Commissioner of Income Tax vs Surji Devi Kunji Lal Jaipuria Charitable Trust (No. 1)

R.A. Sharma, J.—At the instance of the Department, the Income Tax Appellate Tribunal, Allahabad (hereinafter referred to as "the Appellate Tribunal"), has referred u/s 256(1) of the Income Tax Act, 1961, to this court the following question of law for its opinion :

Whether, on the facts and in the circumstances of the case, the respondent-assessee, a trust created by the instrument executed on April 24, 1958, is a public charitable and religious trust and its income is exempt from tax u/s 11 of the Income Tax Act, 1961 ?"

The assessee-trust was created on April 24, 1958, with the following objects and purposes :

"(i) For giving monetary help to poor deserving members of the Vaisya community.

(ii) For giving financial help by way of gift, on loan without interest, to enable poor deserving members of the Vaisya community to set up any business, profession or vocation.

(iii) For giving financial help in the shape of money, books or otherwise for education (primary, school, college and higher education and technical or non-technical education) to the poor and deserving members of the Vaisya community.

(iv) For giving help, financial or otherwise, on the occasion of the marriage of members of the Vaisya community.

(v) For giving medical aid in money or in kind to the members of the Vaisya community.

(vi) For social welfare, uplift and generally for improving the condition of poor members of the Vaisya community.

(vii) For giving help without reference to caste or creed in times of calamity, melas, famine, earthquake, fire, cyclone, flood and the like.

(viii) For any other object of general public utility, preference being given, in the discretion of the trustees, to the members of the Vaisya community."

In the assessment year 1961-62, the Income Tax Officer held that the income of the assessee is exempt u/s 4(3) of the Indian Income Tax Act, 1922, on the ground that the assessee is a trust for religious and charitable purposes. The Commissioner of Income Tax, in exercise of his powers u/s 263(1) of the Act, set aside the aforesaid order of the Income Tax Officer on the ground that the assessee is not a trust for religious and charitable purposes as its objects Nos. (i), (ii), (iv) and (vi) are not charitable objects. The appeal filed by the assessee against the order of the Commissioner was dismissed by the Appellate Tribunal, as the assessee, on the basis of the decision of the Gujarat High Court in COMMISSIONER OF Income Tax, GUJARAT Vs. AHMEDABAD RANA CASTE ASSOCIATION, , conceded before it that objects Nos. (iv) and (vi) are not of public charitable nature. At the instance of the assessee, the Appellate Tribunal referred the question about the entitlement of the assessee to exemption u/s 4(3)(i) of the Act of 1922, to this court for opinion. This court answered the question in favour of the Department and against the assessee on the ground that if a party concedes a position before the Tribunal, it cannot take a different stand before this court in a reference made by the Tribunal.

In the assessment year 1970-71, following the earlier decision of the appellate authorities, the Income Tax Officer declared the assessee not to be a trust for religious or charitable purposes and as such not entitled to exemption u/s 11 of the Act. The appeal filed by the assessee against the assessment order was dismissed by the Appellate Assistant Commissioner and the matter was thereafter taken up by the assessee in appeal before the Appellate Tribunal, which has been allowed on November 29, 1975, on the ground that the earlier decisions of the Appellate Tribunal and this court, given for the assessment year 1961-62, were based on the concession of the assessee that the objects contained in Clauses (iv) and (vi) of the trust deed were not of charitable nature in view of the decision of the Gujarat High Court, which has subsequently been overruled by the Supreme Court in Ahmedabad Rana Caste Association Vs. The Commissioner of Income Tax, Gujarat, , and as such these decisions cannot operate as res judicata. On merits, following the aforesaid decision of the Supreme Court, the Appellate Tribunal held that as objects beneficial to a section of the public can also constitute a charitable purpose, the assessee is a religious and charitable trust entitled to exemption u/s 11 of the Act. At the instance of the Revenue, as mentioned earlier, the Tribunal has referred the question of law extracted above to this court for opinion u/s 256(1) of the Act.

The expression "charitable purpose" has been defined in Section 2(15) of the Act as follows :

"2. (15). ''charitable purpose'' includes relief of the poor, education, medical relief and the advancement of any other object of general public utility."

To make a purpose charitable, it is not necessary that it should be beneficial to the poor only and what is required is benefit to a section of the public as distinguished from specified individuals. The Supreme Court in the case of Ahmedabad Rana Caste Association Vs. The Commissioner of Income Tax, Gujarat, , has laid down that, to constitute a charitable purpose, it is not necessary that the object of a trust should be beneficial to the whole mankind or all persons in a State and it is sufficient if the object is for the benefit of a section of the public. After declaring the law as aforesaid, the Hon''ble Supreme Court held that a trust created for the benefit of the Rana community of Ahmedabad is a charitable trust entitled to exemption u/s 4(3)(i) of the Act, 1922. In the instant case, the Vaisya community is a section of the public and a trust created for giving medical aid, social welfare, uplifting of poor members of the community and for giving financial and other help on the occasion of the marriage of the members of this community is for religious and charitable purposes. Marriage of children is considered as one of the obligatory actions of Hindus and is a religious duty of a high order ; giving financial and other help on the occasion of the marriage is regarded as a part of religious and charitable activities. Clauses containing the objects of the trust including Clauses (iv) and (vi), in our opinion, are of religious and charitable purposes and we agree with the Appellate Tribunal that the earlier decisions given by the Appellate Tribunal and this court in the case relating to the assessment year 1961-62 are not binding being based on a concession of learned counsel for the assessee apart from the fact that the decision of the Gujarat High Court on which reliance was placed has been overruled by the Supreme Court in Ahmedabad Rana Caste Association Vs. The Commissioner of Income Tax, Gujarat, . The Appellate Tribunal was also correct in holding that the decision given in the year 1961-62 cannot operate as res judicata. In our opinion, the assessee being a religious and charitable trust is entitled to exemption u/s 11 of the Act.

Our answer to the question referred by the Appellate Tribunal is in the affirmative and in favour of the assessee. There shall be no order as to costs.