ivil Appeal No 2130 and 2131 of 1970
From the Judgment and order dated the 12th February 1970 of the Mysore High Court in ITRC Nos 5 and 6 of 1968
N A Palkhivala and Vineet Kumar for the appellant
G section Sharma and section P Nayar for the respondent
N A Palkhivala section T Desai A G Meneses Mrs A K Verma P N Monga J B Dadachani for the Intervener Tribunal Trust Chandigarh
V section 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 215 of the same Act for the assessment year 1962 63  Charitable purpose was defined in section 43 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 215 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 215 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 Sharma is that according to Mr Palkhivala the concluding words of the definition in section 215 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 215 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 peope 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
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
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
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
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
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 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 2c 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 lrust
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 215 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 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 215 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 43 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 215 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 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 4308 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 297658 out of which the value of the building sites and the buildings was Rs 47500
As against that the liabilities of the trust amounted to Rs 124086
The net value of the assets of the trust rose in 1947 to a figure of Rs 173571 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 2255077
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 vs Ms Raipur
Mfg Co though extensively used in 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 vs 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 215 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 vs 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 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
215 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 4308109 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 297658 
After deducting the total liabilities of the trust shown as Rs 12408610 annas the net value of the assets is given as Rs 173571144
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 225507746 nP is shown
This included Rs 123195454 from sales of newspapers and magazines through agents Rs 72924927 from advertisements and notices alone Rs 12742253 as payments of job printing bills
The sales of its newspapers and journals through retailers brought in Rs 6601068 np
The subscribers of newspapers and journals contributed Rs 51780374
Profits from sales of other publications are shown as Rs 504005 np
Income from sundry receipts is given as Rs 296457 np profits from the sale of a van and machinery are shown as Rs 482983
Some other income is shown as Rs 233795 Interest on investments is shown as Rs 176271
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 49224681 from the gross income the net income for the year is shown as Rs 3037680 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 215 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 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 215 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 4308109 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 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 2c 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 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 215 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 vs 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 vs 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 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 vs Commissioner of Income tax Bombay3 Lord Wright while considering the meaning of Sec 43 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 43 of the Act has largely been influenced by Lord Macnaghten s definition of charity in Pemsel vs Commissioners for Special Purposes of Income tax  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 43 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 IA 241 7 ITR 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 vs Andhra Chamber of Commerce this Court interpreting Section 43 of the 1922 Act held at p 732 The expression object of general public utility  in section 43 would prima facie include all objects 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 215 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 19613 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 215
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 vs IRC 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 215 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 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 vs Carmeld Mifud Bonnici The Englishman Ltd vs 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 215 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 vs 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 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 6774
In Commissioner of Income tax Gujarat vs Vadilal Lallubhai this Court following its earlier decision in Commissioner of Income tax vs 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 vs University College of North Wales  414
It seems clear to us that the amended provisions Section 215 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 section 215 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 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 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 215 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 215 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 2c 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 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 215 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 2c 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 vs Commissioner of Income tax Madras1 Commissioner of Income tax Madras vs Andhra Chamber of Commerce2 Md Ibrahim Riza vs Commissioner of Income tax Nagpur3
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 215 of the Act as was held in Commissioner of Income tax West Bengal II vs Indian Chamber of Commerce4
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 term education as used in Section 215 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 1022 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 2c 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 2c 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 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
VMK Appeals dismissed


Summary:
Section 215 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 4308109 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 297658 
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 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 215 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 vs Commissioner of Income tax  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 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 215 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
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  State of Gujarat vs Ms Raipur Mfg Co 1967 1 SCR 618 and Commissioner of Income tax vs Lahore Electric Supply Co Ltd  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 vs Pemsel   583 Morice vs Bishop of Durham  All India Spinners  Association vs Commissioner of Income Tax Bombay 194412 ITR 482 486 commissioner of Income Tax Madras vs Andhra Chamber of Commerce 196555 ITR 722 732 In re Grove Gredy  582 Cape Brandy Syndicate vs IRC  71 Rt
Hon ble Jerald Lord Strickland vs Carmelo Mifud Bonnici AIR 1935 PC 34 The Englishman Ltd vs Engineering Mazdoor Sang  Anr AIR 1975 SC p 946  949 Commissioner of Income tax Gujarat vs Vadilal Lallubhai 1972 86 ITR p 2 Commissioner of Income tax vs Sadora Devi 1957 32 ITR 615  627 1958 1 ISC 1 and In re the Tribune  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 215 of the Act of 1961
483 C D iii Although the term education  as used in section 215 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 1022 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 2c 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 vs Commissioner of Income tax Madras  Commissioner of Income tax Madras vs Andhra Chamber of Commerce  Md Ibrahim Riza vs Commissioner of Income tax Nagpur 1930 LR IA 260 and Commissioner of Income tax West Bengla II vs Indian Chamber of Commerce 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 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 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 at 423 and 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 ie 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 ie the object of general public utility but equally governed the earlier three well known 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