundamental charitable object to develop the human mind, body and soul with a view to achieve physical, mental and spiritual well-being with the ultimate aim of achieving self-consciousness. With these objects, the respondent claims to have opened 250 centres around the country. Swami Satya Vedant and many other disciples of Acharya Rajneesh conduct seminars and meditation camps all over India for the benefit of people without any remuneration. It is contended that the activities of the respondent are for the benefit of human beings and not for profit. Whatever might be the perception of people about Acharya Rajneesh and his teachings in the earlier phase, it must be accepted that in view of the developments pointed out above, the philosophy and teaching of Acharya Rajneesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ood 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 benefit of a healthy communal life. It is, therefore, clear that a purpose calculated to promote unity and brotherhood amongst the members of a community would normally be a purpose beneficial to the community and the purpose set out in the first part of sub-clause (5) of clause 3 must be held to be within the statutory definition. Turning to the second part of sub-clause (5) of clause 3, the purpose there set out is to do all acts which bring about complete development of all aspects of life of the male and female members of the community. It is difficult to see how, having regard to modern concepts and ideas, complete development of all aspects of life of each member of the community can be regarded as anything other than an object of general public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Supreme Court in Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1 observed as follows: "The test which has, therefore, now to be applied is whether the predominant object of the activity involved in carrying out the object of general public utility is to subserve the charitable purpose or to earn profit. Where profit-making is the predominant object of the activity, the purpose, though an object of general public utility, would cease to be a charitable purpose. But where the predominant object of the activity is to carry out the charitable purpose and not to earn profit, it would not lose its character of a charitable purpose merely because some profit arises from the activity. The exclusionary clause does not require that the activity must be carried on in such a manner that it does not result in any profit. It would indeed be difficult for persons in charge of a trust or institution to so carry on the activity that the expenditure balances the income and there is no resulting profit. That would not only be difficult of practical realisation but would also reflect unsound principle of management. We, therefore, agree with Beg. J. when he said in Sole Truste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom income-tax granted under section 11 itself stipulates that the trust may make some income by its activity; however, the Legislature wanted to exempt such income from income-tax if it is being used for charitable purposes. In the present case, it was contended that the books were being printed, published and sold for the price and it was an activity for profit. In fact, this argument could be rejected if the income was used for charitable purposes. It is material to note that by making amendment in the trust deed, the object of printing, publishing and sale of goods has been deleted and admittedly that activity was taken over by another trust which pays income-tax as per the rules. It is contended that for meditation and other activities also the respondent is charging certain fees from the people who want to take lessons or training in meditation. We have carefully gone through the accounts showing income and expenditure of the trust during the relevant period. It appears that the main income is from the charges taken for meditation. Charges are also taken for providing food. The expenditure is also mainly on the meditation, food and for providing facilities in the centre. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to grant benefit of deduction under section 80G of the Income-tax Act for the donations made to the respondent by the donors. On that request, necessary inquiry was made by the Commissioner of Income-tax and after getting detailed reply and clarification as per the letter dated April 9, 2001 from the respondent, the Commissioner of Income-tax issued an order under rule 11AA dated July 22, 2003, whereby the donations made to the respondent are made allowable for the benefit of deduction under section 80G of the Income-tax Act in the hands of the donors for the period from April 1, 2001 to March 31, 2004. Again the same benefit was continued by an order dated September 17, 2004, with effect from April 1, 2004 to March 31, 2007. It means the donors, who make donations to the respondent trust, are also entitled to get benefit of deduction of the said donation from their income as per the provisions of section 80G for the purpose of the income-tax. It clearly shows that the Government is fully satisfied that the activities of the respondent are for charitable purposes and, therefore, not only the respondent is registered under section 12A as the charitable trust and entitled to benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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