Per Shri D.V. Junnarkar, Accountant Member -The assessee is a society formed by a memorandum of association dated 11-4-1957 with the following objects:

(a)to conduct, promote and patronise through instruction all such nation-building activities for the Hindu Society which the late Dr. Hedgewar instituted and envisaged;

(b)to conduct activities of literary, scientific, cultural and charitable nature conducive to the above objects;

(c)to establish libraries, medical and other relief centres, schools and colleges;

(d)to diffuse political knowledge consistent with the national heritage and thus conducive to the welfare of humanity as a whole.

(e)to spread education and physical training;

(f)and for these purposes:

(i)acquire on lease, by purchase, sale or gift, lands and buildings from Governmental or semi-Governmental authorities, trusts and corporations, institutions and societies, as well as from individuals in Nagpur or any other place in Bharat and/or abroad and to sell, manage, transfer, exchange, mortgage, demise, dispose of or otherwise deal with any property whatsoever belonging to the Society;

(ii)to put up suitable memorials, buildings and other constructions, to maintain, alter and equip them suitably and at its discretion to permit their use on license or lease to institutions or organisations which in the opinion of the Society are devoted to same or similar objects;

(iii)to receive donations in cash or kind from individuals or associa-tions in the country or outside for the purpose of carrying out the objects of the Society;

(iv)to do all such things as the society may think proper and necessary for the attainment of the objects with a view to perpetuate the memory of the late Dr. Keshave Baliram Hedgewar, who dedicat-ed his life for the rejuvenation of the Hindu Society.

2. It was registered as a society under the Societies Registration Act, 1860. It is also registered by the Charity Commissioner as a public-trust under the Bombay Public Trust Act, 1950, and by the Commissioner under section 12A of the Income-tax Act, 1961 ("the Act"). When notice under section 148 of the Act was issued to the assessee for subjecting its income to income-tax, it claimed exemption under sections 11,12 and 13(1) of the Act on the ground that it was a charitable trust. The IAC objected to clause (d) of the objects clause, reproduced above, on the ground that it related specifically to a political purpose. This was not a charitable purpose. He concluded that the society was not for a charitable purpose.

3. The IAC found that the assessee had two buildings one of which was known as "Smruti Mandir", which was never let out, and the other was known as "Smruti Bhawan", which was a hostel of students. The IAC estimated the assessee's income under section 22 of the Act from this later building. He also estimated the assessee's income from donations and interest from bank deposits and subjected the same to tax for the years under consideration. For the first year under consideration, there was no interest on bank deposits.

4. On an appeal by the assessee before the Commissioner (Appeals), the Commissioner (Appeals) agreed with the IAC that the object of the assessee in clause (d) was not of an educational character. For arriving at this decision, he relied on the Supreme Court decision in the case of Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234. On the question whether clause (d) could be considered to be charitable, the commissioner (Appeals) was of the view that a clause like clause (d) could be adopted by any political party and could be used as an instrument for propagating the views and opinions by which the party swears. The party could claim that its programs are consistent with national heritage and calculated to promote welfare of humanity. Again, who is to decide, what would constitute national heritage and what would be conducive to welfare of humanity'? So considered, a clause like this could build up confrontations which