[Opinion] Charitable Purpose – Relief of the Poor (ROP)

CA Naresh Kumar Kabra & Muskan Agarwal – [2022] 145 taxmann.com 575 (Article)

‘Poverty is a condition, not destiny!
It can be corrected.’

Before starting our discussion on Charitable Purpose – Relief of poor (ROP), let us shed some light on the term Charitable Purpose.

Section 2(15) of the Income Tax Act, 1961 defines ‘charitable purpose’ to include

• relief of the poor (ROP),
• education,
• yoga,
• medical relief,
• preservation of the environment (including watersheds, forests, and wildlife)
• and preservation of monuments or places or objects of artistic or historic interest,
• and the advancement of any other object of general public utility (GPU).

From above, we can analyze that the ‘Relief of the Poor’ is the first limb of the charitable purpose.

However, neither ‘Relief’ nor ‘Poor’ are defined in Income Tax Act, 1961. We therefore in this article will make efforts to define these two above mentioned words with the help of dictionary meaning and judicial precedents.

Brief Introduction

The dictionary meaning of the term ‘Poor’ means those who have little or no money, goods, or other means of support. Any initiative taken to assist them in any manner would constitute a ‘Relief to the Poor’.

The expression ‘Relief of the Poor’ implies all actions to assist the Poor who are needy and who deserve to be addressed. It is however difficult to define the form in which there can be Relief for the Poor. No rigid formula can be deduced for this purpose.

It is difficult to make any exhaustive list of what is ‘Relief of the Poor’.

In our daily lives, we come across many people who we think are Poor. They could be landless laborers in villages or daily wage workers at construction sites.

Let us first try to understand who can be termed as Poor with the help of the following two case studies: –

Case Study 1: Urban Case

Ram works as a laborer in a wheat flour mill in Ranchi (Jharkhand). He manages to earn around Rs. 5,000 a month. The money is not enough to sustain his family. He lives in a one-room rented house outside in the outskirts of the city. They can manage a meagre meal of dal and rice twice a day, but that is never enough for all of them. The younger kids are undernourished. They have no access to proper healthcare when they fall ill.

Case Study 2: Rural Case

Lakha belongs to a small village in Uttar Pradesh. He and his other family members do odd jobs for the big farmers. Work is erratic and so is income. At times, the family is not able to manage two square meals a day. They live in a Kuchha hut on the outskirts of the village.
From the above two cases, we can illustrate many different dimensions of poverty. Poverty includes hunger and lack of shelter. It also includes:

• a situation where parents are unable to send their children to school,
• Lack of access to clean water and sanitation facilities.

Above all, it means living in lack of basic necessities including healthcare, education.

Thus, there is no rigid definition quantifying or describing who all are Poor.

Scope of ‘Relief of Poor’

The scope of Relief of Poor is wide. There is no exhaustive list to limit the activities that are subsumed under the heading Relief of Poor. Taking an example of a SC ruling in the case of Thiagarajar Charities v. Addl. CIT [1997] 92 Taxman 152/225 ITR 1010 (SC), the SC studied the objects of Thiagarajar Trust and concluded that below-mentioned objects shall be considered under ‘Relief of Poor.’

I. To establish, maintain, run develop, etc. and assist in the establishment, maintenance, running, development, etc. of the following:

a. Elementary Schools, Secondary Schools, High Schools, Colleges, Universities, and Hostels for the benefit of students
b. Libraries, reading rooms, recreation centers
c. Hospitals, clinics, dispensaries and all similar institutions

II. To build, and to aid and assist in the building of houses, and places of residence for the Poor, needy, deprived, etc.

III. To help, assist, and give:

a. food and clothing to the Poor, needy or deprived and to grant donations for the support of the inmates of orphanages.
b. promote, rural reconstruction work, cottage industry and all other matters incidental thereto in India

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