1976 (12) TMI 90 - AT - Income Tax

Summary

Issues Involved:
1. Whether the appellant trust was constituted under the deed dated 28th November, 1941.
2. Whether the appellant is a trust whose objects are charitable and religious should be considered with reference to the deed dated 28th November, 1941, or 1st July, 1944, or both.
3. Whether the objects of the trust constituted under the deed dated 28th November, 1941, are wholly religious and charitable.

Issue-wise Detailed Analysis:

1. Constitution of the Appellant Trust:
The Tribunal directed the AAC to examine if the appellant trust was constituted under the deed dated 28th November, 1941. The AAC confirmed that the trust was indeed constituted under this deed, stating that the partnership started on 14th November, 1940, and the deed was written on 28th November, 1941. The AAC concluded that the trust was validly created under the deed dated 28th November, 1941, and subsequent documents only showed the trust's continuation. No arguments were advanced challenging this finding.

2. Determination of Charitable and Religious Nature:
The appellant contended that the trust deed dated 1st July, 1944, was merely a reaffirmation of the original trust deed dated 28th November, 1941, and it was not open to the trustee to add, alter, or vary the original objects of the trust. The Revenue argued that the declaration of trust in the deed dated 28th November, 1941, ceased when the partnership dissolved on 7th July, 1944, and hence, the operative deed is the one dated 1st July, 1944. The Tribunal, however, held that once a valid trust is created, it is irrevocable and cannot be altered by any subsequent act. The Tribunal determined that the question of whether the appellant is a trust whose objects are religious and charitable should be considered solely with reference to the deed dated 28th November, 1941.

3. Objects of the Trust:
The Tribunal examined whether the objects of the trust constituted under the deed dated 28th November, 1941, are wholly religious and charitable. Clause 8 of the deed allowed the trustee to give money to poor and deserving persons for marriage celebrations. The Revenue contended that such gifts are not charitable objects. The Tribunal reviewed various authorities and concluded that, given the social customs, community outlook, and religious beliefs prevailing at the time the trust was created, providing monetary assistance for marriage expenses was considered a charitable object. The Tribunal found that the income from the trust created under the deed dated 28th November, 1941, is exempt under section 4(3)(i) of the IT Act, 1922.

Conclusion:
The Tribunal allowed the appeals, determining that the appellant trust was constituted under the deed dated 28th November, 1941, and that its objects, including providing monetary assistance for marriage expenses, are charitable. The assessments were to be revised accordingly.