A purpose which is wholly or substantially of a religious nature is not a "charitable purpose" within the meaning of Section 80g(5) of the Income Tax Act, 1961.

( 1 ) THE Income-tax Appellate Tribunal has referred the following question of law for the opinion of this court :"whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the assessee was entitled to the relief under Section 80g on the donations paid to Vishwa Mangal Trust ?"

( 2 ) THIS reference raises a question of construction of the third Explanation to Section 80g (5) of the I. T. Act, 1961. Section 80g allows deduction in respect of donations made to a charitable trust. The third Explanation makes it clear that "charitable purpose" does not include any purpose the whole or substantially the whole of which is of a religious nature.

( 3 ) THE present reference relates to the assessment year 1973-74, By an assessment order of December 27, 1976, the ITO had allowed deductions under Section 80g on a donation of Rs. 25,000 paid by the assessee company (M/s. Upper Ganges Sugar Mills Ltd. , Calcutta) to the Vishwa Mangal Trust. Subsequently, the proceedings were reopened. The trust deed of Vishwa Mangal Trust was examined. The ITO found that Clause 2 (h) contained an object which was wholly of a religious nature and accordingly was not a charitable purpose. The deduction claimed under Section 80g was held not allowable. The assessment order was modified accordingly.

( 4 ) ON appeal, the finding and conclusion of the ITO were affirmed by the AAC.

( 5 ) THE assessee went up to the Tribunal. The Tribunal held that Clause 2 (h) read in the light of the various other clauses of the trust deed shows that the underlying idea of Clause 2 (h) was the welfare of human brotherhood and the propagation of the concept of universal brotherhood which was not wholly or substantially of a religious nature. On this view, the appeal was allowed and the assessee was held entitled to relief under Section 80g on the donations made to the Vishwa Mangal Trust.

( 6 ) IN order to resolve the controversy raised in this reference, it is necessary to examine the trust deed. The second clause of the deed lays down the various objects of the trust. It reads :"2. (a) To establish, support and maintain schools, colleges, libraries, reading rooms, lecture halls, public museums and to grant aid to, support and maintain persons and institutions for the promotion of science or literature or fine arts or diffusion of useful knowledge or galleries of paintings and other works of art or collection of natural history, economic and scientific inventions and designs. (b) To establish and maintain or grant aid to hospitals, medical schools or colleges, nursing institutions and such other institutions. (c) To grant relief on the occasion of earthquakes and floods and other occasions of calamities of similar nature or to give donations to other institutions or persons doing such relief works. (d) To establish and maintain studentships, give prizes and to grant aid to poor students. (e) To establish boarding houses and hostels for students. (f) To promote physical culture and education and to assist and promote sports and games and generally to do all acts for the improvement of general health and physical development. (g) To establish and maintain and to grant aid to centres for diffusion of Indian art and culture. (h) To establish, maintain and to grant and/or aid to public places of Worship and prayer halls. (i) To establish, support and maintain and/or to grant aid to almshouses and/or to give relief to the poor and needy persons. (j) To establish, support and maintain and/or to grant aid to institutions for uplift of backward and depressed classes irrespective of caste, creed or nationality. "

( 7 ) THE third clause reads :"the trustees shall from time to time collect funds which and/or the income thereof will be utilised for the objects aforesaid. All investments and properties of the trust for the time being held by the trustees is hereinafter referred to as the trust fund. "

( 8 ) THE