TMI Blog1989 (11) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... t in this case was completed on 23-2-1979 but it was set aside by the Commissioner of Wealth-tax (Appeals) by his common order dated 21-3-1979 with a direction to re-do the assessment in the light of the decision of the Supreme Court in the case of CIT v. P. Krishna Warrier [1964] 53 ITR 176. In compliance with the directions fresh assessments were made and the appeals arise out of the fresh assessments. 3. The assessee is a Managing Trustee of Arya Vaidya Sala, Kottakkal. The material facts leading to the present appeals and the cross-objections are as follows : 3.1 Shri P.S. Warrier, an eminent Ayurvedic Physician was carrying on business in Ayurvedic medicines under the name and style " Arya Vaidya Sala ". He was also running a hospi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed for the purposes of the Arya Vaidya Patasala. The balance, if any, that may remain out of the 10% after disbursement of the Arya Vaidya Patasala, may be used for the Arya Vaidya Sala itself. The balance 15% are to be deposited by the Trustees each year in approved banks as a reserve fund for the two thavazhies for a period of 20 years and the fund thus accumulated inclusive of interest is to be divided equally among the two thavazhies equally, i.e. in moiety, and it will be the duty of the trustees to invest the same on the authority of immovable properties. M. The Trustees are not bound to pay any amount to the said two thavazhies after the expiry of 20 years. The 40% of the profit so earmarked for 20 years and so released after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 5(1)(i) will not be available to the assessee for these years for the proportionate value of the net wealth of the trust. 5. On the other hand, the learned counsel for the assessee contended that the only point to be decided was whether the business was carried on under trust and the dominant object was only for religious or charitable purposes. According to him, the business was run by the trust and the dominant object is of charitable or religious purposes in this case. In the earlier years also, it was held by the Supreme Court that 60% of the income from the business was exempt as it was allotted for the charitable or religious purposes. Reliance is placed on CIT v. P. Krishna Warrier [1964] 53 ITR 176 (SC). Now the assessee claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act in respect of which separate books of account are maintained or a business carried on by an institution, fund or trust referred to in clause (22) or clause (22A) or clause (23B) or clause (23C) of section 10 of that Act :] " The question as to whether the income of the assets held by the assessee in trust required to be allotted wholly for charitable or religious purposes for the exemption under section came for consideration before the Hon'ble High Court of Bombay in Trustees of K.B.H.M. Managing Shebaits of Bhukailash Debutter Estate's case wherein it is held that-- " There is a difference in the language between the Indian Income-tax Act, 1922, and the later enactment -- the Wealth-tax Act, 1957. Under section 4(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... four fell within section 5(1)(i) of the Wealth-tax Act. The objects specified in the deed were conjunctive and not disjunctive. The trustees had not been given discretion to use the whole income of the trust on any one of the specified objects. The property of the trust was held primarily for a public purpose of a charitable nature in India and was wholly exempt under section 5(1)(i). " According to us, the dictum laid down in this decision fully supports the case of the assessee before us, for the reason that the dominant object in the trust deed of Shri Late P.S. Warrier is to charitable in nature and in having set apart 60% of the income derived from the business held under the trust for charitable purposes. The allotment of 40% of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption under section 5(1)(i) of the W.T. Act. 7. Another decision relied on by the assessee is Abdul Sathar Haji Moosa Sait Dharmastapanam's case, where it is held that-- " Section 3 of the Wealth-tax Act is subject to other provisions of the Act and thus subject to section 21 also. No assessment can be made under section 3 apart from and without reference to section 21. As the assessment of the trustee would have to be made in the same status as that of the beneficiary, the status and liability of the beneficiary assume relevance and importance to fasten liability on the trustee. If the beneficiary cannot be made liable, the trustee also cannot be held liable. It is, therefore, necessary to consider whether the beneficiary will be exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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