THANTHI TRUST Vs. ASSISTANT DIRECTOR OF INCOME TAX

JUDGEMENT

(1.) THE writ petitioner in these three writ petitions is a charitable trust which holds in trust a business of running a newspaper known as "Daily Thanthi". THE trust was created in the year 1954. By the amendment made in the year 1957, the trust was declared an irrevocable trust. By a supplementary deed made on June 28, 1961, the objects of the trust were declared to be, inter alia, the relief of the poor and education. THE trust has throughout claimed the status of charitable trust and sought the benefit of the provisions of the Income-tax Act exempting the income of charitable trust. In that effort, the trust has had more than one occasion to come before this court challenging the denial of the exemption by the Revenue for the income derived by it from the newspaper business. THE validity of the supplementary deed has been upheld by this court in C. S. No. 90 of 1961.

(2.) A Division Bench of this court in the first of the assessee's cases relating to its entitlement to be treated as a charitable trust and its income derived from the newspaper business being allowed exemption from tax in the case of CIT v. Thanthi Trust [1982] 137 ITR 735 (Mad) has considered the character of the petitioner's trust created under the trust deed dated March 1, 1954, and the subsequent supplementary trust deed dated July 9, 1957, as also the effect of the judgment of this court in C. S. No. 90 of 1961. The court held that the founder of the trust had created a public charitable trust; the supplemental deed dated June 28, 1961, and the decision of this court in C. S. No. 90 of 1961, create a legal obligation on the trustees to spend the income derived from the trust after defraying the expenses of the newspaper business, for the purposes set out in the Schedule to the decree in P. S. No. 90 of 1961, and therefore, the trust property including the business itself should be taken to be held under a legal obligation for various charitable objects ; that those charitable objects fall under the relief to the poor and education referred to in Section 2(15) of the Act; and that the primary purpose of the trust is to carry out on the charitable objects, and that business is carried on only as a means in the course of the actually carrying out the primary purpose of the trust, and not as an end itself.

(3.) SUB-section (4A) of Section 11 was amended by the Finance (No. 2) Act, 1991, with effect from April 1, 1992. That section after amendment reads thus :