| COURT: | Karnataka High Court |
| CORAM: | Jayant Patel J, S. Sujatha J |
| SECTION(S): | 11, 12A |
| GENRE: | Domestic Tax |
| CATCH WORDS: | Charitable purpose |
| COUNSEL: | S. Parthasarathy |
| DATE: | February 23, 2016 (Date of pronouncement) |
| DATE: | March 1, 2016 (Date of publication) |
| AY: | - |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| S. 2(15): In order to constitute a “charitable purpose”, the object need not be to benefit of the whole of mankind or of persons in a Country or State. Even benefit to only a section of the public is sufficient. To ascertain the true nature/purpose of the Trust, the objectives have to be considered as a whole and not in isolation | |
(i) To ascertain the true nature/purpose of the Trust, the objectives have to be considered as a whole, not in isolation. The Tribunal cannot pick and choose certain objectives ignoring the main objectives. It appears that the respondent and the Tribunal are influenced by the preamble in the Trust Deed. Preamble cannot control the main objectives of the Trust.
(ii) The Appellant-Trust would have started with an intention to safeguard the interest of the Milk Producers and the Employees of the Milk Producers Cooperative Societies of the District and to help the Milk producers. But, that intention of the Settlor/Executor would not decide the nature of the Trust whether it is for charitable purposes or not. A conjoint reading of the objectives i.e., the main objectives of the Trust enumerated at paragraph-2 of the Trust Deed and the other objectives of the Trust at paragraph-3 of the Trust Deed would indicate that the Trust is created for charitable purpose or not.
(iii) While considering the case of the Trust created for the benefit of Rana Caste or community of City of Ahmedabad, the Apex Court in ‘AHMEDABAD RANA CASTE ASSOCIATION Vs. COMMISSIONER OF INCOME TAX’ reported in [1971] 82 ITR 0704 has held that “It is well settled by now, and the High Court also has rightly taken that view, that an object beneficial to a section of the public is an object of general public utility. To serve a charitable purpose, it is not necessary that the object should be to benefit the whole of mankind or all persons in a particular country or State. It is sufficient if the intention to benefit a section of the public as distinguished from a specified individual is present.”
(iv) Applying the principles laid down in the case of AHMEDABAD RANA CASTE ASSOCIATION [supra], we are of the considered opinion that the other objectives of the Trust may be to provide educational facilities and medical facilities to the Members of the Milk Producers Societies and their family members as also to the employees of the Societies, the main objective of the Trust as enumerated at paragraph-2 of the Trust Deed cannot be ignored.
(v) Section 2[15] of the Act contemplates ‘charitable purpose’. ‘Charitable purpose’ includes relief of the poor, education, medical relief and the advancement of any other object of general public utility. The phrase ‘any other object of general public utility’ if, examined in the light of the Judgment in the case of AHMEDABAD RANA CASTE ASSOCIATION [supra], it is not necessary that the object should be to benefit of the whole of mankind or of persons in a Country or State. If it is distinguished from a specified individual and if it is to the benefit of section of the public, it has to be construed as charitable purpose. As such, the Order passed by the Tribunal is unsustainable.
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