IDEAL PUBLICATIONS TRUST Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The appellant, a Trust engaged in the publication of a Malayalam newspaper by name Madhyamam , has filed this appeal under Section 260A of the Income Tax Act challenging the order of the Income Tax Appellate Tribunal confirming disallowance of income tax exemption claimed by the appellant as a Charitable Trust under Section 11 of the Act. Even though the appellant started the publication in 1987, in the course of several years the appellant was engaged only in one activity, viz. publication of newspaper and the entire profits are said to be utilised for developmental purposes in the form of setting up of new units for publication of the newspapers from various centres. In order to consider the appellant s case for income tax exemption under Section 11 of the Act, we have to necessarily refer to the objects of the Trust. Clause 3 of the Trust Deed containing the objects of the appellant Trust, is extracted herein below:

(2.) Learned Counsel appearing for the assessee heavily relief on the decision of the Privy Council in the case of Trustees of the Tribune" reported in 7 ITR 415 and contended that publication of the newspaper itself is a charitable purpose as provided under Section 2(15) of the Income Tax Act and therefore the appellant is entitled to exemption from payment of tax under Section 11 of the Act, no matter whether the publication of newspaper is on commercial lines or not.

(3.) Learned Senior Standing Counsel appearing for the Revenue contended that the assessee had not incurred any expenditure for charitable purpose in terms of Section 11(1)(a) of the Act and unless 75% of the income is spent for charitable purposes during the previous year, the appellant is not entitled to any exemption. On going through the objects of the Trust extracted above, we find that those are charitable objects within the meaning of that term contained in Section 2(15) of the Act. However, admittedly the appellant/assessee has not so far taken up or spent any amount of income towards charitable purposes stated in the object clause. The only contention of the appellant is that publication of newspaper itself is advancement of object of general public utility which is a charitable object as defined under Section 2(15) of the Act and so much so, the appellant is entitled to exemption. Learned Standing Counsel has relied on the decisions of the Supreme Court in Asst. Commissioner of Income Tax v. Thanthi Trust,, Sole Trustee Loka Shikshana Trust v. Commissioner of Income Tax Mysore, and Additional Commissioner of Income Tax Gujarat v. Surat Art Silk Cloth Manufacture Association, and contended that the assessee is not entitled to exemption, as the business carried that the assessee is not entitled to exemption, as the business carried on by it itself is not for charitable purpose and the assessee has not spent income for charitable purpose stated in the object clause of the Trust.