COMMISSIONER OF INCOME-TAX VS GUJARATHI MANDAL
2001 P T D 3247
[240 I T R 293]
[Madras High Court (India)]
Before R. Jayasimha Babu and Mrs. A. Subbulakshmi, JJ
COMMISSIONER OF INCOME‑TAX
Versus
GUJARATHI MANDAL
T.C. Nos. 494 and 495 of 1985 (References Nos. 332 and 333 of 1985), decided on 21/07/1998.
Income‑tax‑‑‑
‑‑‑‑Charitable purposes‑‑‑Charitable trust‑‑‑Exemption‑‑‑Denial of exemption‑‑‑Scope. of S.13(1)(b)‑‑‑Section 13(1)(b) applies only to a trust created for benefit of a particular religious community or caste‑‑ Section 13(1)(b) will not apply to a trust to promote interest of a linguistic group and their religious, social and moral standards‑‑‑Indian Income Tax Act, 1961, Ss. 11 & 13.
Section 13(1)(b) of the Income Tax Act, 1961, is attracted only if the trust is created for the benefit of any particular religious community or caste. It can have no application if what is sought to be done by the trust is to promote the interest of a linguistic group. Language cannot be equated to religion or caste. The commonality of language is mainly due to the residence in a particular linguistic area and is not related to the religious beliefs of .the speaker. The religions practised by the people of the country are not confined to any particular linguistic area.
The assessee was a trust. Its main objects were to import knowledge and education primarily in Gujarati language and to help promote religious, social and moral standards of the Mandal members. The Assessing Officer denied its exemption but the Tribunal held that it was entitled to exemption.
Held, that the terms of the trust did not show that it Was set up to promote the interest of any particular religious community or caste. In fact there was no reference to any religion or to any caste in the deed of trust. The object of the trust was the promotion of social and moral standards as also the religious standards of the Mandal members. There was no requirement in the memorandum of association that Mandal members should belong to any particular religion. All that was required was that the members should know Gujarati. The object of promotion of religious, social and moral standards pf the members was capable of including the promotion of the interest of diverse religions followed by its members. This clause, therefore, did not in any way restrict or require the Mandal to promote the interest of any particular religion or caste. The assessee was entitled to exemption under section 11.
C.V. Ranjan for the Commissioner.
Mrs. Aparna Nandakumar for the Assessee,
JUDGMENT
R. JAYASIMHA BABU, J.‑‑‑The following common question of law has been referred to us at the instance of the Revenue relating to the assessee's assessment for the assessment years 1976‑77 and 1979‑80:
"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee is entitled to exemption under section 11 of the Income‑tax Act, 1961?"
The Revenue contends that a trust set up to promote Gujarati language is to be regarded as one set up to promote the interest of a particular religion or caste attracting the bar of section 13(1)(b) of the Income‑tax Act, and therefore, the trust is not entitled to the benefit of the exemption under sections 11 and 12 of the Act.
The respondent‑assessee is Gujarathi Mandal, Salem. Its object has been set out in its memorandum of association of Shri Gujarati Mandal, Salem, as follows:
"Shri Gujarati mandal, Salem, is a charitable association founded with the following objects:
(1)To impart knowledge and education primarily in Gujarati language and to cultivate interest and‑promote studies.
(2)To establish and maintain educational institutions and such other institutions for the benefits of the Mandal.
(3)To establish reading rooms, libraries, etc.
(4)To arrange lectures and cultural meets to cultivate and promote interest in Gujarati and Hindi language.
(5)To help promote religious, social and moral standards of the Mandal members.
(6)To cooperate in the activities which promote unity and friendship."
The Assessing Officer for the assessment year 1976‑77 rejected the claim of the Mandal under sections 11 and 12 of the Act by holding as under:
"On a perusal of the rules and regulations of the Mandal it is seen that the provisions of sections 11 and 12 are not applicable in the assessee's case. The Mandal is found to be mainly for the Gujarati speaking adults and any Gujarathi commercial firm residing and established in Salem District‑vide‑rule 1 under membership. The income of the assessee Mandal will not, therefore, qualify for exemption under sections 11 and 12 as per the provisions of section 13(1)(b)."
On appeal to the Appellate Assistant Commissioner, he held as under;
"A reading of the memorandum and bye‑laws of the association of the Mandal clearly shows that it is intended for the benefit of Gujrathi speaking persons and to promote interest in Gujrathi and Hindi languages. The membership is open to only Gujarathi speaking persons. The four non‑Gujarati members are only Rajasthanis and Parsees, who probably know to speak Gujarathi. Among the primary school students, out of the 13 non‑Gujarathi students only two are South Indians, others probably know Gujarathi or Hindi. Considering all these facts, I have to agree with the Income‑tax Officer that the Mandal was established for the benefit of a particular religious community or caste. The fact that there may be a few outsiders is only a breach of the bye‑laws. The provisions of section 13(1)(b), are, therefore, rightly applied."
Section 13(1)(b) of the Income‑tax Act reads as under:
"In the case of a trust for charitable purposes or a charitable institution created or established after the commencement of this Act, any income thereof if the trust or institution is created or established for the benefit of any particular religious community or caste."
Section 13(1)(b) of the Act is attracted only if the trust is created for the benefit of any particular religious community or caste. It can have no application if what is sought to be done by the trust is to promote the interest of a linguistic group. Language and religion cannot be equated to religion or caste.
.However, as noticed by the Appellate Assistant Commissioner, among the members there are Rajasthanis and Parsees. There is no finding that all the members belong to the same religion or that the membership is denied on the basis of religion or that the funds are applied only to promote the interest of one religious group or caste. In any event, the terms of the trust do not show that it was set up to promote the interest of any particular religious community or caste. In fact there is no reference to any religion at all or to any caste in the deed of trust.
The Tribunal rightly interfered with the order of the Appellate Assistant Commissioner and held that "Gujarathi speaking persons do not by themselves constitute a particular religion, a particular community or a particular caste. Any member of any religion or any community or any caste can speak Gujarathi. The only common affinity among them is language. Just because a person speaks the same language as another, it cannot be said that they belong to the same religion or same community or caste. All these are elementary propositions". We are entirely in agreement with those observations of the Tribunal. Despite the propositions being elementary, the Revenue has chosen to seek a reference.
Ours is a multi‑lingual, multi7religious multi‑cultural nation wherein diverse religious and languages co‑exist. There is no identification of any language with any particular religion or vice versa. The commonality of language is due mainly to the residence in a particular linguistic area and is not related to the religious beliefs of the speaker. The religious practised by the people of the country are not confined to any particular linguistic area.
People speaking different languages may and do practise the same religion. The most outstanding example being Hindu religion practised by people speaking a large number of different languages residing in places as far apart as Kashmir to Kanniyakumari and also places outside India. So also Christianity which has adherents all over the world. Though the religion may be the same, the languages spoken by them are diverse. The same is true of all other great religions as well who have followers among speakers of different languages. Those who speak the same language cannot by any stretch of imagination be regarded as constituting a caste or religion. The reasoning, if it may be called that, adopted by the Assessing Officer and the Appellate Assistant Commissioner are far‑fetched and wholly artificial.
Before the Tribunal an attempt was made by the Revenue to sustain the denial of the benefits of sections 11 and .12 of the Act on a ground which was not raised in the assessment order or in the appellate order. That ground was the reference made in the memorandum of association to the promotion of religious, social and moral standards of the Mandal members. The Tribunal as rightly held that the clause in the memorandum of association does not attract section 13(1)(b) of the Act. We see no error in that finding.
Section 13(1)(b) of the Act refers to the interest of a particular religion or caste. The object of the Mandal in the object clause 5 is not promotion of any particular religion or caste. The object is the promotion of social and. moral standards as also the religious standards of the Mandal members. There is no requirement in the memorandum. of association that Mandal members should belong to any particular religion., All that is required is that the member should know Gujarathi. As noticed earlier, that language can be and in fact is spoken by people belonging to different religions‑‑‑Hindus, Muslims, Parsees, Tribals. All of them are equally eligible to become members of Mandal, and the object of the Mandal regarding the promotion of religious, social and moral standards of the members is capable of including the promotion of the interest of the diverse religion followed by its members. This clause, therefore, does not in any way restrict or require the Mandal to promote the interest of any particular religion or caste.
Our answer to the common question ‑ referred to us, is against the Revenue and in favour of the assessee. The assessee shall be entitled to costs in the sum of Rs. 2,500 (Rupees two thousand and five hundred) only.
M.B.A./325/FC Reference answered.