THE ASSISTANT COMMISSIONER OF INCOME TAX, MADRAS, ETC. ETC. versus THANTHI TRUST ETC. ETC.

Citation: [2001] 1 S.C.R. 727 · Decided: 31-01-2001 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Case Partly allowed

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Judgment (excerpt)

'--
THE ASSISTANT COMMISSIONER OF INCOME TAX, 
A 
MADRAS, ETC. ETC. 
v. 
THANTHI TRUST ETC. ETC. 
JANUARY 31, 2001 
/' 
[S.P. BHARUCHA, N. SANTOSH HEGDE AND 
Y.K. SABHARWAL, JJ.) 
Income Tax: 
Income Tax Act, 1961: 
B 
c 
Sections 11, I 3(l)(bb)-Assessment years 1979-80 to 1983-84_!_,Trust 
created for running a daily newspaper-Supplementary deed executed for 
public charitable purposes-Tax exemption on income from running a 
newspaper-Entitlement to-Held, exemption is not available to the assessee D 
as the business carried on by the trust is not for the primary purpose of the 
trust as required under Section 13 (l)(bb) of the Act. 
Section //-Sub-section (4A) introduced w.ef 1.4. 1984-Assessment 
years 1984-85 to 1991-92-Tax exemption on income from running a 
newspaper-Entitlement to-Held, exemption is not available to the assessee 
as the exemption is available only to business carried on by trust wholly for 
public religious and charitable pw1JOses. 
E 
Section 1 /-Sub-section (4A) amended w.e.f 1.4.1992-Assessment year 
1992-93 onwards-Tax exemption on income from running a newspaper-· F 
Entitlement to-Held, exemption is available to the assessee as the business 
carried on by the assessee is incidental to the aflainment of the objectives 
of the trust. 
Assessee-trust was created in March 1954 for the purpose of 
establishing a Tamil daily. In July 1957, founder of the trust executed a G 
supplementary deed wherein the trust was declared an irrevocable trust. In 
July 1961, by another supplementary deed, the founder of the trust directed 
that the surplus income of the trust after defraying all the expenses should 
be devoted for specified public charitable purposes which included, inter alia, 
the establishment of schools and colleges for education and running of 
727 
I-I 
728 
SUPREME COURT REPORTS (2001] I S.C:.R. 
A orphanages. 
-tr-
Section 13(1)(bb) was introduced to the Act w.e.f. 1.4.1977 and omitted 
w.e.f. 1.4.1984. For assessment years 1979-80 to 1983-84, the assessee 
claimed tax exemption under Section I I of the Income Tax Act, I 961 in its 
B 
income--tax returns. The claim of the assessee for exemption was rejected 
by ITO on the ground of Section 13(1)(bb). The assessee filed Writ Petitions 
and the High Court, relying upon its earlier decision in assessee's own case 
~ 
which had become final and binding on the Revenue, upheld the contention of 
the assessee. 
c 
Section I 1(4A) was introduced in the Act w.e.f. 1.4.1984. The ITO 
disallowed the tax exemption under Section I I of the Act claimed by the 
assessee for assessment years 1984-85 to 1991-92 on the ground of Section 
I I (4A) of the Act. The assessee filed Writ Petitions before High Court 
challenging the rejection by ITO. The High Court upheld the claims of the 
assessee. 
D 
Section II (4A) of the Act was amended w.e.f. 1.4.1992. The ITO rejected 
the tax exemption under Section 11 of the Act for assessment years 1992-93, 
1995-96 and 1996-97. The High Court allowed the Writ Petitions of the 
assessee. 
E 
In appeal to this Court, Revenue contended that a business, to be excepted 
from the clutches of Section 13(1)(bb), must be one carried on in the course 
of actual carrying out of a primary purpose of a public charitable trust; that 
a business carried on for generating revenue, which is used for furthering 
the charitable purpose of the trust, is not an activity in the course of the 
...J! 
fi. 
primary purpose of the trust. With respect to the introduction of sub-section 
(4A) to Section 11 of the Act, the Revenue contended that the income derived 
from a business held under trust wholly for charitable or religious purposes 
would not be included in the total income of the previous year only in the 
cases of a business carried on by a trust wholly for public religious purposes 
G and the business consists of printing and publishing books or of a kind 
notified in Official Gazette or a business carried on by an institution wholly 
~ 
for charitable purposes and the work in connection with the business was 
mainly carried on by the beneficiaries of the institution, provided that separate 
books of accounts had been mainh1ined in respect of such business. Revenue 
contended with respect to amendlment to sub-section (4A) of Section 11, 
H that it had to be construed to mean that a trust or institution would not get 
r 
ASS. COMMR. OF INCOME TAX v. THANTHI TRUST. 
729 
the benefit of Section 11 unless the business was carried on i

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