M/S.IDEAL PUBLICATION TRUST vs. JOINT COMMISSIONER OF INCOME TAX

JUDGMENT H.L.Dattu, C.J. Sri.Jose Joseph, learned Standing Counsel for the Department, is directed to take notice for the respondent. He is permitted to file his memo of appearance within six weeks. (2) The one and the only question that requires to be considered in this appeal filed by the assessee is, whether the assessee Trust is entitled for exemption of income derived by it under Section 11 of the Income Tax Act ('the Act' for short) as a charitable institution. (3) The Tribunal while disposing of the appeal, had followed its earlier decision in I.T.A.No.199 of 1998 for the assessment year 1992-93. (4) The orders passed by the Tribunal in the aforesaid appeal was the subject matter of appeal in I.T.A.No.41 of 2004. This Court by its orders dated 27th February, 2008 has come to the conclusion that the assessee Trust is not a charitable institution and, therefore, not entitled for exemption under Section 11 of the Act. The reasoning and conclusion reached by the learned Judges of this institution is at paragraph 5 of the order. The same reads as under:

“So far as the position after the amendment of sub-section 4A of Section 11 is concerned also, we are of the view that the appellant is not entitled to exemption, because exemption is available in respect of the income only if the business carried on by the Trust is incidental to the attainment of the objects of the Trust. Admittedly, the appellant Trust has not utilised or set apart any part of the income for any of the charitable purposes referred to in the object clause, viz., education, medical relief or relief of the poor. The appellant is only engaged in publication of the newspaper which is run on commercial lines including charging of commercial tariff for advertisements and charging of price for the newspaper at rates comparable to other newspapers run for profit. However, the appellant's case is that the business of printing and publication of newspaper itself is an object of general public utility and so much so the income therefrom is exempt from tax. We are unable to accept this proposition because we are of the view that in order to qualify for exemption in respect of income from profits and gains of business, the business, after the amendment of sub-section (4A) of Section 11, should be carried on as an incidental activity to the attainment of the objects of the Trust and not as an object in itself. In other words, the business itself should not be the object of the Trust, even though the business may advance the object of general public utility. In fact, if a contrary meaning is assigned to the section, any business income involving advancement of object of general public utility will be exempt from tax. In fact, every business to some extent advances object of general public utility. However, what is intended in sub-section (4A) of Section 11 is that the object of the Trust should be for charitable purpose which includes advancement of object of general public utility and income from any business carried should be incidental to the objectives of the Trust. Since the appellant has no other activity other than the business of printing and publication of newspaper on commercial line, we are of the view that the business itself cannot be said to be an object of general public utility entitling the appellant for exemption as a charitable institution. The Supreme Court in Thanthi Trust's case (247 ITR 785) referred above held that publication of newspaper is not education and therefore unless the business of publication of newspapers falls under Clause (4A), exemption cannot be granted”.

(5) The assessee in this appeal for the assessment year 1997-98, was the appellant in I.T.A.No.71 of 2008 also which was disposed of by this Court on 22nd August, 2008. While disposing of the said appeal, this Court had permitted the assessee to approach the Tribunal for appropriate reliefs, if it so desires. (6) Further, the questions of law raised in I.T.A.No. 71 of 2008 are identical with the legal issues raised in this appeal.

(7) In that view of the matter, following the earlier decision rendered by this Court in I.T.A.No.71 of 2008 disposed of on 22nd August, 2008, this appeal is also disposed of. Liberty is reserved to the appellant, if it so desires, to approach the Tribunal for appropriate reliefs by making an appropriate application. Ordered accordingly.

(H.L.DATTU) CHIEF JUSTICE

(THOMAS P.JOSEPH) JUDGE vns/dk