TMI Blog1970 (3) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... ian and money-lending business was entitled to exemption under section 4(3)(i) itself ? 2. If the income was not so exempt, whether under proviso (b) to section 4(3)(i) it could be included in the total income of the assessee or could be exempted from taxation under the proviso ?" The facts relevant for our purpose, as appearing from the statement of the case, may shortly be stated as follows : The assessee is Seth Kirodimal Charity Trust which was created under a trust deed dated May 13, 1946, by Seth Kirodimal. The objects of the trust are charitable, namely, establishing and maintaining hospitals, temples, dharmasalas, educational institutions, etc. Under clause 5 of the trust deed, the trustees were empowered as follows: "The tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act apparently on the ground that interest on advances did not constitute business income; but in regard to the second item, he held that it fell within proviso (b) to section 4(3)(i), as amended, and as the conditions for the applicability of the clause were not satisfied, the sum of Rs. 3,48,930 was assessable to tax. Both the department as well as the assessee appealed to the Income-tax Appellate Tribunal. The Tribunal dismissed the appeal of the department and allowed that of the assessee, inter alia, holding : (i) that the Appellate Assistant Commissioner erred in holding that the interest amount of Rs. 1,82,654 was exempt from tax as not arising from business carried on by the assessee; (ii) that as the proviso in the amended sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them: (i) ....any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, in so far as such income is applied or accumulated for application to such religious or charitable purposes as relate to anything done within the taxable territories.... Provided that such income shall be included in the total income.... (b) in the case of income derived from business carried on on behalf of a religious or charitable institution, unless the income is applied wholly for the purposes of the institution and either- (i) the business is carried on in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious or charitable institution. This, to my mind, is the plain reading of clause (i) of section 4(3) read with the proviso: and if this be the position, it is extremely difficult to accede to the argument pressed before us on behalf of the department that although the insurance agency business, of which a trust was created, is within the operation of clause (i) of section 4(3), it is yet hit by the initial words of proviso (b) to clause (i)." In our opinion, the purpose of section 4(3)(i)and that of proviso (b) is distinct and separate and, though enacted as a proviso, that proviso was not intended to carve out from the ambit of clause (1) cases where a trust carried on business. It is now well-setted that the word "property" would also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax v. Cotton Textiles Export Promotion Council, Dharmodayam Co. v. Commissioner of Income-tax, and Thiagesar Dharma Vanikam v. Commissioner of Income-tax. In Commissioner of Income-tax v. P. Krishna Warriar, the Supreme Court said: "Clause (i) of section 4(3) of the Act takes in every property or a fractional part of it held in trust wholly for religious or charitable purposes. It also takes in such property held only in part for such purposes. Business is also property within the meaning of the said clause. Clause (b) of the proviso to section 4(3)(i) applies only to a business not held in trust but carried on on behalf of religious or charitable institutions." After the aforesaid decision of the Supreme Court there can be no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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