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PETITIONER: SOLE TRUSTEE LOKA SHIKSHANA TURST

       Vs.

RESPONDENT: COMMISSIONER OF INCOME TAX, MYSORE

DATE OF JUDGMENT28/08/1975

BENCH: KHANNA, HANS RAJ BENCH: KHANNA, HANS RAJ BEG, M. HAMEEDULLAH GUPTA, A.C.

CITATION:  1976 AIR   10            1976 SCR  (1) 461  1976 SCC  (1) 254  CITATOR INFO :  R          1976 SC 384  (17)  RF         1976 SC1836  (19)  RF         1977 SC2211  (12)  RF         1978 SC1443  (8)  R          1980 SC 387  (13,16,18,21)  RF         1981 SC1408  (9,10)  R          1981 SC1922  (8)  R          1982 SC 149  (244,270)

ACT:      Income  Tax  Act,  1961,  Section  2(15)-Definition  of ’Charitable purpose’-"The advancement of any other object of general public  utility not involving the carrying on of any activity for  profit", meaning  of-"Profit" if confined only to private profit.      Income  Tax   Act,  1961.   Sections  2(15)   and   11- "Education", meaning  of- Appellant  trust  engaged  in  the business  of  printing  and  publication  of  newspaper  and journals and making profits, if entitled to tax exemption.

HEADNOTE:      Section 2(15)  of  the  Income-tax  Act  provides  that ’charitable purpose’  includes relief of the poor, education medical relief.  and the  advancement of any other object of general public utility.      The appellant  is a sole trustee of the "Loka Shikshana Trust", holding  properties mentioned in a schedule attached to  a  deed  of  trust  executed  on  19-2-1962  by  himself purporting to  re-declare a  trust of  15-7-1935. The  total assets of  the earlier  trust of  1935 consisted of a sum of Rs. 4308.109 only. Under the provisions the earlier trust of the trustee  had carried on a lucrative business of printing at Belgaum,  and, thereafter,  he started publishing a daily newspaper. The  value of  the redeclared trust of 1962 stood at Rs.  2,97,658/-. Clause 2 of the trust deed provided that the object  of the  Trust shall  be to educate the people of India in general and of Karnatak in particular by           (a)  establishing conducting  and helping directly                or  indirectly   institutions  calculated  to                educate the  people by spread of knowledge on                all matters of general interest and welfare;

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         (b)  founding  and   running  reading   rooms  and                libraries and keeping and conducting printing                houses   and   publishing   or   aiding   the                publication  of  books,  booklets,  leaflets,                pamphlets, magazines  etc,,  in  Kannada  and                other languages,  all these  activities being                started, conducted  and carried  on with  the                object of educating the people;           (c)  supplying the Kannada speaking people with an                organ or  organs of  educated public  opinion                and conducting  journals in Kannada and other                language for the dissemination of useful news                and information  and for  the ventilation  of                public opinion  on matters  of general public                utility; and           (d)  helping directly  or indirectly societies and                institutions which  have all  or any  of  the                aforesaid objects in view. The Income-tax  officer sent a communication to the trust on April 27,  1963 to  the effect that, since the only activity of  the   trust  was  printing,  publication,  and  sale  of newspaper. weekly  and monthly journal, the trust carried on an activity  for profit.  The claim  of the sole trustee was rejected, and,  having been  unsuccessful  through  out  the appellant has  preferred this  appeal after certification of the case under section 261 of the Income-tax Act, 1961.      Dismissing the appeal, ^      HELD: (Per H. R. Khanna and A. C. Gupta, JJ.)      (1) It  is not correct to say that the word "profit" in section 2(15) of the Act means private profit. The word used in the definition provision is profit and not private profit and it  would not  be permissible  to read in the definition the word 462 "private" as  qualifying profit even though such word is not there. There  is also  no apparent  justification or  cogent reason for placing much a construction on the word "profit". [472B]      The words  "general public  utility" contained  in  the definition of  charitable purpose are very wide. These words exclude objects of private gain [472C]      All India  Spinners’  Association  v.  Commissioner  of Income-tax, (1944) 2 I.T.R. 482, relied on.      It is  also not  correct to  say that  the newly  added words "not  involving the  carrying on  of any  activity for profit" merely  qualify and  affirm what was the position as it obtained  under the definition in the Act of 1922. If the legislature intended  that the concept of charitable purpose should be  the same  under the  Act of 1961 as it was in the Act of  1922, there  was no  necessity for it to add the new words in  the definition.  The earlier  definition  did  not involve any ambiguity. and the position in law was clear and admitted of no doubt after the pronoumcement of the Judicial Committee in  the Tribune  case (1939)  7 ITR 415 and in the case of  All India  Spinners’ Association.  If despite  that fact, the  legislature added  new words in the definition of charitable purpose,  it would  be contrary  to all  rules of construction to  ignore the  impact or the newly added words and to  so construe  the definition  as it  the newly  added words were  either not  there or  were intended to be otiose and redundant. [47CC-E]      (ii) The  sense in  which the word "education" has been used  in   section  2(15)  is  the  systematic  instruction, schooling, or training given to the young in preparation for

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the work  of life.  It also  connotes the  whole  course  of scholastic instruction which a person has received. The word "education" has,  not been  used in  that wide  and extended sense  according  to  which  every  acquisition  of  further knowledge constitutes  education. According to this wide and extended sense, travelling is education, because as a result of travelling  you acquire fresh knowledge. Likewise, if you read newspapers  and  magazines,  see  pictures,  visit  art galleries,  museums  and  zoos,  you  thereby  add  to  your knowledge. Again,  when your  grow up and have dealings with other people,  some of  whom are  not straight, you learn by experience and thus add to your knowledge of the ways of the world. If  you are  not careful, your wallet is liable to be stolen or  you are liable to be cheated by some unscrupulous is liable  to be  stolen or  you are liable to be cheated by some unscrupulous  person. The thief who removes your wallet and the  swindler who  cheats you  teach you a lesson and in the process  make you  wiser though  poorer. If  you visit a night club, you get acquainted wit and add to your knowledge about some  to the not much revealed realities and mysteries of life.  All this in a way is education in the great school of life.  But, that  is not  the sense  in  which  the  word "education" is  used in  clause  (15)  of  section  2.  What education connotes in that clause is the process of training and developing  the knowledge, skill mind,  and character of students by formal schooling. [469C-F]      (iii) The  fact that  the appellant trust is engaged in the business  of printing  and publication  of newspaper and journals and  the further  fact that the afore-said activity vields or  is one  likely to  yield profit  and there are no restrictions on  the appellant-trust  earning profits in the course of  its business would go to show that the purpose of the appellant-trust does not satisfy the requirement that it should be one "not involving the carrying on of any activity for profit." [471C-D]      In re  The Trustees  of the  ’Tribune (1939) 7 ITR 415, State of  Gujarat v.  M/s Raipur  Mfg. Co.,  [1967] 1 S.C.R. 618, and  Commissioner  of  Income-tax  v.  Lahore  Electric Supply Co. Ltd., [1966] 60 I.T.R. 1, referred to.      (i) It has been declared repeatedly by the Courts, even before the addition of the words "not involving the carrying on  of  any  activity  for  profit"  to  the  definition  of "charitab1e purpose".  that activities  motivated by private profit  making   fell  outside   the  concept   of   charity altogether. It  is more  reasonable to  infer that the words used clearly imposed a new qualification on public utilities entitled to  exemption. It  was obvious  that, unless such a limitation was  introduced, the  fourth  and  last  category would become too wide to prevent 463 its abuse.  Wide words  so used  could have  been limited in Scope by  judicial interpretations  ejusdem generis so as to confine the last category to objects similar to those in the previous categories  and also  subject to a dominant concept of charity  which must  govern all the four categories. But, the declaration  of law by the Privy Council, in the Tribune case had  barred this  method of  limiting an obviously wide category of  profitable activities of general public utility found entitled  to exemption.  Hence, the  only other way of cutting down  the wide  sweep of  objects of "general public utility" entitled  to exemption  was by  legislation.  This, therefore, was  the method  Parliament adopted  as is  clear from the  speech of  the Finance Minister who introduced the amendment in Parliament. [482F-H]      Income Tax  Commissioners v.  Pemsel, [1891]  A.C. 531,

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583; Morice  v. Bishop  of Durham,  (1805) 10  Ves. 522: All India Spinners’  Association v.  Commissioner of Income Tax, Bombay, 1944(12)  ITR 482,  486; commissioner of Income-Tax, Madras v.  Andhra Chamber  of Commerce, 1965(55) I.T.R. 722, 732; In  re Grove-Gredy  [1929] 1  Ch. 557, 582; Cape Brandy Syndicate v. I.R.C. [1921] 1 K.B. 64, 71; Rt. Hon’ble Jerald Lord Strickland  v. Carmelo  Mifud Bonnici, A.I.R. 1935 P.C. 34; The  Englishman Ltd. v. Engineering Mazdoor Sang & Anr., A.I.R. 1975  S.C. p.  946 @  949; Commissioner of Income-tax Gujarat  v.  Vadilal  Lallubhai,  1972  (86)  I.T.R.  p.  2; Commissioner of  Income-tax v. Sadora Devi, 1957 (32) I.T.R. 615 @-627  [1958] 1 I.S.C. 1 and In re the Tribune, (1939) 7 I.T.R. 415, referred to.      (ii) If  the profits must necessarily feed a charitable purpose, under  the terms  of the  trust, the mere fact that the activities  of the trust yield profit will not alter the charitable  character   of  the   trust.  The  test  is  the genuineness of  the purpose tested by the obligation created to spend  the money exclusively or essentially on "charity". If that  obligation is there, the income becomes entitled to exemption. That  is the  most reliable  test. The  governing idea of  charity must  qualify  purpose  of  every  category enumerated in section 2(15) of the Act of 1961. [483 C-D]      (iii) Although the term ’education’, as used in section 2(15) of  the Act,  seems wider  and more comprehensive than education  through   educational   institutions,   such   as Universities, whose income is given an exemption from income tax separately under section 10(22) of the Act, provided the educational  institution   concerned  does  not  exist  "for purposes of  profit",  yet  the  educational  effects  of  a newspaper  or   publishing  business   are  only   indirect, problematical and quite incidental so that, without imposing any  condition   or  qualification   upon  the   nature   of information to  be disseminated or material to be published, the mere  publication of  news or  views cannot  be said  to serve a  purely or even predeminantly educational purpose in its ordinary and usual sense. Judging from the facts set out in the  trust deed  itself, the  sole trustee had managed to make the  satisfaction of the needs mentioned in clause 2(c) a highly  profitable business.  The deed  puts no  condition upon the  conduct of  the newspaper  and publishing business from which  one could  infer that is was to be on "no profit and no  loss" basis.  The High  Court was right in coming to the conclusion  that the  appellant is not entitled to claim exemption from income-tax. [485-E-G, 486-D]      East   India   Industries   (Madras)   Pvt.   Ltd.   v. Commissioner of  Income-tax Madras,  1967 (65)  I.T.R.  611; Commissioner of  Income-tax, Madras  v.  Andhra  Chamber  of Commerce,  1965   (55)  I.T.R.  722;  Md.  Ibrahim  Riza  v. Commissioner of Income-tax, Nagpur, (1930) L.R. I.A. 260 and Commissioner of Income-tax, West Bengla II v. Indian Chamber of Commerce, 1971 (81) I.T.R. 147.                          ARGUMENTS For the appellant      (1) The  objects clause of the Trust is so worded as to make it clear that the whole and sole object of the Trust is education of the people of India 464 in general  and of  Karnatak in particular by the four means or modes set out h in that clause. Those four means or modes are not  separate objects  of the  Trust but  are merely the instrumentalities prescribed  by the  Settlor for  achieving the specified  object of  education. Even  assuming for  the purpose of  argument that sub-clauses (a) to (d) of clause 4 of the  Trust Deed  are separate and distinct objects of the

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Trust, clause  (c) which  covers a newspaper or a journal is itself an object falling within the category of "education".      (2) The  words added in the 1961 Act "not involving the carrying on  of any  activity for  profit" go  only with the last head  viz "any  other object of general public utility" and not with the first three heads. This is put beyond doubt by the  comma which  appears after  each of  the first three heads, there being no comma after the fourth head.      (3) The  present case  falls within  the second head of "charitable purpose",  viz. education.  The  ruling  of  the Privy Council  in the  Tribune case 1939 I.T.R. 415 does not apply to the facts of the present case.      (4) Assuming  that the  case does  not fall  within the category of  "education" it  falls within the last head "any other object  of general  public utility, and the qualifying words "not  involving the  carrying on  of any  activity for profit" are satisfied. First the word "profit" means private gain, and the qualifying words merely say expressly what was implicit in  the 1922  Act (1939 I.T.R. 415 at 423, and 1944 I.T.R. 482  at 488).  Even assuming the word "profit" covers profit  for  the  Trust,  involving  no  private  gain,  the qualifying words  are still satisfied. They require that the object of the Trust should not involve, i.e. entail that the trustees should  carry on  the activity  for profit. No such condition about  making profit is imposed by the trust deed. That profit may result from the activities of the Trust in a particular year  is wholly  irrelevant. Profit making is not the motive of the Trust.      (5) Provisions  of section ll of the Act clearly reveal that it  is implicit  in the  very scheme  of the Act that a business undertaking  can be  held in trust for an object of general public utility. For the respondent      (i) The  decision of  the Privy  Council in the Tribune case squarely applies to the facts of the present case; (ii) For ascertaining  that true  meaning of  the expression "not involving the  carrying on of an activity for profit" it was not only permissible but only proper for the Courts to refer to  parliamentary  debates  and  other  proceedings  of  the legislature. (iii)  Where a  business undertaking is held as property of  the Trust  and income  resulting  therefrom  is wholly applied  for charitable  purposes such  as education, medical relief  of the  poor, or  for any  other  object  of general public  utility but with which object the production or income  is not  linked it  would be  still exempt. But if that income  is utilised  only for the purposes of advancing the very  object from the advancement of which it is derived it would cease to be exempt. The means and processes adopted by the  Trustee for  the advancement of the object were such as rendered  the object  itself as  non-charitable. (iv) The expression "activity for profit" was much wider in cope than merely   a    business   activity.   The   legislature   had intentionally used  the  expression  "activity"  instead  of business because  in some cases the income produced from the activity may  not be legally assessable under the provisions of the  Income-tax Act, 1961 under the head "Income, profits and  gains   of  business"   (Section  28).  The  expression ’activity for  profit" in  the context  meant  activity  for profit making;  (v) Since  the advancement  of education was being achieved  by means  involving the  carrying on  of  an activity  for  profit,  the  Trust  would  still  be  denied exemption. In other words, the qualifying words added to the definition at  the  end  did  not  govern  merely  the  last category of  charity  i.e.  the  object  of  general  public utility but  equally governed  the earlier  three well known

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categories namely  medical relief,  relief of  the poor, and education. The effect of the qualifying words "not involving the  carrying  on  an  activity  for  profit"  was  to  deny exemption  to   trusts  which  carried  on  a  profit-making activity for advancing the object of general public utility. 465

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2130 and 2131 of 1970.      From the  Judgment and  order dated  the 12th February, 1970 of  the Mysore  High Court  in I.T.R.C. Nos. 5 and 6 of 1968.      N. A. Palkhivala, and Vineet Kumar, for the appellant.      G. S. Sharma and S. P. Nayar for the respondent.      N. A.  Palkhivala, S.  T. Desai, A. G. Meneses, Mrs. A. K. Verma,  P. N.  Monga, J. B. Dadachani for the Intervener- Tribunal Trust Chandigarh.      V.  S.   Desai  and   J.  Ramanlurthi  for  Intervener- Saurashtra Trust, Bombay.      The Judgment  of H.  R. Khanna and A. C. Gupta, JJ. was delivered by  Khanna, J.  M. H.  Beg,  J.  gave  a  separate opinion.      KHANNA, J.-The  detailed facts  of this  case have been given in the judgment of our learned brother Beg J. and need not be  repeated. The  question of law which was referred to the High  Court and  which has been answered in the negative against the assessee appellant is as follows:           "Whether on  the facts and in the circumstances of      the case,  the income,  of the  Lok Shikshana Trust was      entitled to  exemption under  section 11 of the Income-      tax Act, 1961, read with section 2(15) of the same Act,      for the assessment year 1962-63-?" "Charitable purpose"  was defined  in section  4(3)  of  the Indian Income-tax Act, 1922 was as under:           "In this sub-section ’charitable purpose’ includes      relief of  the poor, education, medical relief, and the      advancement of  any  other  object  of  general  public      utility." The definition  of "charitable  purpose" as given in section 2(15) of  the Income-tax  Act, 1961 (hereinafter referred to as the Act) with which we are concerned reads as under:           "(15) ’Charitable  purpose’ includes relief of the      poor, education, medical relief, and the advancement of      any  other   object  of   general  public  utility  not      involving the carrying on of any activity for profit."      It would  appear from  the above that in the definition of "charitable  purpose" as  given in the Act the words "not involving the  carrying on  of any activity for profit" have been added  at the end of the definition as given in the Act of 1922.  We shall see as to what is the effect of the above addition 466      In order  to see  as to  whether the appellant-trust is for a  charitable purpose, we may first go into the question as to  what is  the object of the appellant-trust. According to Mr.  Palkhivala, learned  counsel for  the appellant, the object of  the appellant-trust is education, while the stand of Mr. Sharma on behalf of the revenue is that not education but the  last mentioned category in section 2(15), viz., the advancement of  any other  object of general public utility, is the  object of  tile appellant-trust.  The reason for the above divergence  in the  stands of  Mr. Palkhivala  and Mr.

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Sharma is  that according  to Mr. Palkhivala, the concluding words of  the definition  in section  2(15) of  the Act "not involving the carrying on of any activity for profit" do not qualify the  first three  categories of  relief of the poor, education, or  medical relief  but qualify  only the  fourth category of  "advancement of  any other  object  of  general public utility".  Once the object of the appellant- trust is held to be education, the word trust would, according to Mr. Palkhivala, be held to be for a public purpose as defined in section 2(15)  of the  Act. In  such an  event, it  would be immaterial whether  the object of the trust involves or does not involve  the carrying  on of any activity for profit. As against that?  Mr. Sharma  has controverted  the  submission that the  concluding words  of the  definition,  viz.,  "not involving the  carrying  on  of  any  activity  for  profit" qualify only  the fourth  category of  "advancement  of  any other object  of general  public utility’.  According to Mr. Sharma,  the   concluding  words  qualify  the  first  three categories of  relief of  the poor,  education  and  medical relief also.  In any case, submits Mr. Sharma, the object of the appellant  trust falls  in the  fourth category  of  the definition, namely.  "any other  object  of  general  public utility." It  is, in  my opinion,  not necessary  to express opinion in this case on the question as to whether the words "not involving  the carrying  on of any activity for profit" qualify the  fourth object,  viz., the  advancement  of  any other object of general public utility, or whether they also qualify the  other three  objects of  relief  of  the  poor, education and  medical relief,  because we  are of  the view that the object of the appellant-trust was not education but any other  object of  general public  utility. Clauses 2, 6, 10, 14, 16 and 18 of the trust deed of the appellant read as under.:           "2. The  object of  the Trust  shall be to educate      the people  of India  in general  and  of  Karnatak  in      particular by           (a)  establishing, conducting and helping directly                or  indirectly   institutions  calculated  to                educate the  people by spread of knowledge on                all matters of general interest and welfare:           (b)  founding  and   running  reading   rooms  and                libraries and keeping and conducting printing                houses   and   publishing   or   aiding   the                publication of  books, booklets,  leaf  lets,                pamphlets, magazines  etc.,  in  Kannada  and                other languages,  all these  activities being                started, conducted  and carried  on with  the                object of educating the peop]e: 467           (c)  supplying the Kannada speaking people with an                organ or  organs of  educated public  opinion                and conducting  journals in Kannada and other                language for the dissemination of useful news                and information  and for  the ventilation  of                public opinion  on matters  of general public                utility; and           (d)  helping directly  or indirectly societies and                institutions which  have all  or any  of  the                aforesaid objects in view."            6.  The original  Trustee shall  have  power  and      authority to  spend  and  utilise  the  money  and  the      property of  the Trust  for any of the purposes of this      Trust in  such manner  as to him may appear proper. The      original Trustee  shall be  entitled to operate all the      Banking accounts of the Trust.

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         10. The  original Trustee shall have full power to      take over on such terms as he may deem fit such concern      or concerns  or undertakings  as, in  his opinion,  are      congenial or  conducive to  any of  the purposes of the      Trust.           14. The  original Trustee  shall  be  entitled  to      appoint a  Manager or  Managers of  institutions of the      Trust, Editor or Editors and other subordinates for the      purposes of  carrying out  the printing and publication      of any  newspaper or  newspapers,  weeklies,  monthlies      magazines, books  or other publications, and shall have      power from  time to time to delegate To any one or more      persons by  Power of  Attorney or  otherwise any one or      more of the following powers.           (a)  To open  one or  more  banking  accounts,  to                operate the  same and to deposit and withdraw                moneys from the same;           (b)  To give  receipts or  discharges for money or                property Received  by them or any one of them                in the  course of  business carried on by the                Trust;           (c)  To buy  or sell  paper, ink,  machines, books                and materials  required for  the purposes  of                the business of the Trust:           (d)  To enter  into contracts with agents, dealers                and others  in the  course of the business of                the Trust;           (e)  To employ  or remove subordinates and workers                necessary for the work;           (f)  and generally  to do all things necessary and                expedient  in   carrying  out   the  business                entrusted to him or Them.           16. The  original Trustee  or Trustees  shall  not      take any  remuneration for  discharging  his  or  their      duties as  a Trustee  or Trustees  provided  that  this      provision shall not preclude a 468      Trustee or  Trustees from  being paid  out of the Trust      fund such  remuneration as  may be  deemed  proper  for      carrying out  any work  and duty in connection with the      conduct or  management of institutions of the Trust, or      with the  business of  printing,  publishing  or  other      activities carried  on by the Trust. A Trustee shall be      entitled to be paid an expenses that may be incurred by      him  in   connection  with  his  duties  as  a  Trustee      including travelling and other expenses.           18. The  original Trustee  or other Trustees shall      not be responsible for any loss occasioned to the Trust      in respect  of any  business  or  dealings  carried  on      behalf of  the Trust  unless the same is due to his own      fraud or  misappropriation or breach of trust and every      trustee shall  be indemnified  by and  out of the funds      and moneys  of the  Trust against  any loss  or  damage      which the  Trustee might  suffer in  regard to any act,      deed, or  omission of  his in  the performance  of  his      duties as  a Trustee, including any fines or penalities      imposed under the Factory Act or any Labour Legislation      or Press Act or any other similar enactment." The income-tax  officer sent a communication to the trust on April 27, 1963 to the effect that since the only activity of the trust  was printing,  publication and sale of newspaper, weekly and monthly journal, the trust carried on an activity for profit  and was  not entitled  to exemption. In reply to that notice the Sole Trustee stated that the above mentioned activities of  the trust  were covered  by clause (c) of the

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objects clause  of the  trust deed.  It was  added that  the above object did not involve the carrying on of any activity for profit.  In a  further communication dated June 26, 1964 the Sole Trustee wrote:           "The Trust  has four objects in its objects clause      one of  which is  to supply the Kannada speaking people      with an organ or organs of educated public opinion etc.      (clause 2(c)  of Trust  Deed).  Under  this  clause  we      conduct the  publication of  newspapers. This  has  not      been agreed upon by your honour as a Charitable purpose      and we have accordingly preferred appeals for relief.           The main object of the Trust is education and this      may be  achieved by  conducting and helping educational      institutions having  the  similar  objects  as  of  our      l‘rust. These  are all  charitable objects. In case the      Trust has  a surplus  income it  cannot be spent on any      object other  than the  objects of  the Trust.  For the      present we  have been  educating the  Kannada  speaking      people through  newspapers and journals and we shall be      taking up  the other  ways and  means of  education  as      noted in  our trust deed as and when it is possible for      Trust. We  have no  option at  all except  to spend our      income on  the objects  of  our  Trust  which  are  all      charitable without any doubt or ambiguity."      We have set out above the relevant clauses of the trust deed and the material part of the communications sent by the Sole Trustee. It would 469 appear therefrom  that though a number of objects, including the setting  up of  educational institutions, were mentioned in the  trust deed‘  as the  objects of the trust, supplying the Kannada speaking people with an organ of educated public Opinion was  also one  of those  objects. The  communication sent by  the Sole  Trustee to  the income-tax  officer shows that the  trust at  present is  carrying out  only the  last mentioned object of the trust, namely, supplying the Kannada speaking people  with an  organ or organs of educated public opinion. The  concentration so  far of the activities of the trust only on that object is in pursuance of clause 6 of the trust deed,  according to  which original trustee shall have power and  authority to  spend and utilise the money and the property of  the trust  for any of the purposes of the trust in such manner as to him may appear proper.      The sense  in which  the word "education" has been used in section 2(15) is the systematic instruction, schooling or training given  to the  young in preparation for the work of life. It  also  connotes  the  whole  course  of  scholastic instruction  which   a  person   has  received.   The   word "education" has  not been  used in  that wide  and  extended sense, according  to  which  every  acquisition  of  further knowledge constitutes  education. According to this wide and extended sense, travelling is education, because as a result of travelling you acquire fresh knowledge. Like wise, if you read newspapers  and  magazines,  see  pictures,  visit  art galleries,  museums  and  zoos,  you  thereby  add  to  your knowledge. Again,  when you  grow up  and have dealings with other people,  some of  whom are  not straight  you learn by experience and thus add to your knowledge of the ways of the world. If  you are  not careful, your wallet is liable to be stolen or  you are liable to be cheated by some unscrupulous person. The  thief who  removes your wallet and the swindler who cheats  you teach  you a  lesson and in the process make you wiser though poorer. If you visit a night club, your get acquainted with  and add to your knowledge about some of the not much  revealed realities and mysteries of life. All this

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in a  way is education in the great school of life. But that is not  the sense  in which  the word "education" is used in clause (15)  of section  2. What  education connotes in that clause  is  the  process  of  training  and  developing  the knowledge, skill,  mind and  character of students by formal schooling.      The question  as to whether a trust the object of which is to  supply the  people with  an organ  of educated public opinion should  be considered to be one for education or for any other  object of  public utility  was considered  by the Judicial Committee  in the case of In re The Trustees of the ’Tribune’. In  that case  a person  who owned  a press and a newspaper created  by his  will by which his property in the stock and  goodwill of  the press  and newspaper was made to vest permanently  in a  committee of certain members. It was the duty  of the  said committee  of trustees under the will "to maintain  the said  press and news paper in an efficient condition, and  to keep  up the  liberal policy  of the said newspaper, devoting the surplus income of the said press and newspaper after  defraying all current expenses in improving the  said   newspaper  and   placing  it  on  a  footing  of permanency". It was also 470 provided by  an arrangement  made subsequently  that in case the paper  ceased to  function or  for any  other reason the surplus of  the income  could not  be applied  to the object mentioned  above,   the  same  should  be  applied  for  the maintenance of  a college which had been established out our the funds  of another  trust created  by the  same testator. There was  surplus income in the hands of the trustees after defraying the  expenses of  the  press  and  the  newspaper. Question arose  as to  whether that  income was liable to be assessed  in   the  hands  of  the  trustees.  The  Judicial Committee held  that the object of the settlor was to supply the province  of the Punjab with an organ of educated public opinion and this was prima facie an object of general public utility. Their  Lordships unequivocally  expressed the  view that they  were not  prepared  to  hold  that  the  property referred to  in the  various paragraphs of the will was held for the  purpose of  "education" in  the sense that word was used in  section 4 of the Indian Income-tax Act of 1922. The above decision of the Judicial Committee applies directly to the present case and in view of this decision, we would hold that the  object of the appellant-trust was "the advancement of any other object of general public utility".      It has  been pointed  out in  the earlier  part of  the judgment that  in the  definition of  charitable purpose  as given in  section 2(15)  of the Act the words "not involving the carrying on of any activity for profit’? have been added at the end of the definition as it was given in section 4(3) of the  Indian Income-tax  Act, 1922.  The  position  as  it existed under  the Act  of 1922 was that once the purpose of the trust  was relief  of the poor, education medical relief or the  advancement of  any other  object of  general public utility. the  trust was  considered to  be for  a charitable purpose. As  a result  of the  addition of  the  words  "not involving the carrying on of any activity for profit" at the end of  the definition  in section  2(15) of the Act even if the purpose of the trust is "advancement of any other object of general public utility", it would not be considered to be "charitable purpose"  unless it  is  shown  that  the  above purpose does not involve the carrying on of any activity for profit. The  result thus  of the change in the definition is that in  order to bring a case within the fourth category of charitable purpose,  it would  be necessary to show that (1)

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the purpose  of the trust is advancement of any other object of general  public utility,  and (2)  the above purpose docs not involve the carrying on of any activity for profit. Both the above  conditions must  be fulfilled b. fore the purpose of the trust can be held to be charitable purpose. It is not necessary  for   the  decision  of  this  case,  as  already mentioned above,  to go  into the question as to whether the words "not  involving the  carrying on  of any  activity for profit"  also   qualify  the   first  three   categories  of charitable purpose, namely relief of the poor, education and medical relief.      Question then  arises as  to whether the purpose of the appellant-trust can  be considered  to be  one not involving the carrying  on of  any activity for profit. So far as this question is  concerned, we  find  that  the  appellant-trust started with a sum of Rs. 4.308, 10 As. 9 Pies. The schedule attached to  the trust  deed dated April 10, 1947 shows that the assets  of the  trust consisted  of  printing  machines, accessories, motor-cars, building, stocks of paper and other miscellaneous things. The total value of 471 the assets  was Rs.  2,97658, out  of which the value of the building sites  and the buildings was Rs. 47,500. As against that, the liabilities of the trust amounted to Rs. 1,24,086. The net  value of  the assets of the trust rose in 1947 to a figure of  Rs. 1,73,571,  14 As.  4 Pies. For the assessment year 1962-63,  which is  the year  under appeal,  the  total receipts of  the trust  were of the amount of Rs. 22,55,077. The main  sources of  the receipts  were sales of newspapers and  magazines   through  agents,  receipts  on  account  of advertisements, receipts  for job  printing bills  be  sides some other  minor items. "As against the receipts, the major items of  expenditure were the purchase of newsprint, paper, printing types,.  printing and  other material, the salaries and allowances  of the  staff, remuneration to news agencies and railway freight. There can, there fore, be no doubt that the trust  has been  carrying on  the business of publishing newspaper and weekly and monthly magazines. The profits from the aforesaid business would also apparently account for the manifold increase  in the  value of the assets of the trust. The emphasis  on business  activity of  the  trust  is  also manifest from clauses 6, 10, 14, 16 and 18 of the trust deed reproduced above.  The fact  that  the  appellant  trust  is engaged in  the business  of  printing  and  publication  of newspaper  and  journals  and  the  further  fact  that  the aforesaid activity  yields or  is one likely to yield profit and there  are no  restrictions  on  the  appellant    trust earning profits  in the  course of  its business would go to show that  the  purpose  of  the  appellant-trust  does  not satisfy the requirement that it should be one "not involving the carrying on of any activity for profit".      It is true that there are some business activities like mutual insurance  and co-operative  stores of  which  profit making is  not an  essential  ingredient,  but  that  is  so because of  a self-imposed  and innate restriction on making profit in  the  carrying  on  of  that  particular  type  of business. Ordinarily  profit motive is a normal incidence of business activity and if the activity of a trust consists of carrying on  of a  business and there are no restrictions on its making  profit. the  court would  he well  justified  in assuming in  the absence  of some indication to the contrary that the  object of the trust involves the carrying on of an activity for  profit. The expression "business", as observed by Shah  J. speaking  for the  Court in the case of State of Gujarat v. M/s. Raipur. Mfg. Co., though extensively used in

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taxing statutes,  is word  of indefinite  import. In  taxing statutes, it  is used  in the  sense of  an  occupation,  or profession which  occupies the time, attention and labour of a person,  normally with  the object  of making  profit.  To regard an  activity as  business there  must be  a course of dealings, either  actually continued  or contemplated  to be continued with  a  profit  motive,  and  not  for  sport  or pleasure.  Whether   a  person  carries  on  business  in  a particular commodity must depend upon the volume, frequency, continuity and  regularity of  transactions of  purchase and sale  in   a  class  of  goods  and  the  transactions  must ordinarily be  entered into with a profit motive. By the use of the  expression "profit  motive" it  is not intended that profit must in fact be earned. Nor does the expression cover a mere  desire to  make some monetary gain out o transaction or even  a series  of transactions.  It predicates  a motive which pervades  the whole series of transactions effected by the person in 472 the course  of his  activity. In the case of Commissioner of Income-tax v.  Lahore Electric  Supply Co.  Ltd.  Sarkar  J. speaking  for   the  majority   observed  that  business  as contemplated by  section 10  if the  Indian Income-tax  Act, 1922, is an activity capable of producing a profit which can be taxed. In the case of the appellant-trust the activity of the trust,  as already  observed earlier,  has in  fact been yielding  profits  and  that  apparently  accounts  for  the increase in the value of its assets.      We are  not impressed  by the submission of the learned counsel for the appellant that profit under section 2(15) of the  Act   means  private  profit.  The  word  used  in  the definition given  in the  above provision  is profit and not private profit  and it  would not  be permissible to read in the above definition the word "private" as qualifying profit even though  such word  is  not  there.  There  is  also  no apparent justification  or cogent  reason for placing such a construction on the word "profit". The words "general public utility" contained  in the  definition of charitable purpose are  very  wide.  These  words,  as  held  by  the  Judicial Committee in  the case of All India Spinners’ Association v. Commissioner of Income-tax, exclude objects of private gain. It is also difficult to subscribe to the view that the newly added words  "not involving  the carrying on of any activity for profit"  merely qualify and affirm what was the position as it  obtained under  the definition  given in  the Act  of 1922. If  the  legislature  intended  that  the  concept  of charitable purpose  should be the same under the Act of 1961 as it  was in the Act of 1922, there was no necessity for it to  add  the  new  words  in  the  definition.  The  earlier definition did not involve any ambiguity and the position in law  was   clear  and   admitted  of   no  doubt  after  the pronouncement of  the Judicial  Committee in  the  cases  of Tribune and  All India  Spinners’  Association  (supra).  If despite that  fact, the  legislature added  new words in the definition of  charitable purpose,  it would  be contrary to all rules  of construction to ignore the impact of the newly added words  and to  so construe  the definition  as if  the newly added  words were either not there or were intended to be otiose and redundant.      The  appeals   fail  and   are  dismissed  but  in  the circumstances without costs.      BEG, J. The. question, answered in the negative in this case by  the Mysore High Court, which is now before us after certification of  the case  under Section  261 of the Income tax Act,  1961 (hereinafter  referred to  as ’the Act’), was

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framed by the Income-tax Tribunal as follows:-           "Whether on  the facts and in the circumstances of      the case,  the income  of the  Loka Shikshana Trust was      entitled to  exemption under  Sec. 11 of the Income tax      Act, 1961 read with Sec. 2(15) of the same Act, for the      assessment year 1962-63".      The appellant  is a sole trustee of the "Loka Shikshana Trust", holding  properties mentioned in a schedule attached to  a  deed  of  trust  executed  on  19-2-1962  by  himself purporting to  re-declare a  trust of  15-7-1935. The  total assets of the earlier trust of 1935, known as the 473 "National Literature Publications Trust", consisted of a sum of Rs. 4308.10.9 only. It appears that, under the provisions of the earlier trust, the trustee had carried on a lucrative business of printing, under the name of "Karnatak Prakashana Mandal", at  Belgaum, and,  thereafter, it  was  shifted  to Hubli where  he started  publishing a daily newspaper called "Samyukta Karnatak".  The printing  business must  have been lucrative because  investments of  profits from it, together with some  possible "donations",  expanded the assets of the redeclared trust  of 1962 so much that the schedule attached to the  trust deed  of 1962  shows their  value  to  be  Rs. 2,97,658/-. After  deducting the  total liabilities  of  the trust, shown  as Rs. 1,24,086.10 annas, the net value of the assets is given as Rs. 1,73,571.14.4.      Even if  the obvious inference from statements found in the trust  deed of  1962? which  is part of the statement of the case, showing the assets of the trust of 1953 as well as of the  re-declared trust  of  196,  that  the  trustee  was carrying on  a fairly  lucrative business,  the  profits  of which had  been utilised  for building  up its assets, could possibly be  ignored, we  find, from  the statement  of  the accounts submitted  by the  appellant trustee himself to the Income-tax Department  for the assessment year 1962-63, with which we  are concerned,  that  the  trust  had  mad.  quite considerable profits from various activities carried on as a part of  its ordinary  and regular  business. Here,  a gross income of  Rs. 22,55,077.46  nP is  shown. This included Rs. 12,31,954.54 from  sales of newspapers and magazines through agents, Rs.  7,29,249.27  from  advertisements  and  notices alone, Rs.  1,27,422.53 as payments of "job printing bills". The sales  of its  newspapers and journals through retailers brought in  Rs. 66,010.68  np. The subscribers of newspapers and journals  contributed  Rs.  51,7803.74.  "Profits"  from sales of  other publications  are shown  as Rs.  5040.05 np. Income from  "sundry receipts"  is given  as Rs. 2964.57 np. "profits from  the sale  of a van and machinery are shown as Rs. 4829.83.  Some other  income is  shown  as  Rs.  2337.95 Interest on investments is shown as Rs. 1762.71. A glance at items of  expenditure shows that nothing was spent for which a deduction  could not  be claimed  by any  private  concern carrying on  a profitable  business. These, items of expense consisted of  money spent on repairs, of buildings, payments of taxes,  purchases of  newsprint and other kinds of paper, ink, photographic  materials, blocks, binding, stitching and packing  materials,   payments  of   salaries,   wages   and allowances  to   the  staff.   After  deducting   the  total expenditure of  Rs. 4,92,246.81  from the  gross income, the net income  for the  year is  shown as Rs. 30,376.80 np. for which exemption  from Income-tax is claimed by the appellant on the  ground that it is protected from taxation by Section 11 read with Section 2(15) of the Act.      The trust  deed of 1962, which, as already stated, is a part of the statement of the case, gives the past history of

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the trust,  in the  course of  a fairly  long  preamble.  It contains the  following passage  giving  some  idea  of  the activities, of  the trust,  the composition  of its  present assets as well as of utilisation of its income since 1935:           "AND WHEREAS in furtherance of the objects contain      ed in  the said  deed of Trust dated 15th July, 1935, I      took 474      over  on   17-7-1935  a  concern  called  the  Karnatak      Prakashana Mandal,  Belgaum, and  conducted a  printing      Press for  some time  at Belgaum,  and? thereafter,  at      Hubli,  and   printed  and   published  a  daily  paper      "Samyukta Karnatak",  and a weekly paper called "Weekly      Samyukta Karnatak", which was later called "Karmaveer",      and also  published certain  books, pamphlet, and other      literature, as  a result  whereof the  property of  the      trust  increased  from  time  to  time,  and  the  said      property  is   today  comprised  of  printing  presses,      buildings, land  and other property which is set out in      the schedule hereunder written".      The trust  deed  also  contains  a  reference  to  what necessitated  a  redeclaration  of  the  trust.  An  amended meaning of  "charitable purpose",  given in Section 2(15) of the Act  of 1961, must have given rise to some doubts in the minds of  the maker of the trust about the taxability of the income of  the trust  which was  exempted  from  payment  of income-tax in the past. He said:           "And whereas  doubts  have  arisen  regarding  the      legal validity  of the  Trust declared in the aforesaid      Deed of Trust dated 15th July 1935.           AND whereas  it became  necessary to take steps to      remove the  said doubts  and to  prevent similar doubts      arising in future, I, Ranganath Ramachandra Diwakar Who      has been  the only  Trustee of  the National Literature      Publication Trust  declared as aforesaid, have obtained      legal opinion  in the matter of the said Trust and I am      desirous, with  a view  to carrying out public purposes      of a  charitable nature  of re-declaring  the Trusts in      accordance with  the legal  opinion obtained  by me  as      aforesaid, on  which I  hold and shall continue to hold      the original  Trust amount  of Rs.  4,308:10.9, and all      contributions,    additions,     accumulations,     and      acquisitions to the same which are now comprised in the      Schedule hereunder  written  and  all  the  properties,      funds, assets,  and any  conversions  or  reconversions      thereof and  the investment  in which the same may from      time to time be held". The objects of the trust are set out as follows:           "2. The  object of  the Trust  shall be to educate      the people  of India  in general  and  of  Karnatak  in      particular by,           (a) establishing,  conducting and helping directly      or in  directly institutions  calculated to educate the      people by spread of knowledge on all matters of general      interest and welfare;           (b)  founding   and  running   reading  rooms  and      libraries and  keeping and  conducting printing  houses      and publishing  or aiding  the  publication  of  books,      booklets,  leaflets,   pamphlets,  magazines   ets.  in      Kannada and  other languages all these activities being      started, conducted,  and carried  on with the object of      educating the people: 475           (c) supplying  the Kannada speaking people with an      organ  or   organs  of   educated  public  opinion  and

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    conducting journals  in Kannada and other languages for      the dissemination  of useful  news and  information and      for the  ventilation of  public opinion  on matters  of      general public utility; and           (d) helping  directly or  indirectly societies and      institutions which  have all  or any  of the  aforesaid      objects in view".      In addition  to the power which the sole trustee had to collect donations  and subscriptions  for the  trust. he had all the powers which the sole manager of a business may have in order  to carry  it on  profitably. He  had the  power of transferring trust  properties and  funds if  he thought "it expedient in  the interest  of the  objects of the Trust, to transfer the  assests and  liabilities of  this Trust to any other Charitable  Trust or  institution  conducted  by  such Trust which  in the  opinion of  the original Trustee or the Board of  Trustee has objects similar to the objects of this Trust and  is  capable  of  carrying  out  the  objects  and purposes of this Trust either fully or partially" (Paragraph 17 of  the Trust deed). Although, the "original trustee" was not "to take any remuneration" for discharging his duties as a trustee, yet, he was not precluded "from being paid out of the Trust  fund such remuneration as may be deemed propellor carrying out  any work  and  duty  in  connection  with  the conduct or  management of institutions of the Trust, or with the business  of printing,  publishing or  other  activities carried on  by the  Trust".  He  was  to  be  paid  expenses incurred in  travelling or  otherwise in connection with his duties as a trustee (paragraph 16 of the Trust deed).      The "original  trustee" could  invest trust  monies and profits  "in  any  investment  authorised  by  law  for  the investment of  Trust funds  or in  shares, or  securities or debentures of Limited Companies in India or outside" (para 4 of the  Trust deed).  He had  the "power  to mortgage, sell, transfer and  give on  lease or  to otherwise  deal with the Trust property or any portion thereof for the purpose of the Trust and to borrow monies or raise loans for the purpose of the Trust  whenever he may deem it necessary to do so" (para 8 of  the Trust  deed). Furthermore,  the  Trustee  had  the "power and  authority to spend and utilise the money and the property of  the Trust for any of the purposes of this Trust in such manner as to him may appear proper".      lt  appears   to  us  that,  with  this  profit  making background of the trust, its loosely stated objects the wide powers of  the sole  trustee, and  the apparently profitable mode  of  conducting  business,  just  like  any  commercial concern, disclosed not only by the terms of the trust but by the statement of total expenditure and income by the trustee it is  very difficult  to  see  what  educational  or  other charitable  purpose   the  trust   was  serving  unless  the dissemination of  information  and  expression  of  opinions through the  publications of the trust was in itself treated as the really educational and charitable purpose.      The principal  arguments  advanced  on  behalf  of  the appellant-trustee are:  firstly paragraph  2(c) of the Trust deed only enables the trustee 476 to supply  the Kannada  speaking people with organs or means for express educated public opinion as a mode of serving the real and  expressly mentioned  purpose of  "education" which must control and determine the true nature of the activities of the  trust  so  that  profit  making,  as  an  incidental consequence of  these activities, was quite immaterial; and, secondly, even  if the  activities of the trust did not fall within the  separate category  of, "education"  as such,  in

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which case profit yielding became quite irrelevant, but fell under the  more general  or the  4th and  last  category  of purposes of  general public  utility  specified  in  Section 2(15) of  the Act,  the mere  fact that  the conduct  of the printing  business   was  profitable   sometimes   or   even constantly wag  not enough to make it an activity carried on "for profit".  The first  contention rests on the assumption that an express mention of a dominant though general purpose of "education"  will enable  the  Courts  to  supervise  the execution of  such  a  trust  as  one  intended  solely  for educational purposes.  The second  submission, accepted  by. the Income-tax  Tribunal but  rejected by  the  High  Court, implies that  the profit-making  motive must be specifically and expressly  made the  object of  an activity  which is of obvious  utility   to  the  public  before  excerption  from taxation can  be denied to such an activity. In other words, the added  qualification or condition imposed upon a work of "general public utility", before it could pass the test of a charitable purpose, made no difference to the law. According to learned  Counsel for  the appellant,  the  amendment  was meant to  make explicit what was previously only implicit in the law as it stood. The argument thus is that the amendment only clarified  without actually  changing the  law  on  the subject.      The last  paragraph of  clause (3)  of Section 4 of the Indian Income-tax  Act of  1922 (hereinafter  referred to as ’the Act of 1922’) laid down:           " ’charitable  purpose’  includes  relief  of  the      poor, education,  medical relief and the advancement of      any other object of general public utility, but nothing      contained, in  clause (i)  or clause (ii) shall operate      to exempt  from the provisions of this Act that part of      the income  from property  held under  a trust or other      legal obligation  for private  religious purposes which      does not enure for the benefit of the public".      It will be noticed that the provision set out above did not really  define a  "charitable purpose" but purports only to indicate  a concept  of charity  which would  include the four categories  of objects  mentioned there.  The four-fold classification of  charitable  purposes  has  a  history  in English law.  A  statute  of  Elizabeth  I  which  "was  not directed so  much to  the definition  of charity  as to  the correction  of   abuses  which   had   grown   up   in   the administration of trusts of a charitable nature" (See: Tudor on "Charities"  six End. p. 2) had a preamble containing; an illustrative list  of charitable  objects  which  was  never treated as  haustive. It,  however, became  the practice  of Courts "to refer to the preamble as a sort of index or chart in order  to determine  whether or  not a  given purpose was charitable". Thus,  a purpose  was considered, in the eye of law, to  be charitable  only if it came within the letter or the spirit  and inendment  of the preamble of the statute of Elizabeth. 477      To give  a semblance  of order  to the rather confusing mass of  case law  which had  accumulated  on  the  subject, attempts were made to ; classify purposes which had obtained recognition by  Courts as  charitable. Lard  Macnaghten,  in Income Tax  Commissioners  v.  Pemsel  adopted  a  four-fold classification of  charitable purposes  which had been first put .  forward in  the course  of an  argument by Sir Samuel Romilly in Morice v. Bishop of Durham. These were (1) Relief of poverty, (2) advancement of education; (3) advancement of religion; (4) other purposes beneficial to the community not falling under any of the pre ceding heads

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    The last or the residuary category seemed very wide and general. Properly  speaking, such  a wide  category would be interpreted, if  it were found in a statute, ejusdem generis with the previous three categories, which were less wide and more specific. The framers of our Act of 1922 must have been attracted by  this classification  which they  adopted  with some modifications,  "Medical  relief"  was  apparently  sub stituted  for   "advancement  of  religion".  In  All  India Spinners’  Association   v.  Commissioner   of   Income-tax, Bombay(3), Lord Wright, while considering the meaning of Sec 4(3) of the 1922 Act, observed (at P. 486)           "The Act  of 43  Elizabeth (1601)  contained in  a      preamble a list of charitable objects which fell within      the Act,  and this  was taken  as a  sort of  chart  or      scheme which  the Courts  adopted as  a groundwork  for      developing the  law, in  doing so they made liberal use      of analogies so that the modern English law can only be      ascertained  by   considering  a   mass  of  particular      decisions often difficult to reconcile. It is true that      Section 4(3)  of the Act has largely been influenced by      Lord Macnaghten’s  definition of  charity in  Pemsel v.      Commissioners for Special Purposes of Income-tax (1891)      A.C.  531  at  p.  583,  but  that  definition  has  no      statutory authority  and is  not precisely  followed in      the most  material particular; the words of the section      are ’for the advancement of any other object of general      public utility’,  whereas Lord  Macnaghten’s words were      ’other  purposes  beneficial  to  the  community’.  The      difference in  language, particularly  the inclusion in      the Indian Act of the word ’public’ is of importance."      The trend  of judicial  pronouncements was  to construe the words  "general public  utility", in Section 4(3) of the Act of 1922, very widely. The only serious limitation put on the character  of a  "general public  utility" seems to have been that  it clearly  excluded the object of private profit making. Thus,  in the  All India  Spinners’ Association case (supra), the  Privy Council, while holding that the "primary object" of the Association appeared to be "the relief of the poor", said (at p. 488): 478           "That would  be enough  prima facie to satisfy the      statute. But  there is good ground for holding that the      purposes of the Association included the advancement of      other purposes  of general  public utility.  These last      are very  wide words.  Their exact scope may require on      other occasion  very careful  consideration. They  were      applied in the Tribune Press case (1939) 66 I.A. 241; 7      I.T.R. (415) without any very precise definition to the      production of  the  newspaper  in  question  under  the      conditions fixed  by the  testator’s  will.  The  Board      stated (at p. 256) that:           ’the object of the paper might be described as the           object of  supplying the province with an organ of           educated public opinion’.      and that  it should prima facie be held to be an object      of general-public  utility. These words, their Lordship      this would  exclude the object of private gain, such as      an under  taking for  commercial profit  though all the      same it  would subserve  general  public  utility.  But      private profit was eliminated in this case".      In Commissioner of Income-Tax, Madras v. Andhra Chamber of Commerce,  this Court  interpreting Section  4(3) of  the 1922, Act, held (at p. 732):           "The expression ’object of general public utility’      in section  4(3) would  prima facie include all objects

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    which promote the welfare of the general public". Decision of  some cases  seems to  have revolved  round  the question whether  the body of beneficiaries was large enough to constitute the purpose one of "public utility".      Some of the decisions on income for which exemption was claimed on  the ground  that it  was meant  for a charitable purpose falling  within the  wide  residuary  class  perhaps travelled  even   beyond  the  "bursting  point"  to  which, according to  Lord Russell  of Killowen,  English Courts had stretched the  concept of  charity [See: In re Grove Grady]. At any rate, the reason which induced our Government to make an amendment  by Section  2(15) of  the Act of 1961 was thus stated by  the Finance  Minister Shri  Morarji Desai, in the course of  his speech  in Parliament explaining the proposed amendment (see: Lok Sabha Debate dated 18-8-1961)(3):           "The other  objective  of  the  Select  Committee,      limiting the  exemption only to trusts and institutions      whose object  is a  genuine charitable purpose has been      achieved by  amending the  definition in  clause 2(15).      The definition  of ’charitable’  purpose in that clause      is at present so widely worded that 479      it  can  be  taken  advantage  of  even  by  commercial      concerns  which,  while  ostensibly  serving  a  public      purpose, get  fully paid  for the  benefits provided by      them, namely,  the  news  paper  industry  which  while      running its  concern on commercial lines can claim that      by circulating  newspapers it was improving the general      knowledge of the public. In order to prevent the misuse      of this  defamation in such cases, the Select Committee      felt that  the words  ’not involving the carrying on of      any  activity  for  profit’  should  be  added  lo  the      definition". (p. 3074).      Mr. Palkhivala  objected strongly  to any  reference to the  speech  of  the  Finance  Minister,  who  proposed  the amendment, for  the purpose of finding cut the object of the amendment. He  contended that  speeches made  by Members  of Parliament in  the course  of debates on pro visions enacted were not  to be  looked at  for interpreting the language of the enactment  to which  we  should  confine  ourselves.  He relied on  the well  known dictum  of Rowlatt  J.,  in  Cape Brandy Syndicate v. I.R.C., when that learned Judge said:           "In a  taxing Act  one has  to  look  at  what  is      clearly said  ...... one  can only  look fairly  at the      language used".      It was  contended that, as the meaning of words used in Section 2(15) was very clear we need go no further. l am not able to  accept  this  over-simplification  of  the  problem before us.  To say that the concept of a charitable purpose, either before or after the amendment we are considering, was at  all  clear  or  free  from  considerable  ambiguity  and difficulty would  be to  ignore the  plethora of  not always consistent case law which one can find on the subject and to minimize the  difficulties of  Courts. "Charitable  purpose" has never  been  at  all  clearly  defined  or  exhaustively illustrated. We  have, therefore,  to discover  the mischief aimed at by the amendment.      It is  true that  it is dangerous and may be misleading to gather  the meaning  of the  words used  in an  enactment merely from  what was said by any speaker in the course of a debate in Parliament on the subject. Such a speech cannot be used to  defeat or  detract from  a  meaning  which  clearly emerges from  a consideration of the enacting words actually used. But,  in the  case before  us, the  real  meaning  and purpose of  the words  used  cannot  be  understood  at  all

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satisfactorily without  referring to  the  past  history  of legislation on  the subject  and the  speech of the mover of the amendment  who was, undoubtedly, in the best position to explain what  defect in  the law the amendment had sought to remove. It  was  not  just  the  speech  of  any  member  in Parliament. It  was the  considered statement of the Finance Minister who  was proposing  the amendment  for a particular reason which  he clearly  indicated. If  the reason given by him only  elucidates what  is also  deducible from the words used in  the amend cd provision, we do not sec why we should refuse to take it into 480 consideration as  an aid  to a  correct  interpretation.  It harmonises with  and clarifies  the real intent of the words used. Must we, in such circumstances, ignore it ?      We find  that Section 57, sub-s (4) of the Evidence Act not only  enables but enjoins Courts to take judicial notice of the  course of  proceedings in  Parliament  assuming,  of course, that it is relevant. It is true that the correctness of what  is stated  on a  question of fact, in the course of Parliamentary proceedings,  can only  be proved  by somebody who had  direct knowledge  of the  fact  stated.  There  is, however, a  distinction between  the fact  that a particular statement giving  the purpose  of an  enactment was  made in Parliament, of which judicial notice can be taken as part of the proceedings,  and the  truth of  a disputable  matter of fact stated  in the  course of  proceedings, which has to be proved aliunde,  that is  to say, apart from the fact that a statement about  it was made in the course of proceedings in Parliament (See:  Rt.  Hon’ble  Jerald  Lord  Strickland  v. Carmeld Mifud Bonnici, The Englishman Ltd. v. Lajpat Rai.      In the  case before  us, a reference was made merely to the fact  that a  certain reason  was given  by the  Finance Minister,  who   proposed  an   amendment,  for  making  the amendment. What  we can  take judicial notice of is the fact that such  a statement of the reason was given in the course of such a speech. The question whether the object stated was properly expressed  by the  language of Section 2(15) of the Act is  a matter  which we have to decide for ourselves as a question of  law. Interpretation of a statutory provision is always a  question of law on which the reasons stated by the mover of  the amendment  can only  be  used  as  an  aid  in interpretation if  we think,  as I  do in  the instant case, that it  helps us  considerably in understanding the meaning of the amended law. We find no bar against such a use of the speech.      In Anandji  Haridas &  Co.  Pvt.  Ltd.  v.  Engineering Mazdoor Sangh  &  Anr.,  a  Division  Bench  of  this  Court observed (at p. 949)           "As a  general principle  of interpretation, where      the  words   of  a  statute  are  plain,  precise,  and      unambiguous, the  intention of the Legislature is to be      gathered from the language of the statute itself and no      external  evidence   such  as   Parliamentary  Debates,      Reports of  the Committees  of the  Legislature or even      the statement  made by the Minister on the introduction      of a  measure or  by the  framers  of  the  Act  is  ad      missible to  construe those  words. It  is only where a      statute is  not exhaustive  or where  its  language  is      ambiguous, uncertain,  clouded or  susceptible or  more      than one  meaning or  shades of  meaning, that external      evidence as to the evils, if any, which the statute was      intended to  remedy, or  of the circumstances which led      to the passing of the statute may 481

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    be looked  into for  the purpose  of  ascertaining  the      object which  the Legislature  had in view in using the      words in question".      The  Finance   Minister’s  speech  tells  us  that  the Government was  accepting the  recommendations of the Select Committee to which the Bill which became the Act of 1961 had been referred. One of the recommendations was:           "The  Committee   is  of   the  opinion  that  the      advancement of  an object  of  general  public  utility      which involves  the carrying  on of  any  activity  for      profit should not come within the ambit of a charitable      purpose".      [See Gazette of India Extraordinary Part II, Section 2, p. 677(4)].      In  Commissioner  of  Income-tax,  Gujarat  v.  Vadilal Lallubhai, this  Court, following  its earlier  decision  in Commissioner of  Income-tax v.  Sadora Devi did not consider it at  all inappropriate  to refer  to a  Select Committee’s Report for  finding  out  the  reason  behind  an  ambiguous provision so as to be able to apply the Mischief Rule. It is too late  in the  day for  Mr. Palkhivala  to object  to the adoption of  such a  course  in  an  attempt  to  apply  the Mischief Rule  to find out the reason behind an amendment of the law.      The case  on which  Mr. Palkhivala, the learned Counsel for the  appellant, relies  most strongly for support to his client’s case  on merits  is: In  Re the ’Tribune’(3), where the Privy  Council, allowing  an appeal  from a  Full  Bench decision of  the Lahore  High Court,  held that the income a Trust, the  object of  which was described as "supplying the province with  an organ  of an educated public opinion", was entitled to  exemption on the ground that it was a trust for a purpose  of "General  public utility"  and  not  just  for propagating any political views. It was also held there that such a  trust would  not fall  within the category of Trusts for education  in the  sense in  which that  term appears in Section 4  of the  Act of  1922. The  Privy  Council,  after observing that  the Chief  Justice and  Addison, J.,  of the Lahore High  Court, had  laid some  stress on the fact "that the Tribune newspaper charges its readers and advertisers at ordinary  commercial  rates  for  the  advantages  which  it affords", said (at p. 422):           "As against  this the  evidence or  finding do not      disclose that  any profit  was made by the newspaper or      press before  1918 and  it is  at  least  certain  that      neither was  founded for  private profit whether to the      testator or any other person. By the terms of the trust      it  is   not  to  be  carried  on  for  profit  to  any      individual. It cannot, in their 482      Lordships’  opinion,   be  regarded   as   an   element      necessarily present  in any  purpose of  general public      utility, that  it should  provide something for nothing      or for less than it costs or for less than the ordinary      price. An  elemosynary element is not essential even in      the   strict    English   view   of   charitable   uses      (Commissioners v.  University College  of  North  Wales      (1909) 5 Tax Cas. 408, 414)".      It seems  clear to  us  that  the  amended  provisions, Section 2(15)  in the  Act of 1961, was directed at a change of law  as it  was declared  by the  Privy  Council  in  the Tribune  case   (supra).  The  amended  provision  reads  as follows:           "S. 2(15)  ’charitable purpose’ includes relief of      the  poor,   education,   medical   relief,   and   the

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    advancement of  any  other  object  of  general  public      utility not  involving the  carrying on of any activity      for profit;"      It is  apparent that,  even now, charitable purpose has not been  defined. The  four-fold classification,  which was there in  the Act  of 1922,  is there  even in  the  amended provision, but  the last  or general  category of objects of "general public  utility" is  now qualified  by the  need to show that  it did  not involve  profit making.  The question before us,  therefore is:  What is the meaning or purpose of introducing the limitation" not involving the carrying on of any activity  for profit" ? The contention of Mr. Palkhivala is that it merely indicates that, as was held in the Tribune case (supra)  and other  cases,  the  purpose  must  not  be private profit  making or,  in other words, the benefit must be to  an object  of "general public utility". This involves reading of the word "private" before "profit" which is quite unjustifiable. Furthermore,  if that was the sole purpose of the amendment, we think that the amendment was not necessary at all.  It had  been declared repeatedly by the Courts even before the  amendment that  activities motivated  by private profit  making   fell  outside   the  concept   of   charity altogether. We  think that  it is  more reasonable  to infer that the  words used  clearly imposed a new qualification on public utilities entitled to exemption. It was obvious that, unless such a limitation was introduced, the fourth and last category would  become too  wide to  prevent its abuse. Wide words so  used could  have been limited in scope by judicial interpretations ejusdem  generis so  as to  confine the last category  to  objects  similar  to  those  in  the  previous categories and also subject to a dominant concept of charity which  must   govern  all  the  four  categories.  But,  the declaration of law by the Privy Council, in the Tribune case (supra), had  barred this  method of  limiting an  obviously wide category  of profitable  activities of  general  public utility found  entitled to  exemption. Hence, the only other way of  cutting down  the wide  sweep of objects of "general public utility"  entitled to  exemption was  by legislation. This, therefore,  was the  method Parliament  adopted as  is clear from the speech of the Finance Minister who introduced the amendment in Parliament. 483      The  word   "involve"  does   not,  it   seems  to  me, necessitate the  bringing out  of the  profit motive  of  an activity expressly  in the deed of trust as was suggested by the  learned  Counsel  for  the  appellant.  The  dictionary meaning of  the word ’involve’ is: "to entangle; to include; to contain;  to imply"  (see;  The  Shorter  Oxford  English Dictionary-III Edn.  p. 1042).  All profit making, even as a mere  by-product,  would  have  been  covered  by  the  word "involving", which is of wide import, if this word had stood alone and  by itself  without further  qualifications by the context. The  use of  the words "for profit", however, shows that the  involvement of  profit making  should be of such a degree or  to such  an extent as to enable us to infer it to be the  real object.  As a  rule, if  the terms of the trust permit its  operation "for  profit", they become prima facie evidence of  a purpose  falling outside  charity. They would indicate the  object of profit-making unless and until it is shown that  terms of the trust compel the trustee to utilise the profits  of business  also for  charity. This means that the test introduced by the amendment is: Does the purpose of a  trust  restrict  spending  the  income  of  a  profitable activity exclusively  or primarily upon what is "charity" in law ?  If the  profits must  necessarily feed  a  charitable

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purpose, under  the terms  of the  trust, the mere fact that the activities  of the trust yield profit will not alter the charitable character  of the  trust. The  test now  is, more clearly than  in the  past, the  genuineness of  the purpose tested  by   the  obligation  created  to  spend  the  money exclusively or  essentially on "charity". If that obligation is there, the income becomes entitled to exemption. That, in our opinion, is the most reliable test.      The difficult question, however, still remains: what is the meaning  of "charitable purpose" which is only indicated but not defined by Section 2(15) of the Act ? It seems to me that a  common concept  or element of "charity" is shared by each of the four different categories of charity. It is true that charity  does not  necessarily exclude  carrying on  an activity which yields profit, provided that profit has to be used up  for what is recognised as charity. The very concept of charity denotes altruistic thought and action. Its object must necessarily  be to  benefit others  rather  than  one’s self. Its  essence is  selflessness. In  a truly  charitable activity any  possible benefit  to the  person who  does the charitable act  is merely  incidental or even accidental and immaterial. The  action which flows from charitable thinking is not directed towards benefitting one’s self. It is always directed at  benefitting others.  It is  this  direction  of thought and  effort and  not the  result of what is done, in terms of  financially measurable gain, which determines that it  is  charitable.  This  direction  must  be  evident  and obligatory upon  the trustee  from the  terms of  a deed  of trust before it can be held to be really charitable.      We think  that this  governing  idea  of  charity  must qualify purpose  of every  category  enumerated  in  Section 2(15) of the Act of 1961. We think that the words introduced by the  Act of  1961 to qualify the last and widest category of objects  of public  utility were really intended to bring out what has to be the dominant characteristic of 484 each and  every category  of charity.  They were intended to bring the  last and  most general  category in line with the nature  of   activities  considered   truly  charitable  and mentioned in the earlier categories.      Coming now to the deed of trust before us, we find that the word  "education" is mentioned by the maker of the trust in a rather ceremonial or ritualistic fashion as a label for what he  considers to be charitable object. The third set of objects, in  clause 2  of the  deed does  not appear  to  be stated there  merely as  a  means  of  serving  the  general purpose of  "education"  separable  from  these  objects  in clause (c).  On the other hand, there are strong grounds for believing, in  the light  of  other  provisions  and  profit making activities  and background  of the  trust,  that  the object of  education was  mentioned in  the deed  only as  a convenient cloak  to conceal and serve the real and dominant purpose of  clause  2(c)  which  was  to  run  a  profitable newspaper and  publishing business without paying the tax on it. Just  as mere  making of  profit  as  a  consequence  or incident of  altruistic activity is not decisive of the real purpose or  object of  the activity, so also the carrying on of a  business for  profit does  not cease  to be  so merely because losses  are actually  incurred in  certain years  or because those  who carry it on call it "education". It would be difficult  to find  any commercial  activity which  makes profits  always  or  which  expressly  gives  out  that  its existence depends  upon profit making although, in practice, and,  ultimately,  its  continuance  may  depend  on  profit making. A newly started business may, initially, have to run

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at a  loss; but,  at a  later stage, it may earn magnificent profits. Therefore, test of the real character or purpose of an activity  cannot be  whether its  continuance is  made to depend upon  profits resulting  from it  or not. Such a test would be  artificial and  specious. I  do not think that the qualification introduced by Section 2(15) of the Act of 1961 was intended  to compel Courts to look for the conditions on which continuance of activities of public utility is made to depend. If profit making results from them and these profits can be  utilised for non-charitable purposes the trust which makes this  possible would not be exempt from paying income- tax.      In the  trust  deed  before  us,  as  we  have  already indicated,  the   trustee  had   not  only  wide  powers  of utilisation of  trust funds  for purposes  of the  trust but could divert  its assets  as well as any of the funds of the Trust to  other institutions  whose objects  are "similar to the objects"  of the  trust and of "carrying out the objects and purposes  of this  trust either fully or partially". The whole deed  appears to  me to  be cleverly  drafted so as to make the  purpose of  clause 2(c) resemble the one which was held to  be protected  from income-tax  in the  Tribune case (supra). Indeed  the very language used by the Privy Council in the  Tribune case  (supra), for describing the objects of the Trust  in that  case, seems to have been kept in view by the draftsman of the trust deed before us. And, we find that the power  of diverting  the assets  and income of the Trust although couched in language which seems designed to counsel their real  effect is  decisive on  the question whether the trust is  either wholly  or predominantly  for a  charitable purpose or  not. The trustees is given the power of deciding what 485 purpose is allowed to or like an object covered by the trust and how  it  is  to  be  served  by  a  diversion  of  trust properties and  funds. If  the trustee is given the power to determine the  proportion of  such diversion, as he is given here, the  trust could  not be said to be wholly charitable. He could  divert as  much as  to make the charitable part or aspect, if  any, purely  illusory. Indeed,  this was the law even before the qualifying words introduced by the 1961 Act. [See:  East   India  Industries   (Madras)  Pvt.   Ltd.   v. Commissioner  of   Income-tax,  Madras(1),  Commissioner  of Income-tax, Madras  v. Andhra  Chamber of  Commerce(2),  Md. Ibrahim Riza v. Commissioner of Income-tax, Nagpur(3)]. Such a "trust"  would be of doubtful validity, but I refrain from further comment  or any  pronouncement upon  the validity of such a  trust as that was neither a question referred to the High Court in this case nor argued anywhere.      The amendment  of the 1961 Act considered by us compels closer scrutiny  of deeds  of ostensibly  charitable  trusts with a  view to discovering their real purposes by analysing the effects  of their terms and what they permit. It narrows the scope  of exemption  from income-tax  granted  at  least under the  last and  widest category  of  charitable  trusts mentioned in  Section 2(15)  of  the  Act  as  was  held  in Commissioner of Income-tax, West Bengal II v. Indian Chamber of Commerce(4).      We are  in agreement  with the  view expressed  in  the Tribune case  (supra) to  the extent  that we  think that  a trust such  as the  one considered there does not, just like the trust  before us, fall within the category of education, as such,  mentioned in the statutory elucidation of charity, which  was   repeated  in   the  1961  Act,  with  an  added qualification of  the last and widest category. Although the

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term "education", as used in Section 2(15) of the Act, seems wider  and   more  comprehensive   than  education   through educational institutions, such as Universities, whose income is given  an  exemption  from  income-tax  separately  under Section  10(22),   provided  the   educational   institution concerned does  not exist  "for purposes of profit", yet, it seems to  me that  the educational effects of a newspaper or publishing business  are only  indirect, problematical,  and quite incidental  so that, without imposing any condition or qualification  upon   the  nature   of  information   to  be disseminated  or   material  to   be  published,   the  mere publication of  news or  views cannot  be said  to  serve  a purely or  even a  predominantly educational  purpose in its ordinary and usual sense.      The purposes  with which  we  are  concerned  no  doubt parade under  the guise  or caption of "education". They are found stated  in clause 2(c) of the deed. This clause speaks of a supply of "organs of educated public opinion" to Kanada speaking  people   and  of  a  presumed  need  for  "useful" information and "ventilation" of views on "matters of public utility". It is left to the Trustee to decide which class of people is  "educated" so  as to  be permitted  to voice  its views through  these organs.  He is  also to  decide what is "useful" and  what is  harmful  and  what  is  a  matter  of "general public utility". If, as it seems to 486 us to be the position here, the Trustee is the sole judge of how these  presumed needs  are to  be  satisfied,  he  could certainly  cater  for  them  in  a  manner  which  could  be considered debased or offensive by people of good taste with a proper  sense of  values.  I  do  not  mean  to  cast  the slightest reflection  on the  manner in  which the appellant trustee conducts  his business or on the quality or value of materials found  in his newspapers or other publications. We have no evidence and no finding on these aspects of the case before us.  All I  would like  to point out here is that the trust leaves  it entirely  to the  sweet will  of  the  sole trustee to  decide all  questions relating  to policy or the way in  which the  needs mentioned  in clause 2(c) are to be met. Provision  for their  satisfaction could  be made  in a manner which  could be  very lucrative.  This  is  the  most relevant consideration  in ascertaining  the purpose  of the trust from the point of view of profit making.      Judging from  the facts  set  out  in  the  trust  deed itself,  the   sole  trustee   had  managed   to  make   the satisfaction  of   the  needs   mentioned  above   a  highly profitable business.  The deed  puts no  condition upon  the conduct of  the newspaper and publishing business from which we could  infer that it was to be on "no profit and no loss" basis. I  mention  this  as  the  learned  Counsel  for  the appellant repeatedly asserted that this was the really basic purpose and principle for the conduct of the business of the trust before us. This assertion seems to be based on nothing more substantial  than that  the trust  deed itself does not expressly make  profit making  the object of the trust. But, as I have already indicated, the absence of such a condition from the  trust deed could not determine its true character. That  character   is  determined   for  more  certainly  and convincingly by  the absence  of terms which could eliminate or prevent  profit making from becoming the real or dominant purpose of the trust. It is what the provisions of the trust make possible  or permit coupled with what had been actually done as  without any illegality in the way of profit making, in the  case before us, under the cover of the provisions of the deed,  which enable  us  to  decipher  the  meaning  and

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determine the  predominantly profit-making  character of the trust.      For the  reasons given  above, I think that judgment of the Mysore  High Court  must be and is affirmed, but, in the circumstances of  the case,  the parties will bear their own costs. V.M.K.                                    Appeals dismissed. 487