R.N.GURTU, J. - (1.) THE following question has been referred to us under section 66 (1) of the Indian Income-Act, 1922, by the Appellate Tribunal : Whether on a true construction of the trust deed dated March 15, 1919, the income of the assessee was exempt from the income-tax under section 4 (3) (i) of the Indian Income-tax Act ?
(2.) THE facts stated by the Appellate Tribunal are as follows : Sheo Narain Misra, Son of Pandit Sheo Dhar Misra, and Ganesh Shanker Vidhyarthi, son of B. Jai Narain, started a press named Pratap Press and a paper named Pratap. By a deed dated March 15, 1919, the aforesaid persons created a trust in respect of the Pratap Press and the weekly paper Pratap. A copy of the deed, annexure B, is a part of the statement of the case as also the Pratap policy as set out in the first issue of the Pratap, annexure C. Under the trust deed the trustees nominated are, apart from the two founders of the press and the paper named aforesaid, Sri Maithali Saran Gupta in respect of whom this court may take cognizance that he is a celebrated poet, Sri Jawaharlal Rohtagi and Sri Phool Chand. THEy are to be life members whose duty is to continue the publication of the paper. Clause (2) of the trust deed is important and runs as follows : (2) That the Trust Committee cannot change the policy of Pratap, which at its inception was published in the first issued of Pratap and which in political matters is according to the aims and objects of the Indian National Congress. Clause (3) runs as follows : (3) That if in any circumstances the Committee finds it impossible to continue the paper according to the above policy then by a unanimous decision of the members of the Committee the paper may be handed over to a person who runs it on the same policy which has been followed so far and the Trust Committee may use the Press or its property for things of the same kind as is being done at present. Turning to annexure C, it is stated that the ultimate aim of the Pratap is the good of all mankind and that a very important and indispensable way to achieve that aim is the progress of India by the development of agriculture, trade, knowledge, art, prosperity, self-respect, power, good conduct and character. Other requirements of organised, popular and comprehensive education of right policies of good and efficient administration conducive to the welfare of the people, prevention of social evils and persecutions, encouragement of propagation of self-dependence and strong faith in self-rule. Ancient culture and literature, philosophy, science and religion of our forefathers are to be glorified. Social weaknesses, evil customs and vices are to be exposed. Truth and justice are to be the guide. THE paper is to keep itself away from communal or personal quarrels and it is not to maintain, support, protect or oppose any particular association, organisation, person or creed. It is to work for the service of society and of the country and to make the inhabitants conscious of their rights and duties. Conflicts between ruler and ruled, one community and another and one organisation and another are to be discouraged. Its purpose is not to be to replace the British sovereignty and good Government but to remove obstacles in the achievement by Indians of the highest honour and post, and to acquire equal status for Indians in other parts of the Empire. Grievances are to be conveyed to Government fearlessly and without fear of consequence. THE paper, the policy states, will be with the public and the Government in just causes but with neither is unjust causes. Aggrandizement of the weak by the strong and tyrannies, misconduct, injustice, cowardice and disunion are to be discouraged. THE community is to be encouraged not to be browbeaten and not to be content with its lost and to regard itself as being destined to always linger behind. All Communities should have equal rights and opportunities. Shibboleths which impede the progress of the masses and the growth and development of human society and religion are not to be accepted. Religion is not to be divorced from correct practice and the code of conduct is to be such that principles which bring about mental, moral, social or political degradation are to be rejected. Catholicity is to be considered as essential of religion through which an era of welfare and prosperity is to be ushered. Human society is to be considered as not divided into east and west, nor white and black, nor Christian and Jew, nor Hindu or Muslim, nor poor and rich, nor learned and ignorant. THE class of people who would deserve honour are those who are magnanimous, learned men of principles who have clung firmly and confidently to truth and are clearing the dark and difficult path of posterity by their constant search for truth. THE quest for truth is to be encouraged and untruth is to be discouraged. THE type of men who are guided by self-interest and the baser qualities are not to be honoured. THE belief of the policy statement is that those who stand for truth will win against those who stand for the opposite. THE path to be treated is away from slavery, weakness and little knowledge and difficulties are to be faced with moral force. Such are the objects of the trust as appear from the deed of trust and the policy article of the Pratap. The Tribunal by its order dated April 29, 1952, held as follows : The objects of the establishing this trust is mainly to support the policy of the Congress movement. In the first place this is a vague and ambiguous object and in the second place it does not comply with the provisions of section 4 (3) (i) in so far as it is neither religious nor charitable within the meaning of this section. We, therefore, hold that this trust is not exempt from taxation. On behalf of the assessee it was urged that this was a trust to maintain the said press and newspaper in an efficient condition and to keep up the liberal policy of the said newspaper as set out in the policy article and that the charitable purpose of the deed of trust was the advancement of a general public utility and the income and exempt within the meaning of section 4, sub-section (3), of the Income-tax Act. On behalf of the Department it was contended that the object of the trust was the furtherance of the political policy of the Congress and as such it could not be said the charitable purpose was the advancement of an object of general public utility. Mr. Gopal Behari also contended that in construing the deed of trust, annexure C, which sets out the policy of the Pratap as published in the first issue of the Pratap could not be taken into consideration and the purposes of the trust had to be gathered from clause (2) thereof alone. He also contended that the purposes as set out in the policy article were so vague that they could not be enforced by a court and that of that reason this trust could not be upheld as a charitable trust. Many cases of the English courts were cited before us. We will refer to them. Before we do so, however, we would like to point out that their Lordships of the Privy Council have no more than one occasion pointed out that the Indian Income-tax Act is in many particulars different from the English and that in construing the Indian Income-tax Act the authoritys under the English Income Tax Act or English cases relating to charities should not used as binding authorities, but a best as affording some guidance.
(3.) THE earliest case that was cited before us was the case of Trustees of the Sir G. B. Hunter (1922) C Trust v. Commissioner of Inland Revenue. That was a case where the trust deed provided that the net income of the trust should be paid or applied to the benefit of the Simplified Spelling Society. THE object of the society was to recommend and to further the general use of simpler spellings of English words than those currently in use and to engage in propaganda to influence public opinion in favour of its object and to gain from them the approval of public education authorities. It was claimed on behalf of the assessee that the purposes for which the society was established were charitable either as being educational or as being beneficial to the community. But it was held that the trust was not established for a charitable purpose. It was observed that the object of the society were merely to make spelling more simple. But the purpose was nowhere near either of the expressed categories mentioned by Lord Macnaghten in the well know judgment of Commissioners for Special Purposes of the Income Tax v. John Frederick Pemsel, or within the classes of cases which stand enumerated in the statute of Elizabeth. Anglo-Swedish Society v. Commissioners of Inland Revenue was a case where an Anglo-Swedish Travel Association was constituted with the object of promoting a closer and more sympathetic understanding between the English and Swedish peoples primarily by affording opportunities for Swedish journalists to visit the United Kingdom and to study the British modes of thought and British national institutions. Rowlatt, J., held that he could not bring himself to think that a charitable trust within the analogy of the Statute of Elizabeth had been created. He said that it was not doubt a trust of public utility but that not every trust for matters of public utility was a charity. In other words, that it would not be a true definition of the words charitable trust to say that it was trust for public utility. He said that the trust in question was really a trust to promote an attitude of mind, the view of one nation by another and that was all that there really was in it. He said that a trust a influence general opinion in favour of some theory or view or aspiration was not within the analogy of the Statute of Elizabeth and he pointed out that the particular trust did not seem to materialise at all in any proximate way. Rowlatt, J., then pointed out that it was easier to say that a certain case did not come within the doctrine of the Statute of Elizabeth than to define the limits of the doctrine affirmatively. In Bonar Law memorial Trust v. Commissioners of Inland Revenue a trust was created which was interpreted by Finaly, J., to have created in effect an educational centre for the Conservative Party where persons believing in the Conservative principles would be trained in as intelligent appreciation of those principles and where political candidates would learn, where agents would learn and where those who were disposed to work in the interest of the Conservative Party could go in order that they could learn what were the principles of the party to which they adhered. That being the construction of the trust was not made for charitable purposes. It was pointed out that the very trustees appointed were important office bearers of the Conservative Party, and reference was made to the evidence tendered to show that lectures were given on Conservative Party organisation but not on social or liberal organisation principles and that the building in question was used almost exclusively for the purposes of the Conservative Party.;