UPPER GANGES SUGAR MILLS LTD. ETC. versus COMMISSIONER OF INCOME TAX, CALCUTTA

Citation: [1997] SUPP. 3 S.C.R. 239 · Decided: 04-08-1997 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Dismissed

Judgment (excerpt)

UPPER GANGES SUGAR MILLS LTD. ETC. 
A 
v. 
COMMISSIONER OF INCOME TAX, CALCUTTA 
AUGUST 4, 1997 
[S.P .. BHARUCHA AND V.N. KHARE, JJ.] 
B 
Income Tax Act1 1961 ·' Section BOG-Charitable Trost-Donation by 
assessee-Deduction claimed-c-Allowed by Income Tax Officer-Assessment 
reopened-'-Clai/11 disallowed-'-'-Appeal allowed by Tribunaf--On reference 
High Court reversed the order of Tribunal holding that the Trust was of a C 
reiigio~s nai.ur~~zd, if ~n~ of the objects of the institution is wholly or 
substalllially of a religi~us~ai.ure the donation falls outside the scope of 
s.BOG-Assessee not entitled to claim deduction. 
Words & Phrases-"Chalitable purpose''---Meaning of in the context of 
S.BOG of Income Tax Act. 
D 
The appellant-assessee had made a donation to the Vishwa Mangal 
Trust. His claim for deduction under section SOG was allowed by the In-
come Tax Officer. The assessment was then reopened under section 147(b) 
of the Income Tax Act and the claim of the assessee was disallowed. 
Assessee's appeal before the Appellate Assistant Commissioner was dis-
missed; appeal before the Income Tax Appellate Tribunal was allowed. On 
reference, High Court reversed the view of the Tribunal. Hence the present 
appeal. 
Dismissing the appeal, this Court 
HELD : 1.1. Section SOG of Income Tax Act, 1961 applies to donations 
E 
F 
to any institution ot fund established in India for a charitable purpose. 
"Charitable purpose" for the purpose of the Section, does not include any 
purpose the whole or substantially the whole of which is of a religious 
nature. Explanation 3 takes note of the fact that an institution or fund G 
established for a charitable purpose may have a number of objects. If any 
of these objects is wholly or substantially of a religious nature, the institu-
tion or fund falls outside the scope of section SOG and a donation to it does 
not secure the advantage of the deduction that it gives. [243-C-D] 
1.2. Explanation 3 does not require the ascertainment of whether the H 
239 
240 
SUPREME COURT REPORTS (1997] SUPP. 3 S.C.R. 
A whole or substantially the whole of the institution or fund's charitable 
purpose is of a religious nature. It requires the ascertainment of whether 
there is one purpose within the institution or fund's overall charitable 
purpose which is wholly, or substantially wholly, of a religious nature. 
[243-G-H) 
B 
1.3. Clause 2(h) of the Trust Deed which permits the trustees to 
supportprayer halls and places of worship sets out a purpose the whole or 
substantially the whole of which is of a religious nature. Therefore, the 
Trust and the donation by the assessee to it fall outside the scope of Section 
80G. [243-H; 244:A-B] 
C 
Additional Commissioner of Income-Tax, Gujarat v. Surat A1t Silk 
Cloth Manufactures Association, 121 I.T.R. 1, held inapplicable. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No.3104 of 
1985. 
D 
From the Judgment and Order dated 13.12.84 of the Calcutta High 
E 
F 
Court in l.T.R. No. 291 of 1980. 
WITH 
Civil Appeal No. 10736/95. 
H.N. Salve, Shri Narain, K.V. Vishwanadhan, D. Singh and Suman J. 
Khaitan for the Appellants. 
Ranbir Chandra and B.K. Prasad for the Respondent. 
The Judgment of the Court was delivered by 
S.P. BHARUCHA, J. A Division Bench of the Calcutta High Court 
answered the following question in the negative and in favour of the 
Revenue: 
"Whether on the facts and in the circumstances of the case the 
G 
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?" 
The assessee is in appeal by certificate. 
H 
We are concerned in the first appeal with the Assessment Year 
UPPER GANGES SUGAR MILLS LTD. v. C.l.T. [ S.P. BHARUCHA, J.] 
241 
1973-74, the relevant previous year having ended on 30th June, 1972. The A 
assessee had made a donation of Rs. 25,000 to the Vishwa Mangal Trust 
(hereinafter called 'the Trust'). Th~ assessee claimed a deduction under 
Section SOG in respect of that donation. The .claim was allowed by the 
Income Tax Officer on 27th December, 1976. The assessment was then 
re-opened under Section 147(b) of the Income Tax Act and on 30th 
December, 1977 the Income Tax Officer disallowed the claim. The Appel-
B 
!ant Assistant Commissioner dismissed the assessee's appeal. The Income 
Tax Appellate Tribunal allowed the appeal preferred by the assessee 
against the order of tlie Appellate Assistant Commissioner. Thereafter

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