For nearly 20 years the trust was given Section 80G benefit without interruption. In 1999, a notice was issued denying exemption based on the Supreme Court ruling in Upper Ganges Sugar Mills Ltd vs CIT (227 ITR 578). The proceedings were dropped, only to be initiated again in January 2003. Overruling the objections of the trust, the I-T department held that the trust had contravened Section 80G (5)(iii) of the Act and exemption cannot be renewed under Section 80G.

The trust filed a writ petition in the Andhra Pradesh High Court contending that the exemption in force for 20 years cannot be revoked. In these two decades, the income-tax officer (ITO) had held that Ramayana and Mahabaratha enunciated universal values. They embodied the personification of dharma. The object of the trust was to propagate the knowledge of Arsha Dharma. There is a distinction between the cultural and religious parts of the trust. As the epics have both cultural and literary parts, publication of these books cannot be termed religious.

The I-T department did a volte-face and argued that the epics dealt with Hindu gods and their teachings. And that the trust was religious in nature.

Dismissing the writ petition, Justice Bilal Nazki of the Andhra Pradesh High Court observed that all religions preach dharma and have cultural, historical and literary parts in their books. Explanation 3 to Section 80G lays down that charitable purpose does not include any purpose the whole or substantially the whole of which was of a religious nature. The court quoted the judgment of the Supreme Court in Upper Ganges Sugar Mills Ltd vs CIT in support of the denial of exemption under Section 80G.

The Andhra Pradesh High Court ruling in the Arsha Vijnanna Trust (295 ITR 437) case will have far-reaching consequences for similar trusts engaged in the publication of such books.

The Supreme Court, in the Upper Ganges case, was considering a trust which permitted the trustees to support prayer halls and places of worship.

In the case before the Andhra High Court, the trust deed never mentioned any place of worship or prayer hall. It merely reiterated that the universal values propagated by the epics and the philosophy behind the same should be spread all over the world.

Reference can be made to the view taken by the Bombay High Court in the Rajneesh Foundation case. The Foundation was granted exemption under Section 80G in respect of donations received. The Foundation had for its object promotion of yoga and meditation and propagation of the teachings of philosophers.

In an elaborate judgment, the court referred to the fact that the philosophy of Acharaya Rajneesh was being studied by several universities in India and abroad. The Foundation had promoted Gyan Yagna, Sadhana Centres, and so on. Charitable purpose included object of general public utility.

The Bombay High Court ruled that the objects of the Rajneesh Foundations should be considered charitable (280 ITR 553).

Similarly, the Sai Publication Fund was considered by the Supreme Court as not carrying on business even though books and literature were sold to propagate the teachings of Shirdi Sai Baba (258 ITR 70 SC).

The Andhra High Court has taken a hyper-technical view in holding that publication of Ramayana and Mahabaratha texts should be considered as religious activity only. Swami Vivekananda, Mahatma Gandhi and even an agnostic like Jawaharlal Nehru admired the values put forth in the Ramayana.

There are several charitable trusts all over India engaged in the publication and distribution of the Ramayana. This is the first time that the department has taken the view that the Ramayana is a purely religious text.

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