TMI Blog1989 (3) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... Karnataka for affording treatments, cure, rest recuperation and other advantages in the way of alleviating the sufferings of humanity ; (b) To establish, maintain, run, develop, extend, grant donations for and to aid and assist in the establishment, maintenance, running, development, improvement and extension of educational institutions, technical, industrial and otherwise, including schools, colleges, polytechnics and research associations and institutes, workshops, hostels, etc., for the benefit of students in the State of Karnataka, and to award scholarships for the study, research and apprenticeships for all or any of the said purposes; (c) To establish, maintain, run, develop, improve, extend, grant donations for and to aid in the establishment, maintenance, running, development, improvement and extension of libraries, reading rooms, recreation centres and other facilities in the State of Karnataka as are calculated to be of use in imparting education to the public (d) To conduct poor feeding and to give food, clothing and cash grants to the poor, needy and defectives and afford relief to people in distress and affected by earthquakes, flood, famine, pestilence and other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust appeared to be charitable, a part of its funds having been utilised for giving loans to industries mentioned therein, that activity could not be considered to be a "charitable purpose" within the meaning of the Explanation to section 12(g) of the Act and that the amounts collected by the trust by way of donations having not been fully utilised exclusively for charitable purposes mentioned in the Act, asked the petitioner to appear before him and show cause why a recommendation should not be made to the Government to withdraw its recognition. The show cause notice further states that the action of the petitioner in diverting the trust funds for purposes other than charitable ones was erroneous and defeated the objects for which recognition had been granted. The petitioner filed a reply to the said show cause notice by two letters both dated June 6, 1981. The Government of Karnataka, on a consideration of the entire matter and the provisions of section 12(g) of the Act, held that the petitioner having lent moneys to private businessmen ceased to be an institution established for charitable purposes as, in its view, lending moneys to businessmen is not one of the charitable pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which reads as follows: "12. Exemption from assessment of income-tax.-Agricultural income-tax shall not be payable on that part of the total agricultural income of a person which is - . . (g) any sums paid by such person as donations to any institution or fund which is established for charitable purposes and is subject to such restrictions and conditions as may be prescribed is approved by the State Government for the purpose of this section : Provided that each such sum is not less than two hundred and fifty rupees. Explanation.-In this section, (1) 'charitable purpose', includes relief of the poor, education, medical relief and the advancement of any other object of general public utility not involving the carrying on of any activity for profit ; (2) 'institution which is established for a charitable purpose' includes an institution which is financed wholly or in part by the Government or a local authority whether owned by the Government or a local authority or not." The definition of "charitable purpose" set forth above falls into four heads, viz., (i) relief of the poor (ii) education (iii) medical relief ; and (iv) advancement of any other object of genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the less charitable. The true effect of the expression "not involving the carrying on of any activity for profit" is that when the purpose of a trust is advancement of an object of general public utility, it is that object of general public utility and its accomplishment or carrying out which must not involve the carrying on of any activity for profit. So long as the purpose does not involve the carrying on of any activity for profit, the requirement of the definition will be met and it is immaterial how the moneys for achieving or implementing such purpose are found whether by carrying on an activity for profit or not. The bar in the exclusionary clause would be attracted if the purpose of the trust itself involves the carrying on of an activity for profit, that is to say, if an activity for profit is actually carried on as art integral part of the purpose for advancement of any other object of general public utility. There must be an activity for profit and it must be involved in the carrying on of the purpose of the trust, or it must be carried on in order to advance the purpose or in the course of carrying out the purpose of the trust or institution. The test that has to be app ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
