C.S.P Singh, J.:— The Income-tax Appellate Tribunal has referred the following question for our opinion:

“Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the income derived by the Radhaswami Satsang, a religious institution, is entitled to exemption under sections 11 and 12 of the Income-tax Act, 1961?”

2. The assessee is the Radhaswami Satsang, Agra. The faith, Radhaswami was founded by one Sri Swami Shivi Dayal Singh in 1869. According to the tenets of this faith the deity is represented on this earth by a human being who is called the Sant Satguru. The first Sant Satguru was Sri Shiv Dayal Singh, popularly known as “Swami Ji Maharaj The second Sant Satguru (1878-1898) was Rai Bahadur Salig Ramanand; he is popularly known as “Hazoor Maharaj The third Sant Satguru (1898-1907) was Pandit Brahma Sankar Misra, popularly known as “Maharaj Sahib”. These first three gurus are regarded as the true exponents of the creed by all the followers of this faith. The Satsang which was started in the said manner grew in numbers and from the offerings made by the devotees to the Sant Satguru for the time being, the funds accumulated, which were partly utilised for the construction and maintenance of the shrines of the deceased Sant Satgurus and for places of worship and residence of this community and partly for the other objects of this faith. During the time of the third Sant Satguru somewhere in 1902, the members of the faith met together and established a central administrative council defining its constitution and bye-laws and vesting all the movable and immovable properties therein. All this was done under the direction of Maharaj Sahib, the third Sant Satguru. A document declaring the constitutional powers of the central council seems to have come into being in June, 1904. The said body was designated as the Radhaswami Trust. Some of its material provisions were as follows:

“1. The constitutional powers of the central council Radhaswami Satsang which was established in the year 1902, by a majority of votes of the members of the Radhaswami Faith are as follows:

(a) To regulate the conduct of business pertaining to the Radhaswami Satsang and its branches and of the followers of the Radhaswami religion.

(b) To collect, preserve and administer the properties movable and immovable that have been or may hereafter be dedicated to Radhaswami Dayal or that may be acquired for or presented to the Radhaswami Satsang for the furtherance of the objects of the Satsang.

(c) To do the above and all such other things as are incidental or conducive to the attainment of the above objects in accordance with the direction of the Sant Satguru for the time being, if any who is recognised as the representative of the supreme creater, Radhaswami Dayal, and whose mandates shall be paramount and absolute in all the matters referred to above.

(d) To fill up vacancies among its members consequent upon death or resignation or any other cause, also to add to or to reduce its number or remove any member for sufficient reasons, provided that at no time the number of members be less than ten.

9. All property of Radhaswami Satsang and its branches both movable and immovable which exists at present or may hereafter be presented to Radhaswami Dayal or be otherwise acquired, will for the maintenance and advancement of the objects of the Satsang, be vested in a body of trustees designated the Radhaswami Trust.

Note. —The term ‘movable property’ used in the bye-law includes jewellery, furniture, dairies, carpets, utensils, etc., which belong to the Satsang.

22. The Radhaswami Trust shall prescribe rules for the proper care and custody of the movable and immovable property belonging to the Satsang and its branches and for the proper maintenance of accounts.

25. The trust shall be revocable at the discretion of the council and the trustees shall hold their office at its pleasure.

27. All immovable property as soon as acquired by Satsang, either as a present or offering, shall be conveyed in the name of the “Radhaswami Trust.”

3. A trust deed was executed by certain members of the central council some time in October, 1904. The objects of the trust were: The trustees named above or those that may be appointed hereafter to succeed them, all of whom will hereafter be called trustees, shall collect, preserve, administer, and if necessary, alienate the properties, movable or immovable, that have been or may hereafter be dedicated to the supreme being, Radhaswami Dayal, or that may be acquired for or presented to the Radhaswami Satsang and its branches, in accordance with such directions as may, from time to time, be issued in this behalf by the said council or the Sant Satguru for the time being, if any, who is recognised as; the representative of the supreme being, Radhaswami Dayal, and as such is the sole master of all movable and immovable properties of the aforesaid Satsang, provided that Samadhis and places of public worship of the Radhaswami Satsang shall at no time be alienated. By clause reletting to bye-laws it was provided as follows:

“1. Irrespective of what is prescribed by the following rules, all mandates of the Sant Satguru of the time regarding the disposal of the movable and immovable properties of the Satsang and its branches or other matters connected with the trust, shall be carried out by the trustees.

2. The trust shall be revocable at the direction of the council and the trustees shall hold their office at its pleasure.

3. All immovable properties, as soon as acquired by the aforesaid Satsang either as presents or offerings or by purchase, or otherwise, shall be forthwith conveyed in the name of the trustees.”

4. A specification of the properties said to be held in trust was attached to the deed. On the death of the third Satguru which took place on October 12, 1907, the faith split into two sections popularly known as the Swami Bagh Sect and the Dayalbagh Satsangis. A controversy sprang up bet-ween the two sections in regard to the management of the shrines and the administration of the properties which were vested in the trustees under the trust deed of 1904. The Dayalbagh Satsangis claimed that all the properties were held under a trust for a public purpose of a charitable and religious nature and prayed for a decree to this effect and to the effect that the Sant Satguru individually or collectively possessed no interest in the alleged trust, the properties administered by it or the affairs of the Satsang and its branches.

5. The litigation started in the form of an application under s. 3 of the Charitable and Religious Trusts Act, 1920, but later on was converted into a suit which eventually came to be disposed of by the Privy Council in the case of Patel Chhotabhai v. Jnan Chandra Basak, AIR 1935 PC 97. The Privy Council held, differing from the High Court, that even if the alleged trust came into existence it was difficult to hold that it was for a public purpose of a charitable or religious nature as contemplated by Act XIV of 1920. The suit, as such, was decreed for reliefs contained in para. 1, sub-paras, (a) and (b) of the reliefs prayed for in the plaint. The declarations sought for in these reliefs were to the following effect (p. 98):

“‘(1)—(a) That the so-called Radhaswami Trust administering the properties shown in the schedule marked A is not, in law, a legal and valid trust, nor of the kind or nature alleged by the defendants, (b) That the said trust, if any, is not a trust created or existing for a public purpose of a charitable or religious nature or one to which the provisions of Act 14 of 1920 apply, (c) That defendant 1 or 2 or any followers of defendant 2 represented by defendant 3 individually or collectively possess no interest in the alleged trust or in the properties administered by it or in the affairs of the Satsang and its branches attached to the Radhaswami Central Administrative Council’”

6. The question of assessing the income arose for the first time in the assessment year 1937-38. The ITO, on the basis of the observations of the Privy Council, made assessments for the assessment years 1937-38 and 1938-39 on Madho Prasad Sinha, the Sant Satguru, who succeeded Babuji. The assessment was made in his individual capacity. He was a retired Assistant Accounts Officer who derived income by way of pension and from other sources, and in addition thereto he was in receipt of offerings from the followers of the faith. The ITO assessed him on the aggregate of all the income from the above sources.

7. The assessment order made by the ITO was confirmed by the AAC. The assessee then filed applications under s. 66(2) of the Indian I.T Act, 1922, as it stood at the relevant time, before the Commissioner of Income-tax, U.P These applications were held in abeyance pending the decision of the suit filed by Radhaswami Satsang known as Dayalbagh Satsangis. The civil suit was disposed of by the Allahabad High Court on August 13, 1943, and thereafter the applications were taken up for consideration by the Commissioner. The Commissioner took the view that the offerings were made to the Sant Satguru, and were not used for his personal benefit, and held, that even though no formal trust had been created by the donors in respect of the offerings, the Guru impressed the offerings with trust at the time of receipt, and treated the offerings as held in trust. On this finding he held that the offerings were exempt under s. 4(3)(i) of the Act. He, as such, directed the exclusion of the offerings included in the assessment years 1937-38 and 1938-39. As a result of this decision, he directed the assessee to withdraw the application under s. 66(2), and on this being done, directed that the reference fee should be refunded. Subsequently, the assessee filed an application under s. 35, pointing out that the assessment included not only the offerings received by the Satsangguru but also interest income, property income and income derived by the sale of books and photographs, etc., and this income too should be excluded. In view of the finding recorded by the Commissioner this petition was accepted by order dated December 8, 1945. In the year 1939-40, the ITO, however, did not grant exemption under s. 4(3)(i) of the I.T Act. The appeal against this order was allowed by the AAC on September 19, 1947, upholding the assessee's claim for exemption. The department accepted this position up to the year 1963-64. During this period, the Satsang had income on which tax was deducted at source, and refund was being claimed and allowed. For the years 1964-65, 1965-66 and 1966-67, the assessee filed a refund application, but the ITO took proceedings to assess the income. In the assessment year 1965-66, the assessee was treated as an association of persons and an income of Rs. 56,470 was assessed. For the assessment year 1966-67, the assessment was made in the same status, and the income was taken at Rs. 59,448. These assessments were made on the 31st March, 1970, and 20th March, 1971, respectively. The assessee preferred appeals against these orders, viz., the’ order refusing to grant refund and the assessment order, and the matter was remanded to the ITO for reconsideration. For the assessment years 1966-67, 1967-68, 1968-69. and 1969-70 the assessee filed applications for refund of tax deducted at source, in respect of income from securities. The ITO, however, called upon the assessee to show cause why the income should not be assessed. Written reply was filed on 9th March, 1972, which was supplemented by a detailed reply on 17th March, 1972. An affidavit of the joint secretary of the central administrative council stating, inter alia, that no amount had been spent or utilised for the use of the central administrative council, that the offerings, bhents, donations and contributions had been received voluntarily and utilised only for the furtherance of the religious objects of the faith. The ITO did not accept the contention of the assessee, and made assessment in the status of an association of persons styled M/s. Radhaswami Satsang. He took the; view that there was no legal compulsion or obligation for the assessee to maintain or hold properties for the purposes of the Satsang, and there was no valid trust for religious purposes within the meaning of s. 11 of the Act. The assessee appealed, but-the order of the ITO regarding the question as to whether a valid trust existed or not was upheld. A direction for granting a relief under s. 80 was, however, issued by the AAC. The assessee then appealed to the Tribunal. It was urged that inasmuch as the ITO had held that the assessee was a religious institution, the property held by it must be taken as having been held under a trust or at least under a legal obligation for religious purposes. It was contended that the income of the assessee was exempt either under s. 11 or s. 12 of the Act. The Tribunal has upheld the claim for exemption under s. 11 of the Act.

8. The income in respect of which exemption is being claimed under s. 11 is the income derived from property, interest on securities, sale of publi- _ cations and sale of properties. In order to decide as to whether the assessee is entitled to exemption of this income it is necessary to extract the relevant parts of ss. 11, 12 and 13 of the Act. These provisions run as under:

“11. (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income—

(a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India, and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of twenty-five per cent, of the income from such property.

12. Any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) shall, for the purposes of section 11, be deemed to be income derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and section 13 shall apply accordingly.”

9. So far as S. 13 is concerned, only a part of Expln. 1 to sub-s. (6) is relevant. Explanation thus runs 1

“Explanation 1.— For the purposes of sections 11, 12, 12A and this section, ‘trust’ includes any other legal obligation”

10. Before we turn to the exemption claimed under s. 11 or s. 12 of the Act it is necessary to dispose of a preliminary contention raised on behalf of the revenue. It was urged that the assessee, was not a religious institution and as such no question of granting exemption either under s. 11 or s. 12 arose. Counsel for the assessee, however, took the stand that the question as to whether the assessee was a religious institution or not cannot be examined in this reference, for the ITO has proceeded on the basis that the Satsang is a religious institution. The assessment orders for the relevant years show that the ITO proceeded on the footing that the assessee was a religious institution. From a perusal of the order of the Tribunal it does not appear that the department at any stage took the stand that the assessee was not a religious institution. The application made for reference also does not raise any issue about this. In these circumstances, on the question framed, we do not think that it is open for the department to contend that the assessee is not a religious institution. Even on merits the stand taken by the department cannot be sustained. The word “religious institution” has not been defined in the Act. The Privy Council, however, in the case of Minister of National Revenue v. Trusts and Guarantee Co. Ltd., [1940] AC 138; [1939] 4 All ER 149, 155 pointed out that:

“It is by no means easy to give a definition of the word ‘institution’ that will cover every use of it. Its meaning must always depend upon the context in which it is found. It seems plain, for instance, from the context in which it is found in the subsection in question that the word is intended to connote something more than a mere trust.”

11. In another case Mayor &c. of Manchester v. Mc Adam, [1896] AC 500; 3 TC 491, 497 (HL), Lord Macnaghten observed:

“It is a little difficult to define the meaning of the term ‘institution’, in the modern acceptation of the word. It means, I suppose, an undertaking formed to promote some defined purpose, having in view, generally, the instruction or education of the public. It is the body (so to speak) called into existence to translate the purpose as conceived in the mind of the founders into a living and active principle.”

12. These observations have been followed by this court in the case of CIT v. Radhaswami Satsang Sabha, [1954] 25 ITR 472 (All). The Radhaswami Satsang Sabha was founded for purposes of promoting the ideals of the Radhaswami faith in the public. The central council was found with the specific object of translating this purpose into a living and active principle by collecting, preserving and administering the properties, movable and immovable, that had been or that were dedicated to the Radhaswami Dayalbagh so that the objects of the Satsang may be furthered in accordance with the directions of Sant Satguru, who is recognised by the faith, as a representative of the supreme being, Radhaswami Dayalbagh.

13. These activities meet the test of an institution as laid down in the cases referred to earlier. The institution is religious, as the Radhaswami faith revolves round the representative of a supreme being, and its tenets are meant for the spiritual benefit of mankind.

14. Now, before we turn to ss. 11 and 12, in order to see as to whether the assessee is entitled to exemption under these provisions, one may have a look at the reasons which led the Tribunal to hold that the income was exempted under s. 11 of the Act. The income in question is income derived from property by way of interest, by sale of publications and by sale of grass. The Tribunal has held that s. 12 does not apply to this type of income. The Tribunal has found that the assessee, which is popularly known as the Swamibagh sect, held the property for the furtherance of the object of the Satsang, and this object was to promote the religion known as Radhaswami. It was purely a religious purpose. It then referred to the decision of the Privy Council in the case of Chhotdbhai v. Jnan Chandra Basak, AIR 1935 PC 97, which held that up to the time of the first three Satgurus the property belonged to the Satgurus in their individual capacity, and they were sole owners and masters of the properties. It distinguished the Privy Council decision on the ground that the question involved before the Privy Council was whether a public trust existed, while under s. 4(3)(i) of the Indian I.T Act, 1922, even a legal obligation for applying the income derived from property for religious purposes was sufficient. It also took into account the decisions of this court in the cases of Secretary of State for India in Council v. Radhaswami Satsang, [1945] 13 ITR 520 and CIT v. Radhaswami Satsang, [1954] 25 ITR 472, cases relating to the Dayalbagh sect, and held that these two decisions helped the assessee's case. It then went into the question as to whether there was a legal obligation to apply the income from properties held by the assessee for religious purpose, and held that it was so. The reasons given for taking this view are these. To begin with it has held that inasmuch as the assessee was the Radhaswami Satsang and not the Sant Satguru or the central council or the board of trustees, it meant that the department recognised or accepted that the properties were held by the Satsang, and not by any Sant Satguru or the counsil or the trustees. For taking this view it relied on the fact that the central council was constituted in 1904 and its constitution recognised that whatever properties were offered, they were offered not to the Sant Satguru but to the Satsang as such. The properties so received were to be dedicated and acquired only for the furtherance of the objects of the Satsang. It got over cl. 1(c) of the deed constituting the central council, which made the Sant Satguru paramount qua the manner in which the properties of the Satsang were to be administered, on the view that the Satguru could issue directions only as respects the incidental acts necessary for the attainment of the objects of the Satsang. The other consideration which weighed with the Tribunal was that there was no Satguru for the time being in office, and as such the offering, etc., could not be made to the Satguru, and neither could he give any directions to the council as regards the management and disposal of properties. It also held that after 1949, all properties acquired by the Satsang either itself or through its board of trustees or accretions to the property acquired at the time of the three Satgurus, were taken over by the Satsang itself. In its view, in the absence of a Sant Satguru the central council and the trustees were obliged to hold the properties for religious purposes, viz., for the furtherance of Radhasw ami faith, and this created a legal obligation for a religious purpose. In taking this view, it relied upon the Privy Council decision in the case of All India Spinners' Association v. CIT, [1944] 12 ITR 482 (PC). It will be seen that the decisive factor which led the Tribunal to hold that the properties were held under a legal obligation for applying the income of the properties for religious purpose was the fact that there was no Satguru in existence.

15. To begin with it will be convenient to examine as to whether the decisions of the Allahabad High Court in the cases of Secretary of State for India in Council v. Radhaswami Satsang, [1945] 13 ITR 520 and that in CIT v. Radhaswami Satsang Sabha, [1954] 25 ITR 472 help the assessee. We have referred to these decisions at this stage, for, counsel for the assessee strongly relied on them. We are of the view that these decisions do not help in answering the question. We have noticed that a schism occurred amongst the followers of the Radhaswami Satsang after the death of the third Sant Satguru. The faith broke up into two groups, (1) Swami Bagh group with which we are concerned, and the other Dayal Bagh group to which the two decisions relate. Now, a vital change occurred in the constitution of the Dayal Bagh group, and that was the registration of the Dayal Bagh group as a charitable society under the Societies Registration Act, 1860. Nothing of the kind was done by the Swami Bagh group. Once the members of the faith associated themselves to form a charitable society which was registered under the Societies Registration Act, 1860, a charitable trust came into existence. The Dayal Bagh group framed and passed its constitution and rules and bye-laws for maintaining several institutions established by it. The result of the registration of the society and the framing of its constitution and bye-laws and rules resulted in the vesting of the property in the registered Sabha, and the Sant-Satguru had no beneficial interest left in those properties. These decisions, therefore, do not offer a safe guide for deciding the case of the Swami Bagh sect.

16. We propose to examine the exemption claimed under s. 12 first. We have already extracted s. 12. A bare reading of this provision indicates that it applies only to voluntary contributions, and not to any other type of income. In the present case., we are not concerned with voluntary contributions. Thus, s. 12 is out of the way.

17. Now, turning to s. 11, the claim is made under s. 11(1)(a), for, it is contended that the income is derived from properties held under a trust for a religious purpose. Expin. 1 to s. 13 states that for purposes of s. 11, ss. 12, 12A and 13 the word “trust” includes any other legal obligation. We have seen that the Tribunal has held that the assessee was under a legal obligation to apply the income solely for religious purposes. It rightly examined the exemption claimed by the assessee from the standpoint of the legal obligation, for, the decision in the case of Patel Chhotabhai v. Jnan Chandra Basok, AIR 1935 PC 97, clearly lays down that in spite of the tenets of the faith of Radhaswami Satsang, the deed constituting the central council and the trust deed, no trust came into existence, as the Sant Satguru for the time being was the sole master of the movable and immovable properties of the Satsang, and the trust deed was revocable at the discretion of the council. It also held that the regulations relating to the central council and the provisions of the so-called trust deed were consistent with the desire on the part of the Sant Satguru to obtain the assistance of some of the followers in the management of the affairs of the Satsang.

18. Now, coming to the question as to whether the deed of June, 1904, constituting the central council and the deed of October, 1904, known as “trust deed” created a legal obligation to apply the income derived from properties for religious purposes. While examining this question it will be worth wile quoting the observations of the Privy Council in Chhotabhai's case on page 103;

“In the alleged trust deed itself the ‘Sant Satguru’ for the time being is recognised as the representative of the Supreme being and as such, is the sole master of all movable and immovable properties of the Satsang. Further, the deed is stated to be revocable at the discretion of the council. These provisions, in their Lordships' opinion, are wholly inconsistent with any intention on the part of the Sant Satguru, for the time being, to alter his position as Sant Satguru or to divest himself of the control of the property and to create a trust for a public purpose of a charitable or religious nature such as is contemplated by Act 14 of 1920. On the other hand, the regulations relating to the central council and the provisions of the so-called ‘trust’ deed are, in their Lordships' opinion, consistent with a desire on the part of the Sant Satguru to obtain the assistance of some of his followers in the management of the property, which, no doubt, was increasing as the years passed.”

19. We have extracted this passage in order to show that under the deed creating the trust, the alleged; trust or legal obligation created by the central council was revocable and, secondly, the deed, creating the council and the alleged trust deed, did not create any legal obligation on the Sant Satguru to utilise the properties for religious purposes only. Now, the Tribunal has tried to bypass this difficulty by taking into account the fact that in the relevant assessment year there was no Sant Satguru, and as such the central council was bound to apply the properties in accordance with the deed of June, 1904, constituting it. Now, before we examine this aspect of the matter it is necessary to notice that s. 11 has been made subject to the provisions of ss. 60 to 63 of the Act. Section 61 of the Act runs thus:

“61. All income arising to any person by virtue of a revocable transfer of assets shall be chargeable to income-tax as the income of the transferor and shall be included in his total income.”

20. Section 63 defines transfer and revocable transfer for purposes of ss. 60, 61 and 62. The provision may be extracted.

“63. For the purposes of sections 60, 61 and 62 and of this section—

(a) a transfer shall be deemed to be revocable if—

(i) it contains any provision for the retransfer directly or indirectly of the whole or any part of the income or assets to the transferor, or

(ii) it, in any way, gives the transferor a right to reassume power directly or indirectly over the whole or any part of the income or assets;

(b) transfer includes any settlement, trust, covenant, agreement or arrangement.”

21. It will be noticed that s. 63 contains an inclusive definition of the word “transfer”. Now, by virtue of Expln. 1 to s. 13, a trust includes a legal obligation. Thus, in cases where an exemption under s. 11 is claimed on the ground of the existence of a legal obligation wholly for religious purposes, it has to be examined whether the legal obligation is revocable. Now, Patel Chhotabhai's case, AIR 1935 PC 97, establishes that all the properties of the Radhaswami Satsang belonged to Sant Satguru, and he was its supreme master. Assuming, that by virtue of para. 9 of the deed of June, 1904, constituting the central council, the properties vested in Radhaswami Trust, as para. 25 in the same deed makes the trust revocable at the discretion of the council, the legal obligation was revocable at the discretion of the central council. Section 63(a)(ii) would come into operation at once, and s. 61 would be attracted, and as a result the income would become chargeable in the hands of the transferor. Now, who was the transferor at the time when the deed was executed? The Privy Council in Patel Chhotabhai's case, AIR, 1935 PC 97, has held that the Sant Satguru was the sole master of the movable and immovable properties of the Satsang, and the Sant Satguru, even after the execution of the deed constituting the central council, had no intention to alter his position as Sant Satguru or to divest himself of the control of the property. It has been seen that it was also held that the regulations relating to the central council and the provisions of the so-called trust deed were consistent with the desire on the part of the Sant Satguru to obtain the assistance of some of his followers. Thus, the real transferor was the Sant Satguru. Now, the Sant Satguru, as has been held by the Privy Council, was not bound to apply the properties of the Satsang for religious purposes only. We shall demonstrate hereunder that the position is the same taking the council to be the transferor. Counsel for the assessee urged that as the Sant Satguru was not there, the central council had to apply the properties only for the religious purposes as is apparent from the deed of June, 1904. We think that this is not so. The mere fact that there is no Sant Satguru at the present moment dogs not absolve the central council for holding the properties for each and every one of the purposes set out in the deed constituting it. Their position, even in the absence of Sant Satguru, is only as manager of the Sant Satguru, who may hereinafter be chosen. The legal obligation, therefore, does not extend only for holding it for the purposes of furtherance of the object of the Satsang, but also for the benefit of the Sant Satguru. Considering the tenets of the faith which makes the Sant Satguru paramount and his dictates having overriding effect, the properties cannot be said to be held by the central council exclusively for religious purposes, as they held the properties and the income also for the benefit of the Sant Satguru, who may hereinafter subsequently appear. Thus, the legal obligation for which the properties are held are manifold. Now in Dharmaposhanam Company, Kerala v. Commissioner Of Income Tax, Kerala , [1978] 114 ITR 463 (SC), it has been held that in order to decide as to whether a trust is for a charitable purpose, one must refer to all the object for which the trust has been brought into existence, and not only to the activity which is actually conducted. The decision in Cit, Kerala v. Dharmodayam & Co., Kerala, [1977] 109 ITR 527 (SC), was explained as being applicable to cases where the other objects in the memorandum of association are not intended to be undertaken. In the present case, having regard to the tenets of faith of Radhaswami Satsang, it is not possible to exclude the Satguru, as the entire faith is founded on this central figure, and its followers, the central council and the trustees are bound to obey the commands of the Sant Satguru, which may possibly not be of a wholly religious nature. It is idle to contend that the Sant Satguru would never give directions, which are not of a religious nature, for, he may or may not do so.

22. Thus, as all the objects for which the Radhaswami Satsang was founded have to be looked into, and as the Sant Satguru is the supreme master of all the properties and is not bound to apply the properties or the income of the Satsang held for religious purposes, and as the council, the board of trustees and the followers of the faith hold the properties for his benefit also, the fact that during the previous year relevant for the assessment year there was no Sant Satguru is immaterial for deciding the nature of the legal obligation under which the properties are held.

23. This discussion effectively demolishes the ground on which the Tribunal held that the followers of Radhaswami Satsang, which was an association of persons, was under a legal obligation to apply the income of the Satsang wholly for religious purposes. Counsel for the assessee drew our attention to the decisions of the Supreme Court in (1959 S.C 95) (sic), AIR 1960 SC 100 (Narayan Bhagwantrao Gosavi v. Gopal Vinayak Gosavi), (1969) 2 SCC 853 : AIR 1970 SC 2025, (Goswami Shri Mahalaxmi Vahuji v. Shah Ranchhoddas Kalidas), (1972) 1 SCC 222 : AIR 1972 SC 1760 (State of Punjab v. Guru Nanak Flour and Oil Mills) and (1974) 2 SCC 288 : AIR 1974 SC 1123 (Bihar State Board of Religious Trusts v. Bhubaneshwar Prasad Chowdhary), but it is futile to look into these cases, for they have no relevance to the issue involved.

24. We, accordingly, answer the question in the negative, in favour of the department, and against the assessee. In the circumstances, there shall be no order as to costs.