TMI Blog1985 (11) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... he down-trodden for radical social transformation. (2) Under the able stewardship of such national leaders and dedicated socialists as Acharya Narendra Deva, Achyut Patwardhan, Ram Manohar Lohia, Yusuf Meharally and Asoka Mehta and editorship of such eminent socialists and journalists as E. Narayanan, Aruna Asaf Ali, Purshottam Tricumdas, Rohit Dave, S. Natarajan and N.G. Goray the weekly has pursued these purposes with perseverance and without fear. (3) During all these years since its inception as the official organ of the Socialist Party and later of Praja Socialist Party or as an independent prosocialist journal, the Janata has raised its challenging voice of principled dissent against all conduct and practice---detrimental to the cherished values of nationalism, democracy, secularism and socialism, while upholding the integrity and the ethical norms of healthy journalism. (4) At the last meeting of the Executive Committee of the Praja Socialist Party in August 1971, it was resolved that the said G.G. Parikh should continue the running of the Janata weekly and was authorised to determine its form of management, and to form a trust if considered necessary. (5) Trustees d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l or cultural benefit and advancement and for rural development. (i) To assist social workers, victims of natural calamities and the needy. 4. The ITO treated the objects (a), (b) and (c) above as predominant objects of the trust and observed that the assessee had pursued only one object, i.e., printing and publishing and selling the weekly known as 'Janata' at the rate of 50 paise per copy. This magazine contains 17 pages and is printed only on third class paper. The ITO held that the objects of the trust were not charitable because printing and publishing 'Janata' was commercial in nature. Even commercial publications cost less than the price of the assessee's magazine. He, therefore, held that the assessee was not entitled to exemption under section 11 of the Income-tax Act, 1961 ('the Act'). 5. The assessee had filed an income and expenditure account showing a deficit of Rs. 415. It had received life subscription for the magazine amounting to Rs. 28,110 which was claimed as exempt, but the ITO held that it was not exempt and added it to the income of the assessee. The assessee had spent a sum of Rs. 1,80,259 on the objects of the trust, i.e., printing and publishing of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Surat Art Silk Cloth Mfrs.' Assosiation [1980] 121 ITR 1, and whether the publication of this weekly amounts to an object of the general public utility. When a weekly journal is held under a trust, the natural corollary is that it would be printed and published and sold. The Supreme Court has held in the case of Surat Art Silk Cloth Mfrs.' Association that the mere fact that a profit may result is not fatal to the claim of exemption under section 11, but what is important is that an activity should not be pervaded by profit-motive but should be carried on primarily for serving the charitable purpose. It would then be qualified for exemption. The test which is to be applied is whether the predominant object of the activity involved in carrying out the object of the general public utility is to subserve the charitable purpose or to earn the profit. Where profit-making is the predominant object of the activity, then an object of general public utility will 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges a small price which is more than the cost of the publication and leaves a little profit, would it deprive the Gandhi Peace Foundation of its charitable character ? The pricing of the monthly journal would undoubtedly be made in such a manner that it leaves some profit for the Gandhi Peace Foundation, as, indeed, would be done by any prudent and wise management, but that cannot have the effect of polluting the charitable character of the purpose, because the predominant object of the activity of publication of the monthly journal would be to carry out the charitable purpose by propagating Gandhian thought and philosophy and not to make profit or, in other words, profit-making would not be the driving force behind this activity. But it is possible that in a given case the degree or extent of profit-making may be of such a nature as to reasonably lead to the inference that the real object of the activity is profit-making and not serving the charitable purpose. If, for example, in the illustration given by us, it is found that the publication of the monthly journal is carried on wholly on commercial lines and the pricing of the monthly journal is made on the same basis on which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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