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Section 10 in The Unit Trust Of India Act, 1963
Section 11 in The Income- Tax Act, 1995
Section 10(22) in The Income- Tax Act, 1995
The Unit Trust Of India Act, 1963
Section 54 in The Income- Tax Act, 1995
Citedby 1 docs
Mudhit Madanlal Gupta , Mumbai vs Assessee on 3 November, 2003

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Income Tax Appellate Tribunal - Mumbai
Rajneesh Foundation vs Income-Tax Officer on 21 January, 1983
Equivalent citations: 1983 4 ITD 409 Mum
Bench: V B Vice, K Menon



ORDER
 

V. Balasubramanian, Vice President
 

1. The first appeal is by the assessee and the second appeal by the department.

2. On 11-12-1931 was born in the village of Kuchwara, Madhya Pradesh, Rajneesh Chandra Mohan, who afterwards became Acharya Rajneesh. After obtaining his M.A. Degree, Chandra Mohan taught at the Raipur Sanskrit College from 1957 to 1959 and was a Professor of Philosophy at the University of Jabalpur between 1960-1966. He resigned his professorship in 1966 allegedly to devote himself to spiritual work. He is stated to have travelled extensively delivering lectures between the years 1958 and 1969, until he settled in Bombay in 1969. He is stated to have held a meditation camp for the first time in 1964 in Rajasthan. After 1969, many public lectures and appearances were ascribed to him. He also had written profusely on spiritual and allied subjects.

3. By an indenture of trust dated 11-6-1969, Shri Himatlal Haribhai Joshi and Shri Ishwarlal Naranji Shah as settlors drew up a trust deed creating the trust known as 'JEEVAN JAGRUTI KENDRA'. To start with the registered office of the Trust was at 29, Eastern Chambers, 3rd floor, 128, Poona Street, Bombay. Under Clause 4 of the conditions of the trust deed, the activities of the trust could extend to the whole of India and to such other parts of the world as are decided upon by the trustees from time to time. Shri Rajneesh, according to Clause 2 of the trust deed, was to be the advisor to the trust for life and as an advisor was to have powers mentioned in the trust deed. Clause 5 of the deed dealing with the aims and objects of the Trust runs as under :

5. The aims and objects of the trust shall be :

(a) To spread and impart the preaching of Acharya Shri Rajneeshji and other philosophers pertaining to all religions and/or main principles thereof and/or morals ;]

(b) For the purpose to print, publish, sell, distribute ether free or for price books, magazines, lectures, preachings, writings, periodicals, bulletins, journals and any other literature

(c) To conduct or arrange lectures, tours, shibirs, research programmes or programme of any kind approved by the Board either in India or abroad and for that purpose, to call Acharya Shri Rajneeshji and other philosophers at the cost of the Trust.

(d) To start, promote, establish, maintain, control and/or conduct, gyana yagna, sadhana centres, seminars, discourses, study groups, lectures, reading rooms, libraries, schools, pathshalas research centres and other educational institutions and/or to arrange for the purpose with other schools and/or educational institutions and for the purpose to do all acts, deeds and things necessary far the starting, conducting and/or promotion thereof.

(e) To give loans, scholarships, freeships, prizes, honorarium, remuneration and/or monetary assistance and/or such other assistantship, arrangements etc. to the philosophers, thinkers, writers, authors and/or students, taking interest in the lines and objects of the trust and rendering help for carrying the same out.

(f) To establish, promote and maintain Ashram schools, colleges and such other institutions and for that purpose, to train students and teachers and to take all other steps for the purpose of putting into practice the ideals of education as laid down in the preceding para (a).

(g) To establish, promote, improve, control, diffuse and impart medical knowledge by way of 'Sadhana' and other suitable systems beneficial to physical and mental health.

(h) To establish, promote and/or take over and conduct hospitals, health and medical centres or other such centres.

(i) To donate and contribute and/or to enter into working arrangements of any kind with other establishments, institutions, organisations, bodies or centres having objects wholly or partly similar to those of the Trust and which may be deemed to be the activity conducted for the purpose of popularising, implementing and practising the ideals and philosophy laid down in preceding para (a).

(j) To maintain and safeguard the interest, objective and thinking of the trust and for that purpose to take all other steps that may be deemed necessary by the Board of trustees.

(k) To enter into any arrangement with the Government, local authorities other quasi-Government bodies and other public or private bodies, organisations and/or institutions in order to promote and achieve and/or all of the aims and objects of the Trust.

(1) To accept donations either in cash or in kind and/or under any other arrangements and to raise moneys otherwise, for the purposes of carrying out the objects and activities of the Trust and to accept subscriptions and gifts of movable or immovable properties for the same purpose.

(m) To borrow and raise moneys for the purpose of carrying out the objects of the Trust in such manner and from such persons as the Trust may think fit.

(n) To acquire land, purchase buildings, construct or take on lease or exchange or hire any movable or immovable properties or rights or privileges for the purpose of carrying out the objects of the Trust.

(o) To enter into contract, execute deeds and do all other things and to undertake any other activities as may be conducive, suitable or incidental to the work for the attainment of the objects of the Trust or any of them or part of them.

(p) To undertake and execute any Trust which may be or indirectly conducive to any of the objects of the Trust either gratuitously; or otherwise.

(q) To invest moneys belonging to the Trust in such securities or otherwise and in such manner as laid down and/or provided for in the statutes and/or permission by the appropriate authorities from time to time.

(r) To provide for the relief of poor people and people in distress or for national cause ; and to provide for medical relief.

(s) To maintain, run or otherwise arrange for sadavrats, dharmashalas, rest houses, kala mandirs, ballmandirs, prayer halls, public gardens, pubic utilities, etc.

(t) To establish, promote or take such other activities for advancement and propagation of education, literature, science, colleges, educational institutions and to provide or establish scholarships, gifts in cash or kind for education or developing mind or body.

(u) To promote and establish branches of the Trust all over India and at such other places in the world as may be decided by the Board of Trustees from time to time.

(v) To purchase, acquire or take on lease or rent, land for agricultural activities, for imparting training and activities for the inmates and to achieve self-sufficiency thereby, (w) To accept by way of gifts, donations and/or otherwise any business on such terms and conditions they may in their absolute discretion agree upon. If the Trustees accept any such gift or donation of a business or any such interest in business, the trustees at such time as they may deem proper or continue the share or interest in business donated to the Trust and for that purpose, appoint Chairman or some other Trustee or trustees amongst themselves to represent the Trust in such business and/or to become partner (s) in such business on behalf of the Trust on such terms and conditions as the trustees in their absolute discretion deem proper.

(x) To train and take up such activities like handicrafts, spinning, weaving, leather-crafts or other arts and other activities so as to impart, basic training to the inmates and to achieve self-sufficiency thereof.

(y) Any other activities in furtherance of the aims of the Trust and of general public utility.

And provided always that the trustees shall have full power and absolute authority in their entire discretion to add to and introduce other specific public charitable objects not inconsistent with the objects and purposes to these presents to the advancement of the times and circumstances which may from time to time exist as they may consider desirable and in such case, such newly added objects so decided upon by the trustees shall be deemed to have been incorporated in the objects of these presents. And provided further that if any time any of the objects mentioned hereinabove be deemed to be the object not considered charitable or otherwise, by any of the authority, the same shall stand deleted and the trustses shall not spend any of the trust funds on the said object.

4. The trustees had power to accept donations and contributions from individuals or institutions. . The trustees under Clause 7 have absolute power at their discretion (to deal with and to put into practice the objects mentioned hereinabove). Other clauses of the trust deed gave power to the trustees to deal with movable and immovable properties etc. to make rules and regulations for the day-to-day working of the trust. Clauses 11 and 12 dealing with the management of the property and other business of the trust are as under :

11. The management of the property and other business of the Trust shall be carried out by a Board of Trustees of not less than 2 (two) and not more than 11 (eleven) members, as constituted and provided hereinafter:

Acharya Shri Rajneeshji as the adviser of the Trust shall nominate up to 5 (five) (maybe at a time or from time to time but the total number of members so nominated shall not exceed 5) members on the Board of Trustees and the Trustees nominated shall constitute a Committee for the time being and at the first meeting to be held after such nomination ; the Committee shall have powers to co-opt up to six members of Trustees and thereafter the Committee so constituted shall work as the Board of the Trustees. At the end of the year 50% of the trustees shall retire by rotation. The trustees to retire at the end of the year shall be decided by a secret ballot at the meeting of the Board and subsequently, the trustees longer in the office, shall retire. Acharya Shri Rajneeshji shall re-nominate the trustees retiring from the trustees nominated by him and the fresh Board of Trustees after the nomination by Acharya Shree Rajneeshji shall co-opt the trustees in the vacancy caused by the trustees retired from the co-opted members.

12. Acharya Shri Rajneeshji shall be the adviser as aforesaid for life and he shall have powers and rights to nominate up to 5 (five) trustees from time to time and shall have also the rights to remove any trustees so appointed by him and can appoint some other person as trustee within the number of trustees so required to be nominated by him. If and when Acharya Shri Rajneeshji ceases to hold office for any reason, the trustees at that time present shall be the trustees and shall continue to remain trustees till any of them shall cease to hold office either on death, resignation or removed from office by the Board of trustees at its meeting on a resolution carried out on two-third majority of the members present and voting.

Portion of Clause 14 relevant for our purpose is as under:

The Board of Trustees at its discretion and as per the rules framed by them from time to time may on the application made in the prescribed form, approve of any person above 18 years of age, firm, association, trust or company either within India or outside who is interested and subscribes to the aims and objects of the trust as member. The Board of Trustees may from time to time at its discretion provide for different class of membership like patrons, life members, honorary members and/ or ordinary members.

The Board of Trustees at its discretion in consideration of any scheme of settlement or arrangement including amalgamation or otherwise, may also provide for the co-option of patrons and life members as patrons and life members of these presents.

The Board of Trustees may from time to time frame rules for the election and/or nomination of executive council from amongst the different class of members and such council will look after such work as per the rules framed by the Board.

5. An amendment to the trust deed dated 26-9-1969 made certain minor changes including the deletion of the words 'or abroad' appearing in Clause 5(c) of the deed. All the activities of the trust were being carried on to start with at Bombay. In March 1974, a new ashram premises was taken at Poona. The trustees also decided to change the name of the trust from 'Jeevan Jagrati Kendra' to 'Rajneesh Foundation'. Auditors' report for the year ended 31-12-1974 indicated that separate books of account were maintained at Poona for all transactions carried on from there in the name of Rajneesh Foundation. The figures of both Bombay and Poona accounts were amalgamated and a consolidated income and expenditure account was prepared with a balance sheet annexed thereto. Premises of the trust in Woodland Co-operative Society at Bombay were disposed of during the year 1974. The trust virtually shifted its activities to Poona.

6. For the assessment year 1975-76, the assessee filed a return of income before the ITO, Bombay, Refund Circle 23-7-1976. The entire income under the head 'capital gains' and 'other sources' was claimed to have been applied to the acquisition of capital assets. A nil taxable income was returned. The file was subsequently transferred to the ITO, Poona, and before him written submissions were made claiming that the trust was a charitable one having for its objects the charitable purpose of imparting education. Reliance was placed on Clause 5 of the trust deed and the decisions of the Madras High Court and various other cases. It was also claimed that the assessee was exempt under Section 10(22) of the Income-tax Act, 1961 ('the Act'), as the assessee ran an ashram where intensive training in education was imparted. The ITO rejected the assessee's contentions. He held the trust as having an object of general public utility. The trust was running a business activity provided in Clause 5(b) of the trust deed and made large profits disclosed in a statement of account. The activity was well organised and systematic. Books were published and sold at a very high prices, the sales of books being of the order of Rs. 15,00,000 with a profit of nearly Rs. 1,72,000. The receipts including commission on purchase of books of about Rs. 2,72,000 and subscription for news letter of Rs. 1,400. The assessee claimed that voluntary services of ashramites were available in the activities of publication and sale of books, thus resulting in an estimated gain in notional charges of about Rs. 2,95,000. Under Section 80QQ of the Act, deduction of 20 per cent, i.e., Rs. 34,000, was also available. On this basis the so-called business activity, according to the assessee, in fact resulted in a loss as against the profit alleged to have been made. The assessing officers did not accept the above claim of the assessee in the final assessment made.

7. On appeal, the Commissioner (Appeals) rejected the assessee's claim for exemption under Section 10(22) and Section 11 of the Act. During the year of account, the dominant object of the trust could not be said to be running an educational institution solely for educational purposes. At best, according to the Commissioner (Appeals), the object of the trust could be regarded as one for general public utility, since it was for the spreading of teachings of various "philosophers though mainly of Acharya Rajneesh, but since the object of public utility so conceived, involved the making of profit by a business--like activity in the publication and sale of books, magazines, tapes, etc., it was excluded by Section 2(75) of the Act, from being a trust for charitable purposes. The Commissioner (Appeals) also held, considering the several clauses of the trust deed, that during the assessment years under appeal, the trust could not be held to be a religious trust. Dealing with the computation of income under the various heads, the Commissioner (Appeals) held that the donations were in the nature of capital receipts and have to be excluded in computing the total income of the assessee. Claim for exemption under Section 54 of the Act was made while computing the income from capital gains. The ITO's view that as the trust as such was not residing in the property disposed of, the assessee was not entitled to relief under Section 54, was upheld by the Commissioner. On the question of computation of income from the business of publication and sale of books, the Commissioner set aside the ITO's computation, but directed him to recompute it taking into account deductions under Section 32 and Section 80QQ and aggregation under Chapter VI. It is against this order of the Commissioner that both the assessee and the department have come up on appeal before the Tribunal.

8. The assessee claimed that the trust is exempt under Section 10(22). Alternatively, under Section 11 on the ground of education or as an object of genera) public utility and at any rate, as a trust for religious purposes. The computation of income under 'capital gains' on the sale of property is also objected to. In the departmental appeal objection is raised to the Commissioner's holding that the object of the trust was one of general public utility, to the deletion of the sum of Rs. 99,852 donations on the ground that they are capital receipts, and the direction given to the ITO with regard to the disallowance of Rs. 1,38,984, the claim to constitute application of income, deduction of Section 8CQQ relief with reference to the gross taxable income of the assessee and the reference to certain matters relating to the establishment of the Rajneesh International University which occurred in 1977 long after the relevant previous year of the assessee.

9. The learned counsel for the assessee has stressed the points made before the authorities below. According to him, prior to the assessment year 1975-76, the income of the trust was held to fall under Section 11 and be exempt from taxation. Reference is made in this connection to the assessment orders passed for the assessment years 1973-74 and 1974-75. The assessee was also granted a certificate for exemption under Section 80G for several years. The exemption was valid up to 31-3-1975. The certificate given on 10-9-1969 was valid up to 31-3-1970, the certificate given on 7-1-1971 up to 31-3-1972 and the one given on 27-3-1972 up to 31-3-1975. The previous year of the assessee for the assessment year under appeal ended on 31-12-1974. According to the learned counsel, therefore, during the previous year relevant to the assessment year under appeal, the assessee was granted the benefit of Section 80G by the Commissioner himself. The assessee is a public trust recognised and certified as such under the Bombay Public Trust Act. A proper income and expenditure account furnished under the requirements of the Bombay Public Trust Act has been accepted by them showing that the authorities have accepted the trust as a charitable institution. Taking us through the various provisions of the trust deed dated 11-6-1969, the learned counsel has pointed out that the object clause specifying the purposes for which the trust existed clearly supports his claim. Sub-clause (a) of Clause 5, according to the learned counsel, is the main object of the trust and refers to spreading and imparting the preaching of Acharya Rajneesh and other philosophers pertaining to all religions as well as morals. Sub-clauses (b) to (g) are ancillary objects necessary to make effective the principal object, obtaining Sub-clause (a). Sub-clauses (/;) to (q) of Clause 5 put down the powers enabling the trustees to fulfil the objects. Sub-clauses (r) to (t) are primarily subservient to Sub-clause (a) and could also be regarded as other objects equally charitable. According to the learned counsel, these objects though by themselves charitable have also to be understood in the background of the principal object of the trust, viz., the spreading of the philosophy of Acharya Rajneesh. Provision of relief to the poor, medical relie, running dharamshala, rest houses, prayer house, etc., are in fact, according to the learned counsel, only an extension of Sub-clause (a). These sub-clauses were not intended to be separate objects by themselves, even though if they be so construed that would not conflict with the charitable nature of the institution. Sub-clauses (w) to (w) are procedural in nature. Referring to Sub-clause (x), it is pointed out that these even if were to be construed as standing alone, would represent a purely educational purpose. The provision of Sub-clause (y) is omnibus clause, can never be repugnant to the main object and could only represent objects which are in consonance with and for the purpose of furthering the main objects of the trust.

10. Dealing with the general nature of the trust itself, it is pointed out that the trust enures for the benefit of everybody. Even the expression 'members' referred to in Clause 14 of the deed does not in any way affect this position As it is, no members have been constituted. In any case until the members, if any, are constituted, the clause being inoperative will be irrelevant to the consideration of the point at issue. If at all such membership is to be constituted, it can be only in furtherance of the object of the trust, for instance, if one is in general sympathy, with the purposes and objects of the trust, he could be made a member so as to subserve the best interest of the trust itself.

11. The purpose of the trust being principally educational and the trust having performed only educational activities during the year under appeal, it is a claim of the learned counsel for the assessee that the assessee is entitled to exemption under Section 10(22). The trust does not exist for the purposes of 'profit'. The profit in Section 10(22), according to the learned counsel, should refer to private profit, which does not anywhere figure in the activities of the present trust. The nature of the activity carried on by the trust is primorially educational without any profit involved in it. Reference is made in this connection to the decision of the Orissa High Court in the case of Secondary Board of Education v. ITO [1972] 86 1TR 408. That the activities were educational would be clear also from the fact that from 1977 onwards the institute has been upgraded and regarded as an International University entitled 'Rajneesh International University'. Though this recognition and upgrading took place subsequently, according to the learned counsel, it was only the culmination of an effort and activity which was being carried on during the year under appeal and the earlier years. A University cannot come into existence or be brought into existence by a stroke of the pen. Primarily it should evolve from a basic infrastructure and only an institution where education and teaching goes on for some time--with time blossoming into a fulfledged University as such--get recognition nationally as well as internationally. According to the learned counsel, the fact that in 1977 such recognition was achieved by the assessee-institution was ample proof to show the beginnings of teaching and education. The foundation of the University was also there during the years under appeal. Reference is in extenso made to the connotation of the word 'University' occurring in dictionaries and other literature material. A 'University' is a body of persons imparting knowledge. It may be done either by providing facilities for teaching and research or by the grant of academic degrees, etc., but the sole purpose of the University is not grant of degrees. Not merely formal education but all education which shapes the human mind, character, etc., would come under education and an institution imparting this, according to the learned counsel, constitutes an educational institution for the purpose of Section 10(22). Section 10(22) itself provides that the exemption is available not merely to a University but also other educational institutions. These educational institutions not only need be not Universities but even for likening them to University, there is not enough material in the provisions of Section 10(22).

12. Describing the nature of the work done at the Ashram, it is pointed out that in addition to regular lectures, workshops, seminars, personal guidance courses, etc., camps, meditation courses, etc., are conducted. The details of the programmes conducted under these heads for the years 1972, 1973 and 1974 have been furnished both before the ITO and the other authorities, giving the complete details about the dates, subject, language, programmes conducted, category of programmes, etc. Reference was made also to affidavits of certain persons like Omprakash, Swamy Narendra Bodhisatva, Swamy Yogi Bharat, etc. Copies of letters and correspondence from the University of Western Australia, ERIC, Washington State University, etc., were produced to show that not only nationally but also internationally people have recognised that what was being conducted by the trust was an educational activity of a high type entitled to recognition. In furtherance of the educational activity discourses are held day-to-day for all types of students and seekers of learning. According to the learned counsel, it is not merely a student in a class-room, in a school or college, but even an adult, a working man, etc., seeking knowledge in a systematic way would be getting education. In addition to the discourses and the meditation camps, such educational activity is carried on and spread also through the numerous books written specially for the purpose. While personal teaching through discourses was available to the local students present in the Ashram, finding it convenient to attend them the books, pamphlets, tapes, etc., are capable media for imparting education to people who stay outside the Ashram and also abroad. References were made in this connection to the educational programmes conducted by the foundation during the year under appeal. There were as many as 21 such programmes during the year 1974. The main activity of the Foundation is education and teaching which is achieved by teaching the individual the true purpose of life, how to be at peace with himself and to achieve his own individual true fulfilment and to give forth his best whatever be his vocation or activity in life. A complete list of the books published by the Foundation and also the attempts made by the Foundation to get recognition both on a national as well as international level as an academic institution conforming to the traditional type is referred to. Details of the programme of activities especially those in connection with the meditation are referred to indicate that there is a systematic study and training going on in the institution to justify its being called an educational institution.

13. The learned counsel has also pointed out that a trust as well would be entitled to the exemption under Section 10(22). A trust can have various activities. If the activities of the trust would come within the scope of 'educational', then the trust itself would be exempt as to its income under Section 10(22). In the case of the present assessee the activity during the relevant year was running an educational institution, represented by the Rajneesh Ashram at Poona. The income also was only from educational activities mostly from the sale of educational books. The printing of the books as part of the enlightening activity is educational in character. In fact during the year only discourses, meditation and imparting knowledge through the books were activities carried; on thus supporting the assessee's case that it is a pure educational institution. The learned counsel has referred to several authorities on the scope of 'institution', in particular reference is made to the decision in the case of K.V. Venkatakrishna v. Sub-Collector AIR 1969 SC 563, decision of the Allahabad High Court in the case of CIT v. Radhaswami Satsang Sabha [1954] 25 ITR 472 and the decision of the Supreme Court in the case of Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234. Referring to the discussion of the authorities below on the decision in the case of Loka Shikshana Trust, it is pointed out that the passage in this case does not refer to 'going to school' but has significance as regards the teacher-taught relationship. Referring to the decision in the case of CIT v. Chunilal Khushaldas [1974] 93 ITR 369 of the Gujarat High Court it is pointed out that the observations of the Supreme Court have been limited to the points before them. In this case not only the trust but the manner in which the work is carried on by it signify an educational purpose. The printing of books is only an incidental activity. Reference is made to the decision of the Tribunal in the case of Geeta Dharma Mandal [IT Appeal No. 397 (Pn.) of 1975-76 dated 31-1-1977]. Several other decisions and certain passages in Tudor on Charities, were cited in this connection. To stress that the ejusdem generis rule does not apply to Section 10(22), reference is made to decision of the Madras High Court in the case of Addl. CIT v. Aditanar Educational Institution [1979] 118 ITR 235.

14. In the present case the educational activity was clearly not for profit. A mere surplus does not, according to the learned counsel, prevent the exemption being available if the surplus does not go into private hands as profit. As in Section 2(75) there is no reference to charity in this connection, even profit from publication of books in the assessee's case is an integral part of the educational purpose. While on the one hand there was no evidence to show that the assessee's activities were intended for profit-making, on the other hand there is much to show that the institution does not exist for any purpose other than education. In fact if the donations received are omitted, there would be not only no surplus during the year but a deficit. Even the notional surplus after taking the donation into account is ultilised for educational purposes, viz., construction of buildings.

15. Claiming that the assessee is entitled to exemption in the alternative under Section 11, the learned counsel has put his claim under 3 broad heads:

(i) firstly, that it is a general charitable purpose dealing with education ;

(ii) secondly, that the objects of the trust constitute objects of general public utility ; and

(iii) lastly, that, at any rate, the purpose is religious in nature.

As a prelude to his argument, it is pointed out that the assessee-trust is registered with the Charity Commissioner as a charitable trust. It has also obtained clearance from the Commissioner under Section 80G. These two clearly indicate that the profits, if any, could not go to private parties, thus ensuring the charitable nature of the trust. The Charity Commissioner would not have recognised the institution under the Trust Act unless the objects were charitable. For the purpose of this recognition whether the activity even if it is of general public utility involves carrying on an activity for profit, is not relevant. It constitutes a separate issue. Even the authorities below have accepted that what the assessee carries on is an object of general public utility affording persons who attend the ashram, certain specific advantages which could be given only by the assessee. Dealing with the profit aspect of this activity mainly comprised under the publication of books, it is emphasised that there is no profit in reality.

The surplus, if any, is on account of the free service rendered by the inmates of the ashram. Apart from the fact that it is purely incidental to their activity, the publications are not priced exorbitantly. With regard to the receipts of royalties, this cannot even be regarded as a profit-making activity. 'Activity for profit' really connotes an intention for making a profit. The decided cases indicate that 'activity' governs 'an object' and not 'advancement'. If this is applied to the assessee's case, the claim for exemption cannot be denied. The assessee has referred in this connection to the decisions in the cases of Loka Shikshana Trust (supra), Indian Chamber of Commerce v. CIT [1975] 101 ITR 796 (SC), CIT v. Madras Stock Exchange Ltd. [1976] 105 ITR 546 (Mad.), Addl. CIT v. Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1 (SC), Andhra Pradesh State Road Transport Corporation v. CIT [1975] 100 ITR 392 (AP) CAT v. Cochin Chamber of Commerce & Industry [1973] 87 ITR 83 (Ker.), CIT v. Federation of Indian Chambers of Commerce & Industry [1981] 130 ITR 186 (SC) and several other cases. Lastly, it is contended that the objects, at any rate, are religious in character. According to the learned counsel, the narrow meaning ascribed by the ITO to religious activity in paragraph 11(B) of his order, cannot apply to the present case or for an interpretation of Section 11. That Acharya Rajneesh has been spreading a substantially novel attitude towards life and philosophy and thus has presented before the devotees a new religion which, according to the learned counsel, cannot be ignored. The object of the trust is to educate the people on this religion. Merely because it contains certain new concepts or approaches, it would be wrong to treat it as not a religion. The learned counsel took us elaborately through the meaning of philosophy, the concept of a philosophy as expounded by persons like Aristotle, etc., to show what Acharya Rajneesh propounded is also a philosophy of life dealing with human truths, etc.--which after all is what religion is comprised of.

16. The learned counsel has also pointed out that having regard to the acceptance in the ITO's order of his being a charitable institution and the Commissioner's granting a certificate under Section 80G, it was not open to the department to hold that what the assessee does is not an object of general public utility at all. In fact, if the trust is not for charity, it would be void being in breach of the principle of perpetuity there being no beneficiary. In that case only the settlor can be assessed and not the trustees and the assessment has to be cancelled. In fact even though the assessee can spend the moneys on any object enumerated in the various clauses of the trust deed, according to the learned counsel, there is not even a single sub-clause in this which could be pointed out to be as not charitable.

17. For the department stress is laid on the orders of the authorities below. The assessee filed a return on 23-7-1976 with 'nil' income claiming exemption on several grounds. The main income during the year was on account of capital gain and income from other sources. The assessee, according to the learned counsel for the department, has claimed that its income was not includible in its total income by virtue of provisions of Section 10(22), alternatively, exemption was claimed as a trust under Section 2(75) read with Section 11. The trust in this case is not an educational institution solely for educational purposes as provided in Section 10(22). According to the learned counsel, the trust is also made for the purpose of profit. Even if it is granted that the trust is for a charitable purpose, it does not become an educational institution in the present case. An institution should be a permanent public organisation in order to come under the concept of educational institution. Something intended to carry out charity of an individual, however noble the purpose be, cannot constitute an educational institution. Even if education could constitute charity, an educational institution connotes other ingredients. The expression 'institution' has several meanings. It has to be considered against the context of, in the present case, the provisions of Section 10(22). This is approved, according to the learned counsel, by the Supreme Court in K.V. Venkatakrishna (supra). This is not an educational institution in the context of Section 10(22). Even if it be granted that the ejusdem generis rule does not apply to Section 10(22), the type of educational institution contemplated therein should have relevance in the context of Section 10(22). Referring to 3 TC 491, 1896 AC 7 and the decision in the case of Governing Body of Rangaraya Medical College v. ITO [1979] 117 ITR 284 (AP), the learned counsel has pointed out that even though 'education' has a wide contextual meaning in the UK, in India the Supreme Court has taken the clear view that it applies only to formal education such as elementary education, secondary education, higher education, etc. These and the type of education given in technical or professional institutions provide a career programme where people are trained up in life for something ; teaching is given and the person is trained up for a career. Section 10(22) has only relevance to formal education where education is a process by which knowledge, skill, training, habits, etc., are acquired, whereby a person is entitled to become a useful member of the society. According to the learned counsel, the definition given in this connection in Loka Shikshana Trust's case (supra) still holds good. The assessee-trust even if it is regarded as an institution, cannot be regarded as an educational institution.

18. It is also pointed out that, at any rate, the assessee is not an educational institution solely for educational purposes. Reference is made in this connection to the terms of Clause 5(a) and (b) of the deed. The purpose as enunciated in these clauses is vague and specious ; there is no valid ascertainable purpose. On this point the learned counsel has raised a question: what are the preachings of Acharya Rajneesh and what is his status to be regarded as a philosopher. It must be shown that his preachings are of a type indicating advancement of humanity. Referring to the clause-other philosophers pertaining to all religions and/or main principles thereof and/or morals, the learned counsel has pointed out that the question to be put is whether Acharya Rajneesh could be said to be a philosopher at all like other philosophers of the past. In his lifetime his teachings are vague and spurious ; one has only to speculate as to what are his teachings. What exactly is Acharya Rajneesh ? Can it be said that he had any stature such as that of well known philosophers like Aristotle, Socrates, Shankaracharya, a status resembling even men of recent times like Gandhiji. Clause 5(a) of the trust deed being vague, uncertain and unsound, is, according to the learned counsel, void for the purposes of charity.

19. The assessee is not a trust for education nor is it an educational institution existing solely for educational purposes. Neither Section 10(22) nor parts f Section 2(75) are satisfied in the present case. Naturally, according to the learned counsel, Section 11 would not apply to the assessee on this ground. Even as an object of general public utility, the assessee does not qualify. It is not that the trust provided for some of the indispensables of a settled society. According to the learned counsel, Clause 5(a) of the trust deed and the other clauses do not satisfy this criteria. Clause 5(a) and (b) are to be read together. In fact sub-Clauses (a) and (b) considered separately would be ineffective. The object thus involves carrying on of an activity for profit even if it is regarded as worthy of consideration. Sub-clause (b) is thus a part of the main objects of the trust. In a letter, dated 26-7-1974 the assessee has claimed the publication and circulation of books of Acharya Rajneesh as the main object of the trust. These books are claimed to contain a spiritual and aesthetic material for the spreading of which the trust is formed. Reference is made again to a letter dated 19-12-1975 addressed to the ITO. Publication of books according to this letter is one of the activities carried on by the assessee but it is not the only activity carried on by the institution. The main object of the trust is said to be spreading of 'knowledge, touching to the soul of human being, i.e., on spiritual and philosophical subjects'. For achieving the above, the programme of the institution includes 10 days camp every month, giving intensive training in meditation, 15 days primal group intensive, encounter group, etc., daily discourses on philosophical and spiritual subjects of Acharya Rajneesh, accompanied by two meditations in the day, said to be a sort of imparting training in Yogic and other technics of meditation. The publication of the discourses is in this letter said to be a part of the activities of the trust to achieve the main object. Several hours are devoted directly for imparting training in spiritual and philosophical activities which are carried on non-stop or without any vacation or holidays. It is on the basis of these that it is claimed that the institution is stated to be engaged in educational activities for as many as 2,400 hours a year 'which hardly any other educational institutions must be exceeding'.

20. In order to claim exemption under Section 10(22), according to the learned counsel, the assessee must show that it is a University or other educational institution existing solely for educational purposes and not for profit. Though the Income-tax Act does not define the word 'University', there are other provisions such as those in the University Grants Commission Act, 1956, which defines it 'as established or incorporated by or under a Central Act, a Provincial Act, or a State Act and including any such institution as may in consultation with the University concerned to be recognised by the Commission in accordance with regulations made in this behalf under the Act'. Apart from what are directly termed or known as Universities, by Notification, a Government can declare other institutions as Universities. Section 23 of the University Grants Commission Act provides that no institution whether a co-operative body or not other than an University established or incorporated by or under a Central Act, a Provincial Act or a State Act shall be entitled to have the word 'University' associated with its name in any manner. These and other provisions of the Act make it clear that the University has got a restricted and a special meaning. Referring to the claim of the assessee to be called as Rajneesh International University though in the subsequent years, the learned counsel has pointed out that not only does such a claim not make it a university, it does on the contrary contravenes the provisions of Section 23 of the University Grants Commission Act, 1956, By calling himself a University in the subsequent years, the assessee cannot succeed in claiming exemption under Section 10(22) for those years or analogically claim the same exemption for the earlier years as the basic infrastructure of what subsequently became a University.

20.1 Referring to certain decisions, it, was pointed out that the rule of ejusdem generis would not apply to the interpretation of the word 'educational insti-tution'..Even if based on the decision in Aditanar's case (supra), application of the above rule could be dispensed with, the principle of noscitur sociis would apply. Accordingly, the words take their colour from each other, the meaning of the more general being restricted to a sense analogous to that of the less general. Even though, therefore, the rule of ejusdem generis does not apply, the expression 'other educational institution' will take its colour from the word 'University'. This would gain support from the decision of the Supreme Court in K.V. Venkatakrishna's case (supra) and the decision in 3 TC 491. In order to claim exemption under Section 10(22) the assessee should show that it is an institution ; it exists solely for education and that it does not exist for profit. All the three conditions in the present case are not satisfied. If the claim of the assessee is that it is existing solely for the purposes of education and it is similar in nature to a University, amongst other things it should have been recognised or be capable of recognition by the Director of Education or the Department of Education of the State or Central Government. It must have an educational programme, a syllabus, a standard for achievement prescribed ; it should have teaching staff with requisite and prescribed qualifications ; there must be minimum educational standards prescribed for admission to the institution ; annual and periodical programmes of teaching chalked out in advance for various courses ; and organised scheme of imparting education such as through lectures, workshops, libraries, etc., examinations periodically or finally or at any rate some type of appraisal of the students' achievement ; awarding of diplomas or degrees or even certificates in recognition of the completion of the education or educational programme. According to the learned counsel, if these tests are applied to the present case, the trust would fail miserably as an educational institution. Even, according to the assessee, the main object of the trust is to spread and impart the preachings of Acharya Rajneesh and other philosophers, though reference is made to other philosophers, only the teachings of Acharya Rajneesh figure in the institution, if at all. Apart from being vague the object does not profess to prepare the students for life as is understood by education in even a general or the widest sense. The persons who come to Acharya Rajneesh do not come to learn any courses in arts or science or an admixture of them enabling them to undertake a career ; nor do they come there to equip themselves for any particular training in life or outlook towards life. The Acharya had made it clear that his ideas of education are different from the normal ideas of education. The available data do not indicate what exactly is the scheme of education Shri Rajneesh has in view.

21. Nor, according to the learned counsel, does the assessee exist solely for the purpose of education, since there are other clauses in the trust deed such as the establishment of hospital, medical centres, relief to poor, to run dharamshalas, kala mandirs, public gardens, public utilities, etc. The objects are distributive and the trustees are empowered to spend money on any one of the objects to the exclusion of the other. An institution which could spend its money on public gardens or public utilities or dharamshalas if not on kala mandirs ; according to the learned counsel, cannot in any sense be regarded as an educational institution.

22. Dealing with the claim for exemption as a charitable purpose, it is pointed out that the mere fact that it is recognised under the Bombay Trust Act or has been able to obtain a certificate under Section 80G for some years from the Commissioner cannot be conclusive as to its nature. These are administrative Acts and also ignore the fact that if some objects are charitable, it could be a public trust even if there are others which are not. A charitable purpose should be charitable for all times, the rule of perpetuity does not apply, what the trust does in a particular year is not relevant. The same consideration which apply in connection with Section 10(22) would apply to exemption under Section 11 with reference to education. According to the learned counsel, the assessee does not serve any purpose of general public utility. Being enlightened, even educated on the pet theories, notions or thinking of a particular person does not serve as an object of general public utility. Even if this claim is accepted, according to the learned counsel, the manner in which it is achieved is through discourses for which often an entrance fee is charged, through books, normally if not excessively priced, and tapes, etc. The sale and distribution of these would clearly be an activity for profit under Section 2(75). Exemption under Section 11 on this ground cannot, therefore, be availed of. The assessee clearly does what any trader in books would do. Nor, according to the learned counsel, can a claim of the assessee as a religious institution be accepted. Acharya Rajneesh does not expand any religion even if it be understood in its widest sense. On the contrary, according to the learned counsel, he advocated, as is well known from papers, books, etc., certain course of conduct which at least in some circles is regarded as morally questionable, if not openly repugnant to the normal norms of civilised society. Even if this be regarded as religion, according to the learned counsel, it would be so crude as not to be recognised as a religious practice to be adopted in civilised society.

23. The principal point to be decided in these appeals relates to exemption from tax of the assessee-trust. Several issues have been raised and several authorities were cited for both sides. The assessee has claimed exemption primarily on the ground of an educational institution under Section 10(22). Alternatively, a claim has been made for exemption under Section 11. The ITO rejected the claim under Section 10(22), but accepted a position that the assessee-trust serves as an object of general public utility, but on this ground he rejected the claim, since it involved an activity for profit. In considering the assessee's alternative claim, therefore, the question arises as to whether we are bound by the concession given by the ITO whether it be legally correct or not. The assessee's learned counsel has contended that the ITO having accepted this claim, it is not open to the revenue to dispute it. We do not agree with this. In the first place the whole question regarding the taxability is open before us. Secondly, the ITO has in fact rejected the assessee's claim on the ground that he has not satisfied the conditions necessary for exemption even if an object of general public utility is involved. Thus the consideration was whether the assessee would be entitled to the relief even if his other claim was assumed to be correct. Lastly, and more important than all, there cannot be an estoppel against the statutory provisions. If in law a particular stand obtains, the Tribunal cannot ignore the same merely because the ITO has made a mistake about it. We, therefore, proceed to decide the appeal on this ground also afresh and according to law.

24. The assessee has claimed exemption under Section 10(22) as an educational institution and has also canvassed an interpretation of this sub-section in the light of certain decisions and arguments. These require in detail to be considered for deciding if the assessee fits in with the requirements of this sub-section. Section 10(22) is as under:

10. Incomes not included in total income.--In computing the total of a previous year of any person, any income falling within any of the following clauses shall not be included--

 *   *    *     *      *
 

(22) any income of a university or other educational institution, existing solely for educational purposes and not for purposes of profit ;
 

This provision deals with an item of income not included in the total income of a person. Neither the section nor the sub-section specifically provides that the income should accrue to the person, but unless the provisions of the Income-tax Act through its charging section relate the income to the person, the exclusion cannot operate. The natural corollary of this is that the income of the University or other educational institution should, if it be chargeable, be chargeable in the hands of the assessee. The essential ingredients of this section are that:
  

(i) the income in question should be of a University or other educational institution ;
 

(ii) existing solely for educational purposes ; and
 

(iii) existing not for purposes of profit.
 

Controversy was raised before us on behalf of the department that the exemption does not apply to a trust but only to an institution which satisfies the specific condition of Section 10(22). This, however, is answered by the decision of the Madras High Court in the case of Aditanar Educational Institution (supra), it stated:
 . . . so long as it was found that the institution existed for educational purposes in the relevant year, and so long as its profit is incidental to the purpose of education, the income would be exempt, and not any income however remotely connected with the educational institutions. A society by merely running a college cannot utilise this provision as an instrument for exemption in respect of all its sources of income which had no connection with its educational authority. There must be some correlation between the income earned and the educational institution .... 
 

25. That an educational society could be regarded as an educational institution if the society was running an educational institution, gets support also from the decision of the Allahabad High Court in Katra Education Society v. ITO [1978] 111 ITR 420 and of the Orissa High Court in Secondary Board of Education (supra). If, therefore, a society or a trust manages an educational institution to the extent of the income of the institution which satisfies the conditions of Section 10(22), it would not be taxable.
 

26. It was claimed that the assessee-trust constitutes an institution and would, therefore, come within the provisions of Section 10(12). What is an institution has been discussed by the House of Lords in the case of Minister of National Revenue v. Trusts & Guarantee Co. Ltd. [1940] AC 138, where it was pointed out:
 It is by no means easy to give a definition of the word 'institution' that will cover every use of it. Its meaning must always depend upon the context in which it is found. It seems plain, for instance, from the context in which it is found in the sub-section in question that the word is intended to connote something more than a mere trust. 
 

In Mayor, etc., of Manchester v. Mc Adam [1896] AC 500 is observed:
 It is a little difficult to define the meaning of the term 'institution' in the modern acceptation of the word. It means, I suppose, an undertaking formed to promote some defined purpose having in view generally the instruction or education of the public. It is the body (so to speak) called into existence to translate the purpose as conceived in the mind of the founders into a living and active principle. 
 

In the light of the above definitions of 'institution', their Lordships of the Allahabad High Court held in the case of Radhaswami Satsang Sabha (supra), that the Satsang Sabha was an institution. The expression 'institution' has several meanings and any organised body which carries on a specific activity with continuity could certainly be described as an 'institution'. Referring to K.V. Venkatakrishna's case (supra) the assessee's learned counsel pointed out that a tank was designated as an 'institution'. An 'institution' may be tangible as in that case or intangible as where one speaks of the 'institution of the marriage' but for the purposes of Section 10(22) 'institution' has to be understood as something relevant in the context of a University and education. It could, therefore, mean only an organised establishment where activities which relate to education are carried on. Where a trust ,runs an educational institution, viz., a college, as in Aditanar Educational Institution's case (supra), the trust could become the institution in question. The decisions cited above do not preclude the exemption being available but to the extent obtaining under Section 10(22) to a trust or a society which as part of its several activities also runs an institution, for instance, a college, school, etc.

27. The exemption is available for the income of a University or other educational institution. That we are not concerned with the University here is clear. The claim made is that the assessee is an educational institution and for the assessee's part this claim has been made on two grounds, viz., that the trust itself is an institution and secondly during the year of account only educational activities were carried on by the trust. Support for the exemption claimed, however, was sought on the ground that even though the trust, which in this case was running only an Ashram at Poona, was not during the year of account a University, it was clearly an educational institution. In Aditanar Educational Institution's case (supra), the Madras High Court held that the words 'educational institution' are not to be read ejusdem generis with the preceding word University, since University as such does not constitute a genus. While the ejusdem generis rule may not apply, certainly the meaning of the expression 'educational institution' has to be understood against the context. The exemption in Section 10(22) is intended to be granted as a benefit to education. That a University is a body devoted to education is not in dispute. Other 'educational institutions' should in the context, therefore, be also of the same category even though it need not be a University or likened to it in other respects. The decision in 3 TC 491 referred to by the learned counsel for the department approved by the Supreme Court in K.V. Venkatakrishnd's case (supra) really supports the case. Even in the Madras High Court's decision in the case of Aditanar Educational Institution's (supra) indicates that to be entitled to the relief the institution should be though not a University something akin to it in the sense of functioning for the advancement of education. The expression 'or other' following University would also, in our view, support this, implying, as it does, that the aspect of University considered in this sub-section is 'education'.

28. The other conditions to be satisfied are that the institution should be 'existing solely for educational purposes and not for purpose of profit'. The exemption is available to a University or educational institution. Prima facie these two groups of bodies exist for educational purposes. If there is a body existing for educational purposes and also for the purpose of profit, it would not be entitled to the exemption. An instance in point would be a tutorial college run by a private individual who nets in the profit from running the institution. In our view, the two conditions 'existing solely for educational purposes' and 'not for purpose of profit' are cumulative and must co-exist together to avail of the exemption. An educational institution generally exists for educational purposes. The significance of point 'solely' in the sub-section, therefore, cannot be regarded as a matter of mere caution. An educational institution may either, as a part of its activity of education or independent of it, have other purposes as well, where, for instance, educational institution which teaches the students also conducts a business where the students can be employed or the income from which can be utilised. The institution, however, in that case can be regarded as educational only if at least the major part of its activity should be for education. In order, however, to be entitled for the benefit of Section 10(22) the institution should exist 'solely' for the educational purpose. In other words, any other purpose unless it could be a mere ancillary or incidental to the educational purpose, would deny the exemption. Likewise the institution should not exist for the purpose of profit. Profit, in this connection, would mean private profit. If, therefore, some profit accrues from the educational activity which is not appropriated by any private individual that may not defeat the exemption.

29. Apparently in the concept of 'an educational institution existing solely for educational purposes' there is a redundancy, but this would be understandable if one can think of educational institutions which have activities in addition to purely educational ones, where the exemption would be limited for only the activities which are purely educational. In Aditanar Educational Institution's case (supra) the Madras High Court has explained this as implying that where an institution or a society carries on educational purposes and others to the extent of the educational purposes, it would be entitled to exemption.

30. Granting that the provisions of Section 10(22) are satisfied, the question which arises is whether such satisfaction should apply to the year under consideration or for all time to come. That income-tax is a tax for each year and each year is a self-contained period for the purpose is well settled. Even so in the context of the provisions of Section 10(22) the question would arise as to whether the exemption would apply to the institution as such or to an institution in respect of which it is the income of the previous year. The learned counsel for the assessee has stressed the latter point and claimed during the year of account the assessee's activities were purely educational. Whatever else it may do in other years would not be of any consequence. In our opinion, this would not be correct interpretation of the provisions. Section 10 excludes from the total income of a person certain items of income falling within it. The exclusion is with respect to a person. From this point it may be possible to say that total income of a person for the accounting year is only relevant. Section 10(22), however, deals with the income of a University or other educational institution. To avail of the exemption the person should, therefore, be a University or other educational institution. Judicial interpretation such as in the case of Aditanar Educational Institution (supra) has extended the scope of this sub-section for including societies, secondary boards, etc., which though separate entities also run educational institutions. Even so the exemption would be available and relevant not to the fluctuating nature of the income of the institution from year to year but to the nature of the institution itself. If an institution is a non-educational institution, prima facie it will not be entitled to the exemption. The institution for the purposes of Section 10(22) should be an educational institution, even if its scope is understood as extended by the judicial decisions like Aditanar Educational Institution's case (supra). In other words, according to us, the clarification 'educational' applies to the institution and not to the income and if this be so, primarily the nature of the institution is to be regarded rather than the nature of the income. If, therefore, an institution is not educational, the fact that for some years or any relevant previous year its income is educational may not qualify the institution for exemption under Section 10(22). We have no hesitation in holding on a proper interpretation of Section 10(22) that the nature of the institution as educational is a fundamental condition for availing of the exemption. Merely because, therefore, a trust or a society for some years or in any particular previous years exists for educational purposes and not for purposes of profit, the exemption would not be available to it.

It is interesting to recall in this connection decisions of the High Courts such as CIT v. Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust [1977] 108 ITR 555 (SC), where in connection with wealth-tax it has been judicially laid down that the position as on the valuation date alone would be relevant. The language of the Wealth-tax and Income-tax Acts in this context is different from each other. In respect of the former the wealth on a particular date is considered for assessment, whereas in respect of the latter the income over a period is taken. More than that in respect of the latter for the purposes of Section 10(22) it is the individual--the owner of income--who enjoys exemption and not the income itself. These decisions relating to wealth-tax, therefore, would not be relevant in the present context. In order to be entitled to the relief under Section 10(22) there should be a University or other educational institution and it should satisfy the conditions of the sub-section. Prima facie, therefore, we have to look at the nature of the entity and its personal qualifications. In the case of a trust or society the decision could, therefore, be made only by what the trust deed or the rules of the society provides and not by taking into account what the trust or society does in one year or over several years. Whether the assessee satisfies these conditions for exemption or not has, therefore, to be spelt out from its constituting document.

31. Applying these tests to the present case, we have no hesitation in coming to the conclusion that the assessee-trust will not be entitled to exemption under Section 10(22). In the first place the trust in the present case does not qualify as an educational institution either in the light of the Aditanar Educational Institution's case (supra) or the Katra Education Society's case (supra) or Secondary Board of Education's decision (supra). The assessee is a trust. Its several objects as such are specified in Clause 5 of the trust deed. One of its activities is the running of the Ashram at Poona. Even on the admission of the learned counsel for the assessee, there are some clauses relating to hospitals, dharamshalas, sadavrats, etc., which could independently be regarded as objects of the trust. Even though the learned counsel referred to these as intended to be only incidental to the main Clause (a), in the absence of any directions, evidence or supporting materials in this regard this view cannot be accepted. Under the trust deed as it stands it would be open to the assessee to embark on any of these activities even if they have no relation to the objects in Clause (a).

31A. Secondly, the Ashram at Poona is claimed to be an educational institution in the light of Aditanar Educational Institution's decision (supra). We find two objections to accepting this. The Ashram at Poona itself has several activities, full details of which are not delineated in any definite form. A circular on the activities of the Ashram issued to those who are invited to partake of its activities is very relevant in this connection. For instance one of the pamphlets issued indicates that the Ashram 'at present consists of two main building complexes surrounded by beautiful gardens'. Details are given of Krishna House and Lau Tzu House. Details of the Ashram programme are as under:

Daily ashram programme (Except during camps):

   06 00 hrs.             Dynamic Meditation
  08 00 hrs.             Discourse by Bhagwan Shree
  17.30 hrs.             Kundalini Meditation
  19.00 hrs.             Darshan.  
 

The activities are discourses, darshan, meditation camps, special programmes, rolfing, primal intensive, encounter groups, elightening intensive, healing sessions, etc. The diverse types of activities in some of which the ashramites are the subject, while in others they are objects, whereas in some others one or other person is the subject and the rest of them are onlookers. There are diverse items like special programme, therapies and group work conducted. All these indicate that the activities do not have a common thread where one is an instructor or giver and the other is the receiver or taught. Therapy is a case of healing and not teaching. Discourses may be a matter of understanding, increasing the knowledge or spending the time usefully. The meditation camps may be health exercises or training ground for discipline. Even if, therefore, under the general concept of institutions as generally analysed above the Ashram could be brought, the activities that go on there are so diverse as to be incapable of being brought under a single head. The Ashram at the same time is an institution for lecturing and an institution for healing, an institution for exercises and more than all an institution for preaching the views and personality of a single individual. It could be understood as an intermingling of several institutions each carrying on a different activity, all of which can certainly not be brought under a common denominator called education.

32. The above automatically leads to the non-acceptability of the second claim that the Ashram is an educational institution. Whether the concept of education be understood in the limited sense of scholastic, collegiate or technical education where there is a systematic syllabus through which the students are taken for reaching an ultimate goal appraised by the award of a degree, diploma or certificate or understood in its widest sense as worldly education or acquiring knowledge on some aspect of life and thingswhat goes on in the Ashram cannot fit in with it. We fully agree with the argument of the learned counsel for the assessee that even for the purposes of Section 10(22) education should not be understood in a narrow sense. We cannot, however, ignore the actual words used in Section 10(22) referring as they do to University or other educational institutions. This necessarily implies that the education contemplated in Section 10(22) should be of a nature that obtains in Universities or other educational institutions commonly understood. When to this concept is added the two other attributes 'existing solely for educational purposes 'and' not for profit', the idea is clear that whatever a person achieves in this institution should be an addition to his personal outfit similar to what obtains in a University or any other educational institution. In other words, even if Section 10(22) does not require that a degree should be awarded, a regular course should be conducted or there should be an oversight by the education department of the State or a Commission like the University Grants Commission, it should comprise certainly systematic imparting of knowledge akin to what goes on in these places.

If an institution, therefore, prepares a person for writing an examination conducted by a University or a faculty, or the organisation like the Institute of Chartered Accountants or conducts systematic classes educating adults or preparing a person for a discipline like Homoeopathy, Astrology, etc., it could be called an educational institution. But an institution where diverse activities are carried on to suit the interest and mind of a particular individual, activities incapable of being assessed in the end and not possible to be evolved as an addition to the human outfit, however much the person may feel mentally satisfied with the acquisition, such an institution could not be regarded as 'educating' him. A person who attends the Ashram and partakes of its activity may feel refreshed after a meditation camp, be more informed after hearing the discourses of the Acharya or even feel elated by attending to the yogic, healing, etc., sessions, but certainly he cannot claim to have been educated. And where the subject does not get educated it would be wrong to call the institution where he is, an educational institution.

33. It would be interesting to recall the following from the judgment of H.R. Khanna, J. in the Loka Shikshana Trust's case (supra) where education referred to in Section 2(15) was considered:

The sense in which the word 'education' has been used in Section 2(15) in the systematic instruction, schooling or training given to the young is preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. The word 'education' has not been used in that wide and extended sense, according to which every acquisition of further knowledge constitutes education. According to this wide and extended sense, travelling is education, because as a result of travelling you acquire fresh knowledge. Likewise, if you read newspapers and magazines, see pictures, visit art galleries, museums and zoos, you thereby add to your knowledge. Again, when you grow up and have dealings with other people, some of whom are not straight, you learn by experience and thus add to your knowledge of the ways of the world. If you are not careful, your wallet is liable to be stolen or you are liable to be cheated by some unscrupulous person. The thief who removes your wallet and the swindler who cheats you teach you a lesson and in the process make you wiser though poorer. If you visit a night club, you get acquainted with and add to your knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education in the great school of life. But that is not the sense in which the word 'education' is used in Clause (15) of Section 2. What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by normal schooling.

34. It was pointed out that the substantial part of the activity of the Ashram consists in the publication of books. Whereas the local ashramites had the benefit of the lectures of Acharya Rajneesh in person, the substance of these lectures were made available to non-ashramites through books, tapes, etc. Certainly reading books may be a part of education but reading books by itself cannot be regarded as education, especially where the books themselves represent the view of an individual however eminent he be. If a person were to perhaps take up as a subject for research and investigation, the works of Acharya Rajneesh even as he could research on the works of Ramanuja or Kalidasa or Socrates or Shakespeare, say for preparing a thesis for a Doctorate or so, certainly that could be a part of educational activity. The institution which enables such activity to be carried would be an educational institution but not the reading of the books themselves. We have no doubt that a University or an institution which enables a scholar to study literature to use as his subject of research the plays of Shakespeare and Kalidasa to win a Doctorate degree would be conducting an educational activity, but wherever a person who continuously reads the books of Shakespeare or Kalidasa would not be conducting an educational activity. In the first instance, it is a case of an outsider contemplating certain scheme of knowledge, certain good things of study and writing, whereas in the latter case it is only a routine going through of some material somebody has projected. The difference though subtle is enormous. There is also no merit in the contention that a place for reading of books of a particular author or writer or even a saint, however eminent he may be, would constitute an educational institution by itself. If that be so, it would be easy for any person having enough money to write books of any type, however worthy or unworthy, on any subject and claim that whoever reads the books will be getting educated, and the place where they are read is an educational institution. While on the one hand what is said in the books and their impact on the current thinking, etc., of the society may be relevant, including a case where views so outlandish as to be contrary to common customs are expressed, even if they go with the normal thinking of the society an individual's exposition of his own views cannot claim for itself the status of education or the place where this is given the status of an educational institution. We have, therefore, no hesitation in holding that the assessee will not be entitled to the exemption under Section 10(22).

35. The alternative claim of the assessee is for exemption under Section 11 on the ground of education ; as an object of general public utility ; and, at any rate, a religious purpose. Exemption here is available under the provisions of Section 11 read with Section 2(75). The principal point to be seen in this context is also whether the claim for exemption could be decided on the basis of the activity of the assessee during the previous year or on the general extent of its activity as is available from the aims and objects of the trust deed. Section 11 is as under:

11. (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income--

(a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India ; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of twenty-five per cent of the income from such property ;

The exemption in this case relates to the income from property held under trust for certain purposes. The exemption is available if the purposes are charitable. Even though the exemption applies to the income, the income under consideration is from 'property held under trust'. The criterion for decision, therefore, would depend on the property and the nature of the trust rather than the nature of income itself. A trust being an obligation attached to property with confidence reposed by the settlor the nature of the property when once a trust is constituted cannot change. If, therefore, a property is held under trust for charitable or other purpose, it should continue to be held for the same purpose if the provisions of Section 11 are to be available. Since the nature of a property is to be decided by its position relating to the trust deed whether the exemption is available under Section 11 or not would automatically depend on the trust deed itself. It is only, therefore, on a proper reading of the trust deed that the eligibility for exemption be determined and not merely by finding out whether in a particular previous year the assessce utilised the income for charitable purposes or not. If under the provisions of the trust deed the property is not held for charitable or religious purposes, it would be of no avail. This latter can be ascertained only by reading and interpreting the objects of the trust itself, as could be gathered from the trust deed. Even in this case the analogy with decisions under the Wealth-tax Act as to the nature of a trust on the valuation date and the beneficiaries therein is of limited help to the assessee. Dharmaposhanam Co. v. CIT [1978] 114 ITR 463, where the Supreme Court held that whether a trust is for a charitable purpose or not falls to be determined with reference to all the objects for which the trust has been brought into existence and not merely the activities actually conducted by the assessee, supports our view above.

36. On the claim itself the trust cannot be regarded as for educational purposes for the reasons extensively set out in connection with the claim for relief under Section 10(22). The trust cannot be stated to be carrying on an educational activity.

37. Nor can the trust be said to have a religious purpose. Religion even if it is regarded as a concept of the widest import cannot take in the individual views of a person however eminent he be. Religion has been understood as words, thinking and practice relevant to well known religions of the world. In some context it is also defined as a way of life but in both the senses it is absolutely necessary that it should connote a way of life not merely for the individual but for a particular group in the community and in fact as substantially large part of the community. If an individual decides to lead his way of life physically or intellectually or socially or spiritually in a particular way, however much he may claim that to be his religion society does not accept it as such. It may be regarded merely as an individual's way of living, if not, an exposition of his idiosyncrasies. Even if four people join together and decide on a common way of dealing with themselves, their lives and society, that may constitute a group, an association or a club, but certainly would not be regarded as religion in any sense as commonly understood. It is only when substantial groups of persons moved by the teachings, preaching, ways of life and guidance given by an eminent person or persons and coming through periods of life from generation to generation that we can call it a religion. Hinduism spread over the ages from sages to sages accumulating the genius of man from time to time comes down to us as the religion of Hinduism. Christianity set on the foundation of the teachings of Jesus subject to all its questioning of Christ, thwarting and disobeying him and his teachings from age to age has come down to us as a religion. Likewise with the prophet and the teaching of Kuran, the Budha and his great teachings, Mahavira with his prolific gifts to mankind have all come down to us from generation to generation being subjected to the contemporary struggle and tests from every generation so as to be regarded today as the religion of Islam, Buddhism, Jainism, etc. Even the philosophy of a great philosopher like Aristotle, Shankaracharya, Ramanuja have not come down to us with the high name of religion. With all their scholarship, wisdom and knowledge, masterly instructions, guidance and leadership for the community and their lasting all around contributions to the development of the human mind, these great men are not regarded as the fountain heads of new religions. You do not talk of the religions of Socrates or Aristotle, nor do you think of a religion of Shankaracharya, Ramanuja or in recent times of Gandhiji or Rabindranath Tagore. They are the exponents of the Hindu religion in its various ramifications. When this is the position even with respect to some of the greatest men of the world, we do not see how we can disagree with the learned counsel for the department when he contends that however deep, vast and great the subjects taught by Acharya Rajneesh it could not be even a parody of religion. Apart from this there are inherent conflicts with what Acharya Rajneesh has taught in his discourses through his tapes or books. It is unfortunate that neither the departmental authorities or the assessee nor the learned counsel for the department or the learned counsel for the assessee is in a position to explain to us what exactly these books, tapes and discourses stand for or contain. We must regret that we had no time or opportunity to go through these material, nor has any critic or the results of any detailed study or this material by any responsible person been produced before us. It would, therefore, be impossible for us to ascertain or evaluate what exactly these contain and what exactly is the message or direction to the world of Acharya Rajneesh. When everyone is so much unaware of what is in it if one is not able to recognise it even as a matter of substantial teaching not to speak of the tenets of a religion, it is understandable. While claiming that the Acharya's efforts serve the religious purpose, the learned counsel for the assessee has not indicated before us what purpose it serves, what exactly is the religion it propounds to the world and what exactly in the shape of religious wisdom it can offer to the community.

38. It requires to be said on the contrary that the learned counsel for the department alleged that some of the activities within the Ashram and some of the notions outsiders have about the Ashram such as obtained in newspapers, journals, etc., and also some of the views expressed in these books or discourses relating to life, sex, etc., are so outlandish if not offensive that they could be regarded even as a negation of religion. Rightly as the learned counsel for the assessee pointed out no evidential material other than a vague allegation is made in this regard. From the strictly jurisprudential point of view evidence of any type has not been produced in this connection. Acharya Rajneesh, however, is a controversial figure and we shall not be telling the truth if we disown having seen material relating to his activities in the common newspapers everybody reads day-to-day. In fact we find that one of the recent items of news indicates that the Acharya has shifted to the State of Oregan in the United States where his activities are carried on and as part of these even night clubs are to be opened in several parts of the world. This being mere a newspaper report cannot be treated as evidence or even serious information to judge a case. We are mentioning this only to emphasise the point that while on the one side evidence is not coming to prove the exact nature of the message the Acharya has to give and the specifically alleged noble way of life he holds out for humanity, there are other items of information to the contrary. It is true in the lifetime and even thereafter of every religious leader and prophet offensive things might have been said or made out against him. Time, however, has withstood this and it is thus religions have come down to us. If perhaps years or centuries later the Acharya's teachings likewise in spite of all offensive or distasteful things said against him could survive in the world, this would certainly be a religion and the purpose could be a religious purpose. Unfortunately, we are far behind that time and in the absence of any evidence the activities of the Ashram whether they be in the form of discourses, lectures, tapes or in the shape of meditation camps, yogics, etc., cannot be said to be a religious purpose.

39. That leaves us with the third claim made of an object of general public utility. Even here nothing substantial has been placed before us to show that the running of the Ashram at Poona serves any object of general public utility. We may mention that the ITO has accepted this claim of the assessee but disallowed the claim for exemption on the ground of there being an activity of profit. In our view, the facts do not indicate that the ITO is correct in coming to this conclusion. As stated earlier, the activities in the Ashram do not indicate that any ultimate benefit would accrue to any particular individual, from these activities, even granting that a benefit can accrue to him by attending the lectures of any person, the activities of any club or being in the company of different persons in any association. Whoever would like to join the Ashram or attend the activities of the Ashram may do so for his personal benefit but such benefit would accrue to a person who attends a Yoga centre, a gymnasium, a gymkhana club, or even a cinema theatre. All these cannot be regarded as objects of general public utility, however much they may be objects of individual personal utility. In our opinion, these do not have even the benefits as sadavrats, bathing tanks, etc., which are endowed and kept open to the public. These latter are open to the public and without any liability they can have all the benefits. Even in the case of hospitals, schools, etc., strictly regarded as charitable purposes where payments sometimes are to be made but on the principle that eleemosynary element is not necessary for charity, they are held as charitable ; but while they are subject to rational limitations the institutions are open to all. In the assessee's case the Ashram is not open to all. The learned counsel for the department pointed out that even entry to the Ashram including the hearing of the discourses is regulated by payment, that the tapes, books, etc., are all priced publication and the entire activity is run more on a business line than otherwise. Clinching evidence in this regard not having been brought before us, we cannot accept this argument. It, however, remains that the activities of the Ashram cannot be regarded as open to the public in the same way as those of charitable institutions as generally known. The trust deed makes it clear especially in Clause 5(a) that a main object of the trust is the expounding of teachings of Acharya Rajneesh. Even though it refers to other philosophers, it is clear that such teachings are very limited if not negligible in extent. The institution, therefore, could be regarded as primarily intended for expounding the teachings of a single individual. This teaching is not part of the organised activity of studying the views or teachings of several eminent individuals. Even though, therefore, one who would attend the activities of the Ashram would do so only on purely personal considerations and not as part of availing of a general public benefit, ultimately if a question is asked as to what purpose is served by a person attending these discourses, those lectures and hearing those tapes of the Acharya, in any sense much more than one could obtain by reading the numerous books in the market or the hearing the tapes in the market, the answer would be negative. The institution does not serve, in our opinion, even as a public library free or marginally free as any public library would serve. In our view, there is no object of public activity served by the trust deed.

40. Some of the clauses of the trust deed, e.g., Sub-clause (s) of Clause 5 do deal with hospitals, sadavrats, kala mandirs, etc. These obviously are charitable purposes, coming under the scope of object of general public utility. But it is settled law that where some charitable objects exist side by side with those which are not charitable and the trustees have the power to spend the money on any of these as they like, the entire trust would be regarded as not charitable. See Swat Art Silk Cloth's case (supra) approving East India Industries (Madras) (P.) Ltd. v. CIT [1967] 65 ITR 611 (SC) and Mohammed Ibrahim Riza v. CIT 1930 57 LR IA 260 on this point. These sub-clauses would not derogate from the general conclusion we have drawn above. We, therefore, hold that the assessee-trust is not entitled to exemption either under Section 10(22) or under Section 11 read with Section 2(15).

Before parting with this issue, certain points raised require to be dealt with. The learned counsel for the assessee pointed out that in the earlier year the assessee had been treated as entitled to exemption as a charitable institution ; that the Commissioner granted the benefit of Section 80G for several years and above all that the assessee has been treated as a charitable institution under the Bombay Trust Act. While all these may have a relevance to their respective situations, in so far as we have to find out as a matter of fact and law the assessee's eligibility for the exemption claimed these cannot be regarded as tying us down to any particular view.

There was then discussion on the issue of 'members' referred to in Clause (xiv) of the deed. The learned counsel for the assessee pointed out that there is in fact no such membership entitled to be the beneficiary of the trust. At best persons in sympathy with the objects were enrolled to assist the trust in fulfilling its obligations. While the above clarification does not appear on the face of the trust or in any pamphlet relating to it or letters written by the assessee to the authorities, we have only the assertion of the learned counsel for the assessee in this regard to clarify the position. Be that as it may, in the absence of any regular membership of the trust deriving benefit in any particular manner from the trust, it is not necessary to delve deep into this question. The last point of interest raised by the assessee's learned counsel is the application of the trust in the subsequent years, i.e., in 1977 for being recognised in respect of its World University as a University. Apart from the fact that this is a matter which comes up for consideration long after the assessment year under appeal, what happened to any such application made by the assessee to the governmental and other authorities is also not known. Letters of appreciation and opinions as to the functioning of the trust and the institution produced from disciples and others have been put into support the assessee's claim as an educational institution. How far these writers are competent to decide the question of the assessee being an educational institution for the immediate purpose before us is a debatable question. That apart views expressed by sundry people obviously interested in the trust and without any substantial evidence, facts, etc., to support their opinion, cannot by themselves be of much use in deciding this issue.

41. Both on behalf of the assessee and the department several decisions were cited in support of the propositions advanced. Some of these require to be specially considered.

42. The claim for exemption under Section 11 was raised before us on the ground of an educational purpose, an object of general public utility and lastly as a religious purpose. There are decisions indicating that a trust to establish schools for imparting free education, for establishment of professional chairs, scholarship, fellowship, grant of research fellowship, prizes, awards, etc., would be charity. The Orissa High Court decision in the matter of Secondary Board of Education (supra) as well as the Gujarat High Court decision in Secondary Board of Education v. ITO [1972] 86 ITR 408 (sic) support this case. In Re. Shakespeare Memorial Trust [1923] 2 Ch. 398, 'education', it was held, does not always involve teaching in the sense of a teacher teaching a class but would include acting on the stage, classical dances and the like provided the imparting of the knowledge would be to the students by lectures, teaching and education. Even raising the aesthetic and artistic taste of people by training them to appreciate high class music, dance such as kathakali, high class painting, etc., could be regarded as intended for educational purposes constituting a charitable institution. Reference was made to the Royal Choral Society v. IRC [1944] 12 ITR 13 (CA), where a society formed for the purposes of the engagement and advancement of choral singing was held to be engaged in a charitable object. This decision dissented from a passage in Tudor on Charities, 5th edition, page 39, where fine arts were held to be not objects of charity. In fact the learned counsel for the assessee referred to certain passages in Tudor in this connection. On the contrary the object of running a newspaper, though the object was to create an organ of educated public opinion was not held to constitute education. For this purpose, in Loka Shikshana Trust (supra), the Supreme Court gave a very restricted meaning to this object. In our opinion, it would not be possible in this connection even to distinguish a newspaper or for a matter of that a periodical journal from other similar publications like a series of books published on one or different subjects or one or different aspects of the same subject. This would be the position in the present case where books are published and recorded tapes are distributed. In Incorporated Council of Law Reporter for England & Wales v. AG 47 TC 221 a Council formed to prepare and publish judicial reports was held to be charitable but in the restricted statutory exposition of charity under the Indian Act this ratio may not apply. As mentioned in Bar Council of Maharashtra v. CIT [1980] 126 ITR 27 (Bom.) not all items regarded as charitable under English law could be regarded as charitable in Indian law. None of the decisions, therefore, cited on behalf of the asses-see would in the light of the facts in the present case explained in detail in the earlier paragraphs constitute a charitable purpose under the head 'Education'.

43. A claim to exemption on the ground of religious purposes was also made. Trusts for the building and renovation of temples--Khublal v. Ajodhya ILR 43 Cal. 574, dargas and mosques--Hazarat Pirmahomed Shah Saheb Roza Committee v. CIT [1967] 63 ITR 490 (SC), muktad ceremonies for Parsees following the Zoroastrian religion--Dinshaw Manekji Petit v. Jamshedji ILR 33 Bom. 509, feeding brahmins--CIT v. Ahmedabad Rana Caste Assn. [1973] 88 ITR 354 (Guj.), boarding houses at Makka--Mohamad Yusuf v. Mohamad Sadia AIR 1933 Lah. 531, establishing Christian missions--IRC v. Pemsel 3 TC 53 (HL), are all held to be religious trusts. Such trusts usually connote gifts for the advancement of established religions or religious beliefs, spiritual teachings on the basis of religions, etc. No decisions have been cited before us wherein a trust intended for the propagation of the thoughts, ideas or writings of any particular individual not regarded as an eminent religious authority or teacher has been held to be a religious purpose. Even granting that the teaching of the particular individual would have a religious basis or the embryonic contents of a religion it could at best be called a private religion, a trust for such purposes cannot be recognised as a religious endowment or a charitable institution on that score.

44. The last and perhaps the strongest point on which the claim as a charitable purpose has been made refers to the fourth and residuary head in Section 2(75) 'advancement of any other object of general public utility not involving the carrying on of any activity for profit'. The decided cases furnish a large number of instances where the advancement of any other object of general public utility is noted. For instance, running of a newspaper for educating the public--In re. The Trustees of the Tribune [1939] 7 ITR 415 (PC), Loka Shikshana Trust (supra), institutions for promotion of cottage industries, etc.,--CIT v. Bengal Home Industries Assn. [1963] 48 ITR 181 (Cal.), running chambers of commerce for rendering service to the members, supplying information, making representations to the Government, settling of disputes, etc. --Indian Chamber of Commerce (supra), CIT\. Andhra Chamber of Commerce [1965] 55 ITR 722 (SC), running an institution for hand-spun khadi--All India Spinners' Assn. v. CIT [1944] 12 ITR 482 (PC), a sabha for the amelioration and welfare of a section of the public--Radhaswami Satsang Sabha (supra), running a swimming pool--CIT v. Breach Candy Swimming Bath Trust [1955] 27 ITR 279 (Bom.), have all been held to be objects of general public utility.

45. In the case of Surat Art Silk Cloth (supra), the Supreme Court discussed at length the scope of 'charitable purpose' obtaining in Section 2(75) of the Income-tax Act. There the association carrying on several activities for the promotion of trade and commerce in art silk yarn, cotton yarn, raw silk, silk cotton, etc., deriving income by way of subscription from members and commission received from them on licences for import of foreign yarn, etc., claimed exemption under Section 11. Though a good part of the dispute centred round the words 'not involving the carrying on of any activity for profit', their Lordships of the Supreme Court considered the scope of the basic claim itself 'object of general public utility' and held that the Art Silk Mfrs. Assn. satisfied the test. The other decisions on charity--Loka Shikshana Trust's case (supra), Indian Chamber of Commerce's case (supra), CIT v. Dharmodayam Co. [1977] 109 ITR 527 (SC) and Dharmaposhanam Co. (supra) were considered. While the words 'objects of general public utility' would exclude each of a private gain it should all the same subserve general public utility in order to be termed a charitable purpose. Thus, an institution formed by hotel proprietors for securing permits for sugar, rice, wheat, etc., for the members was held to be not charitable in Madras Hotels Association v. CIT [1978] 111 ITR 241 (Mad.). Trade, commerce and industrial associations have been brought under the head of objects of general public utility mainly because they advance the interests of the community and not merely of the persons engaged in trade, commerce or industry--Andhra Chamber of Commerce (supra). Other instances coming under this head are those of gifts for rests houses--Gordhan Das v. Chunilal ILR 30 All. 111, gifts for planting and rearing of trees for shade purpose--Ramaswami v. Aiyaswami AIR 1960 Mad. 467, a stock exchange association to regulate and control trade in the interest of the community-- Hyderabad Stock Exchange Ltd. v. CIT [1967] 66 ITR 195 (AP), dharamshalas and sadavrats--CIT v. Shri Dwarka Dheesh Temple[1946] 14 ITR 440 (All.), temples for Jains and a library--CIT v. Keshari Singh Nahar [1964] 51 ITR 699 (Cal.), rest house--IR v. Trustees of Roberts Marine Mansion 11 TC 425, feeding of persons and travellers--ILR 21 Mad. 10, preservation of places of historical interest or natural beauty--In re. Vierall [1916] 1 Ch. 10077. In all these instances, we find that the beneficiary of the charity receives something which he is in need of and without which he would suffer. The same cannot be said of other instances such as social club, a cinema theatre, etc., where a person chooses to adopt for himself a method of enjoyment, relaxation, etc. While a free park where the members of the community come and relax is donated for the community certainly it would be a charitable purpose, but if a park to serve the particular inclinations of some people is kept open so that they can come there with payment, it would be really a question whether the same situation, viz., the park would constitute a charitable purpose. In the latter case even if payment is not made or reduced payment is collected, it may not fall to be regarded as an object of general public utility. In other words, the cases cited clearly indicate that it is not the individual purpose of a person or the satisfaction of the needs or indiosyncrasies of any particular person which serves as a general public utility. What the common man in the community by and large stands in need of either because he is too poor or because he does not have the facility for the same or has got other disabilities and a person supplying these to him would give him a 'utility' and where such utility is granted to a substantial part of the public even though not the entire public, that would constitute an object of general public utility. In the present case, a person conducts discourses on whatever he feels to be important or conducts camps, etc., the way that he finds them interesting or brings out books written by him for sale. None of the decided cases help us in concluding that this would constitute an object of general public utility. What Acharya Rajneesh Ashram does in Poona, in our opinion, will not constitute an object of general public utility as understood from the decided cases including those extensively cited by the learned counsel for the assessee.

46. Even granting that the object served by the trust is an object of general public utility, the authorities below have held them to be covered by the phrase 'not involving the carrying on of an activity for profit' obtaining in Section 2(15). The reason for coming to this conclusion is that the writing, publishing and selling of the books as well as the making and selling of the tapes, giving out the ideas of Acharya Rajneesh is itself regarded as an object of the trust. These obviously involve an activity for profit. It is certainly intended that the books or tapes are to be purchased by the disciples or interested persons and by making use of them only they could achieve an object of general public utility. Hearing the tapes and reading the books themselves, according to the learned counsel for the assessee, constitute the object of the trust. This perhaps is borne out also by the object clauses. This being so, it cannot be claimed that alleged charitable object does not involve an activity for profit. The activity of publishing and selling books, making and selling tapes clearly resembles what an ordinary businessman does.

47. The Supreme Court in Swat Art Silk Cloth (supra) dealt at length with the effect of the abovementioned phrase. These words in the definition are held to go with 'object of general public utility' and not with 'advancement'. If the object does not involve the carrying on of an activity for profit, it is not necessary that the accomplishment of the object or the means to carry it out should not involve such activity. The Supreme Court on this point approved the decisions of the Kerala and Andhra Pradesh High Courts in CIT v. Cochin Chambers of Commerce (supra) and the Andhra Pradesh State Road Transport Corporation (supra) respectively. Even the word 'involving' was approached in two ways: holding the purpose or object to be of such a nature that it cannot be achieved without carrying on an activity for profit, the other to see whether the purpose in fact involves the carrying on of an activity for profit. In Dharmodayam's case (supra) the activity was found 'as a matter of advancement of the purpose'. The question also arises as to whether the activity for profit actually carried on is an integral part of the purpose. It was also stressed that it is not enough as a matter of fact that an activity results in profit but it must be carried on with the object of making profit, the predominant purpose of the activity being making profit and not subserving the charitable purpose. The Supreme Court overruled the decision in Loka Shikshana Trust's case (supra) where the majority held that ordinarily profit motive is a normal incident of business activity and if the activity of a trust consists of the carrying on of a business and there are no restrictions on its making profit the court could assume in the absence of indications to the contrary that the objects of the trust involved carrying on of an activity for profit. A minority view of Mr. Justice Beg in that case is to the effect that if profits necessarily feed a charitable purpose, under the terms of the trust, the mere fact that the activities of the trust yielded profit would not alter the charitable character of the trust. The genuineness of the purpose, according to the minority decision, was to be tested, by the obligation created to spend the money exclusively or essentially on charity which determined the claim for exemption. Surat Art Silk Cloth's case (supra) disapproved the approach in the earlier case of Indian Chamber of Commerce (supra) where the Supreme Court held that the statute interdicted for the purpose of tax relief the advancement of object by involvement in the carrying on of activity for profit. The law settled by the Supreme Court in Surat Art Silk Cloth's case (supra) is that where the dominant or primary purpose was an object of public utility not involving the carrying on of an activity for profit, the assessee was entitled to the exemption. This decision on the facts of the case does not help the assessee.

48. Having held that the assessee is not entitled to exemption either under Section 10(22) or Section 11 of the Act, the question arises as to the computation of the total income of the assessee. An important point contested in this connection in the assessee's appeal is the capital gain made by the assessee by the sale of the Woodland's flat. The assessee-trust purchased a property in December 1969, and sold it in June 1974 to the Standard Mills Co. Ltd. The property was a flat No. 1-A and Garage No. 1-5. It was sold for a sum of Rs. 6,30,000. It was claimed before the ITO that the trust occupied the flat as residential premises and the capital gain thus arose on the sale of the residential property since another property was purchased. Holding that the relief under Section 54(1) obtains only for individuals who can physically reside in immovable properties, the ITO disallowed the claim. This was supported by the Commissioner (Appeals).

49. The learned counsel for the assessee has pointed out that the trustees constitute individuals and can be assessed as such to income-tax. Even accepting perhaps, the (sic) too correct view of the ITO on this point, in so far as trustees constitute an individual the provisions of Section 54(1) would apply to them. Reliance is placed on the decision in Trustees of Gordhandas Govindram Family Chanty Trust v. CIT [1973] ITR 47 (SC). Reference is also made to Abhay L, Khatau v. CWT [1965] 57 ITR 202 (Bom.).

50. The Supreme Court in Gordhandas Govindram (supra) held that the trustees for the purposes of Section 3 of the Act constituted an assessable unit as individuals. In our opinion, this was a finding on an immediate point as to the status in which the trust was to be assessed. This does not help the assessee where he claims that the trust has acquired the quality or incidents of an individual for the purpose of Section 54. As rightly stated by the ITO, Section 54 specifically provides:

54. (1). . .being used by the assessee or a parent of his mainly for the purposes of his own or the parent's own residence ....

These words clearly indicate the nature of the assessee contemplated in Section 54, as one who is capable of having a parent. Apart from, therefore, the concept of residence being a physical residence of a physical person, the additional reference to a parent of the assessee clearly clinches the issue in favour of the department. In Abhay L. Khatau (supra) to which reference was made by the learned counsel, joint trustees were held to be unit for the purpose of taxation and capable of being assessed to wealth-tax in the status of an individual. Here too the reference was only to Section 3, the charging section of the Wealth-tax Act, and the interpretation was for the purposes of fixing the liability to wealth-tax and the determination of the status in that connection. This decision also does not help the assessee. We have no hesitation, therefore, in upholding the view of the ITO on this point. Section 54(1) does not apply in the assessee's case.

51. As an alternative, reference is made to the provisions of Section 11(1A) which runs as under:

11. (1A) For the purposes of Sub-section (1),--

(a) where a capital asset, being property held under trust wholly for charitable or religious purposes, is transferred and the whole or any part of the net consideration is utilised for acquiring another capital asset to be so held, then, the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purposes to the extent specified hereunder, namely:--

(i) where the whole of the net consideration is utilised in acquiring the new capital asset, the whole of such capital gain ;

(ii) where only a part of the net consideration is utilised for acquiring the new capital asset, so much of such capital gain as is equal to the amount, if any, by which the amount so utilised exceeds the cost of the transferred asset ;

(b) where a capital asset, being property held under trust in part only for such purposes, is transferred and the whole or any part of the net consideration is utilised for acquiring another capital asset to be so held, then, the appropriate fraction of the capital gain arising from the transfer shall be deemed to have beed applied to charitable or religious purposes to the extent specified hereunder, namely:--

(i) where the whole of the net consideration is utilised in acquiring the new capital asset, the whole of the appropriate fraction of such capital gain ;

(ii) in any other case, so much of the appropriate fraction of the capital gain as is equal to the amount, if any, by which the appropriate fraction of the amount utilised for acquiring the new asset exceeds the appropriate fraction of the cost of the transferred asset.

The assessee sold the Woodland's flat and acquired a plot in Poona. Even if the provisions of Section 54 are not available in so far as the net consideration received has been utilised for acquiring another capital asset capital gains should not be brought to tax in respect of this transaction. Section 11(1A) would apply only to a case where Section 11 applies. The capital asset in respect of which capital gain is computed or relief from taxation is claimed should in this case be property held under trust wholly for charitable or religious purposes. We have held above that the assessee does not satisfy the condition for being a trust holding property for charitable or religious purposes. Section 11(1A), therefore, cannot apply to the case.

52. In the cross objection by the department the fact that the assessee is not entitled to exemption under Section 10(22) or on the ground of charitable or religious purposes is emphasised. It is claimed that having held that the members of the public are not beneficiaries in the trust and on being factually satisfied that the benefit of the institution, if any, was confined to the members admitted, the Commissioner (Appeals) erred in coming to the conclusion that the object of the trust was of general public utility. On this point we have discussed the position at length and come to the conclusion that the assessee-trust cannot be said to be one intended for general public utility.

53. Another ground challenged is regarding the computation of income. The trust received donations of Rs. 99,852 which are included by the ITO in his assessment. The Commissioner (appeals) deleted the inclusion. This is challenged in the departmental appeal.

54. The learned counsel for the department has pointed out that in the return filed by the assessee income from other sources on account of donations was shown at Rs. 99,852. According to Section 12(a) of the Act, even if the assessee were for a charitable purpose the donations would be assessable unless it was intended for the corpus of the trust. There is no evidence in this regard. On the contrary even the nature of the alleged donations, according to the learned counsel, is not clear. A pamphlet published by the assessee in this connection refers to donations as relevant for malas (garlands), etc. The auditors' report for the year also indicates that whatever is received by the assessee and put under the head 'Donations' is not donations as properly understood but could be consideration for either sale of commodities or for rendering of services. Since the assessee himself had returned this as income, there was no onus on the part of the department to prove that it is income apart from what the return stated. Reference is made in this connection to the decisions in Raghuvanshi Mills Ltd. v. CIT [1952] 22 1TR 484 (SC) and [1968] 69 ITR 594 (sic). The point is also stressed that even if the assessee is treated as a charitable institution, donations would be income.

55. For the assessee stress is laid on the order of the Commissioner (Appeals). Section 2(24)(iia) referred to voluntary contributions received by a trust created wholly or partly for charitable purposes as being in the nature of income. Section 12 also provided that voluntary contributions received by a trust created wholly for charitable or religious purposes should be deemed to be income derived from property held under trust. Having denied the assessee the exemption under the ground of charitable trust, the learned counsel has pointed out that the donations cannot be included as income. There was nothing to indicate that these receipts were on account of a facility provided and as a consideration for the same. If Section 10(22) was applicable to the assessee, donations will not in any case be assessable. All through the matter has proceeded on the basis that what the assessee received was a donation. A donation cannot become an income in the case of a person who is not a charitable trust. Reference is made in this connection to the decisions in Rev. Father Prior, Sacred Hearts Monastery v. ITO [1956] 30 ITR 451 (Coch.), Mehboob Productions (P.) Ltd. v. CIT [1977] 106 ITR 758 (Bom.) and CIT v. Yuvarani Premkumari [1979] 117 ITR 908 (Guj.).

56. The exact nature of the receipts credited to the accounts as donations is not known. A pamphlet, as pointed out by the learned counsel for the department, does indicate the receipt of money for the sale of garlands, etc. There is a clear receipt for the sale of books, tapes, etc. The assessee has several activities like camps, meditation groups, etc. It is not known whether payments regular or ad hoc are received for any of these or also for hearing the discourses of the Acharya. At one stage the learned counsel for the department pointed out that without an entrance fee it is not possible to get admittance to these discourses. There is no evidence on record to support the departmental stand. It is not, however, impossible to keep an entrance fee for lectures, given by eminent personalities--a practice very common in western countries though not in our country. Whether the alleged donations are received from insiders in the Ashram who get some benefit or other or from outsiders who are absolutely unconnected with the Ashram with its day-to-day or periodical activities, but all the same are inclined to donate to causes which they believe for is not clear. If it is the last, certainly it is a case of gifts and receipts of gifts do not attract tax as income. On the contrary if the receipts are from the insiders who take some advantage out of the Ashram, it will have to be decided in each cash as to whether there is a receipt by way of income or not. On the information available it is not possible to come to a definite conclusion on this. It requires, however, to be mentioned that if the assessee is a charitable trust, the donations being voluntary contributions will come to be assessed if they are not for the corpus of the trust ; if they are for the corpus they will not be assessed. If the trust is not charitable as we have held, voluntary contributions and gifts do not come to be taxed. In order to bring a receipt to the tax net, it has to be shown to be a receipt by way of income. While the assessee has not produced sufficient details in support of the exact nature of the receipts, which it claims to be voluntary contributions, these have been included in its accounts as receipts and also returned in the returns filed as taxable income. It will not be proper, therefore, to hold in the face of this that the entire onus to decide the nature of this question would as in ordinary cases be on the, revenue which seeks to tax the income. In our view justice requires that on this point the matter must go back to the Commissioner (Appeals) who would investigate the nature of the receipts and decide the question according to law. Both the assessee and the ITO should be given an opportunity to produce evidence in this regard.

57. An important item in the computation of the income of the assessee is receipts from royalties on the sale of books. All these books are books written by Acharya Rajneesh on various subjects or various aspects of different subjects. These scholarly publications apparently have been very much in demand and the sale proceeds are substantial. The amounts taken credit for in the assessee's accounts in this respect relate to profit received on sales of books and also royalties received. Normally on both these parts of the receipts, royalty for books belongs to the writer. An affidavit filed by the assessee containing solemn declaration by Acharya Rajneesh, dated 11-6-1969 contain the following:

1. I say the exclusive printing and publishing rights in the said books, articles, speeches, writings and other works heretofore written or delivered as the case may be by the declarant and the books, articles, speeches, writings and other works to be hereafter written or delivered by the declarant (hereinafter referred to as 'the said Works'), have or shall be the property of the said trust. The trust has agreed to the conditions hereinafter appearing as regards the said Works.

* * * * *

3. The Declarant shall deliver to the trust the completed type script of the Works and the trust shall print, produce, publish and well the works at its own cost and expenses in such manner and style and at such prices as the trust may at its discretion deem fit.

4. The Declarant has given to the trust a list of the books, articles and writings so far written by the Declarant and shall as and when any further books and articles are written, or any speeches are delivered, he shall furnish copies thereof to the trust to enable them to publish the same as aforesaid.

The affidavit in effect is a gift of the exclusive printing and publishing rights in the books, articles, speeches, writings, etc., already existing and to be brought into existence in future to the trust. The substantial income the trust receives out of this property gifted to it is treated as the income of the trust. We do not know whether the alleged gift of Acharya Rajneesh is a valid gift, whether gift-tax has been paid on the same, etc. If the gift, is a valid one given and accepted, by the donee, etc., the property in the gift thus passed on to the donee, the trust, and the income therefrom would be assessable in its hands. If, however, the gift has not passed, the property would continue to remain with Acharya Rajneesh and the income therefrom would have to be assessed in the hand of the Acharya himself. The alleged affidavit we are emphasising the fact that this is an affidavit, since it is not known whether there is an acceptance of the gift converting the affidavit into a gift deed has not been scrutinised by the ITO from the point of view of a legal transfer of the property and the income therefrom from the Acharya to the trust. If the gift has not been effective, there would be no transfer of the asset or the income therefrom to the trust and the question of assessing this part of the income in its hands would not arise. In computing the income, therefore, this question has also to be seen,

58. A ground of appeal is raised by the department claiming that the Commissioner (Appeals) should have while setting aside the assessment order directed the ITO to disallow a sum of Rs. 1,38,984 debited to the income and expenditure account. Apparently this arises from a misconception. No amount as above has been allowed as a deduction. The question, therefore, does not arise.

59. The last ground relates to the direction of the Commissioner (Appeals) to grant deduction under Section 80QQ with reference to the net taxable income of the assessee. According to the learned counsel for the department, the law relating to the said deduction would be governed by the decision in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (SC) rather than Cloth Traders (P.) Ltd. v. Addl. CIT [1979] 118 ITR 243 (SC). According to the learned counsel for the assessee, neither of these two decisions are relevant for deciding this issue.

60. The assessee is in receipt of income from printing and publication of books. In respect of this income it claimed relief under Section 80QQ. Following the decision in Cambay Electric (supra), the ITO rejected the claim since the net results from the publication activity was a loss and hence not entitled to any deduction. The Commissioner (Appeals) directed the relief claimed, holding that the decision relevant is that of Cloth Traders (supra). In our opinion, the Commissioner's order must be upheld on this point. In Cambay Electric's case (supra), the Supreme Court has supported the department's stand mostly relying on the use of the expression 'attributable to' used in Section 80E as against the other 'derived from'. While neither of the decisions referred to is directly on the provisions of Section 80QQ, this section utilises the word 'derived from'. The advantage intended is to benefit and encourage the printing and publishing of books; the deduction, therefore, should be given on the gross income from this activity considered as a separate activity rather than the net (sic) taking into account other activities.

61. Both the appeals are partly allowed.