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1939 Supreme(SC) 34
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD THANKERTON, SIR GEORGE RANKIN, AND MR. M. R. JAYAKAR.
TRUSTEES OF THE TRIBUNE PRESS, LAHORE - Appellant
Versus
COMMISSIONER OF INCOME-TAX, PUNJAB, LAHORE - Respondents
On appeal from the High Court at Lahore.
Decided On : June. 13. 1939.
Solicitors for the appellants : Nehra & Co.
Solicitor for the respondent: Solicitor, India Office.
A trust for the maintenance of a newspaper is an object of general public utility if its dominant purpose is to provide an organ of educated public opinion, regardless of whether it charges commercial rates or possesses a political complexion.
Headnote:(A) Indian Income-tax Act, 1922 - Section 4, sub-section 3(i) - Charitable purpose - Advancement of any other object of general public utility - Whether the maintenance of a newspaper with a liberal policy constitutes a charitable purpose - The question of whether a particular object is of general public utility is a question of law, although the tax authorities must find and state the facts bearing thereon. (Paras 107-108)
(B) Charitable Trust - Charging of commercial rates - The fact that a trust charges readers and advertisers at ordinary commercial rates does not necessarily disqualify it from being an object of general public utility, provided it is not carried on for private profit. An eleemosynary element is not essential for a purpose to be of general public utility. (Para 108)
(C) Political Objects - Dominant purpose test - While trusts for purely political objects are generally not charitable, a trust may be held to be for an object of general public utility if the dominant purpose is the dissemination of news and ventilation of opinion on matters of public interest, even if it possesses a political complexion or advocates for social and political reform. (Paras 109-110)
Facts of the case:
A testator created a trust for the maintenance of a newspaper and press to be kept in an efficient condition, maintaining a liberal policy and using surplus income for its improvement and permanency. The income of the trust was assessed to tax, and the trustees claimed exemption on the ground that the trust was for a charitable purpose, specifically for the advancement of an object of general public utility.
Findings of Court:
The court found that the dominant purpose of the trust was to provide an organ of educated public opinion for the community, and the political discussions contained in the newspaper were not the dominant purpose of the trust.
Issues: Whether the income derived from a trust created for the maintenance of a newspaper, intended to maintain a liberal policy and serve as an organ of public opinion, is exempt from tax as being held for the advancement of an object of general public utility under the relevant tax statute.
Ratio Decidendi: The court held that the test for general public utility is a question of law. A trust is not disqualified from being charitable simply because it charges commercial rates or has a political complexion, provided the dominant purpose is the advancement of an object of general public utility. In this case, providing a newspaper for the dissemination of news and ventilation of public opinion was held to be an object of general public utility.
Result: Appeal allowed.
Legal Category Hierarchy
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taxation
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income tax
- charitable exemptions
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income tax
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trusts
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charitable trusts
- public utility trusts
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charitable trusts
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law
- statutory interpretation
Judgement
Appeal (No. 117 of 1936) from a judgment of the Full Bench of the High Court (June 4, 1935) on a reference made under s. 66, sub-s. 2, of the Indian Income-tax Act, 1922.
The Tribune newspaper and Press were owned by one, Sardar Dayal Singh, who, on June 15, 1895, executed a will by which he created three separate trusts which were to be administered by three independent committees of trustees. The third trust was for the maintenance of the Tribune newspaper and Press in an efficient manner, and for their establishment on a footing of permanency. Clause XXI. of the will provided that "It shall be the duty of the said "Committee of Trustees to maintain the said Press and "newspaper in an efficient condition, keeping up the liberal "policy of the said newspaper and 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.” The appellants, the Trustees of the Tribune Press, Lahore, were the committee of that trust.
Sardar Dayal Singh died in September, 1898. The Tribune Trust had been functioning since his death, and income from the Press and newspaper had been assessed to income-tax since 1917-18, when, after defraying all current expenses, there was a small surplus. Objection to the tax was first taken by the Trustees in the assessment of 1932-33. On January 31, 1933, the Income-tax Officer, Lahore, assessed the Trustees of the Tribune Press for the year 1932-33 on the income of the previous year, 1931-32, namely Rs. 61,629. The assessment of income-tax was Rs. 9941-2-0, and of super-tax Rs. 2307-8-0, making a total tax of Rs. 12,248-10-0. The assessees filed an appeal against the order of the Income-tax Officer under s. 30 of the Indian Income-tax Act, to the Assistant Commissioner of Income-tax, who confirmed the assessment. The Commissioner, on the application of the assessees, then referred the following two questions to the High Court (1.) Is the income of the Tribune Trust liable to be assessed in the hands of the Trustees under the provisions of the Income-tax Act ? (2.) If so, is it not exempt under s. 4, sub-s. 3 (i.), of the Act ? The reference was heard by a Division Bench (Jai Lal and Skemp JJ.), who agreed that the first question should be answered in the affirmative. On the second question, however, they disagreed. Jai Lal J. held that the Tribune Press and newspaper was property which was vested in the trustees, and was devoted to charitable purposes as defined in the Indian Income-tax Act, and consequently its income was exempt from assessment to income-tax. Skemp J. held that the trust was not for charitable purposes. They accordingly referred the case to a Full Bench (Young C.J., Addison and Tek Chand JJ.), who delivered three separate judgments. The Chief Justice and Addison J. concurred in holding that the second question referred should be answered in the negative, while Tek Chand J., in a dissenting judgment, was of opinion that the question should be answered in the affirmative. The judgments are reported at ( 1935) I. L. R. 16 Lah. 829.
The assessees now appealed.
The facts and the terms of the trust and of the relevant statutory provisions appear from the judgment of the Judicial Committee.
1939. May 11, 12. Latter K.C. and H. W. Williams for the appellants. The Tribune Press and newspaper were not begun with any idea of pecuniary gain, but to educate public opinion in social and political spheres. The trust appears to be one for the advancement of objects of public utility. There is
02 Law. Rep. 66 Ind. App. 241 ( 1938- 1939) Trustees of the Tribune Press v. Commnr. of Income-Tax
104
danger in arguing from English to Indian statutes Armstrong v. Estate Duty Commissioner . ([ 1937]
A. C. 885, 896.) The meaning of " charitable purpose " in English law was considered in Commissioners for Special Purposes of Income Tax v. Pemsel ([ 1891] A. C. 531. 587.), but this trust should b
