A division bench of the Bombay High Court in Trustee of Saurashtra Trust v. DIT (E) denied Income Tax exemption to a Trust publishing newspapers and periodicals disclaiming that it is a ‘charitable trust’.
Saurashtra Trust had been earning income from its activities avoiding payment of income tax on the pretext of conducting activities for the welfare of people in Gujarat and Mumbai and educating them.
However, records revealed that since beginning, i.e. for 21 years, the Revenue considers their income to be taxable. From the assessment year 1962-63 onwards in view of specific definition of the term ‘charitable purpose’ as found in section 2(15) of the Income Tax Act, 1961, the income earned came to be assessed for the income tax.
Attempt of the Trust to prove that their income is exempt from the liability of payment of tax consistently failed. It is borne that in November 1976 the ITAT dismissed the appeals of the trust rejecting their claim.
Dismissing the appeal, Justices S V Gangapurwala and A M Badar held that the benefit of judgment of the Apex Court in the case Surat Art Silk Cloth Manufacturers Association is not available to the assessee-Trust.
It further upheld the ITAT order allowing the appeals of the Revenue and confirming penalty levied on trust.
Read the full text of the Judgment below.
