9911796707
TMI Blog1976 (12) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... ons, etc." For assessment years 1957-58 and 1959-60, the appellant claimed that 1/3rd share of income from the registered firm of M/s. Indian Metal and Metallurgical Corporation, Madras, is exempt from tax under s. 4(3)(I) of the IT Act, 1922. Following the decision for the earlier assessment years, the ITO negatived the claim on the ground that the conditions laid down under s. 4(3)(i)(a) regarding exemption of income derived from business are not satisfied. When the matter was pending on appeal before the AAC, the identical question relating to the earlier years came to be decided against the appellant by the Madras High Court in Sri Agastyar Trust vs. CIT(1). Another concern by the name East India Industries (Madras) private Ltd. donated Rs. 7,500 to the appellant trust and claimed exemption from tax under s. 158. The High Court proceeded to consider whether the objects of the trust re-affirmed by the declaration of trust under the deed, dt. 1st July, 1944 are for religious and charitable purposes. The High Court held that it is a multi-purpose charity trust with objects which are religious and charitable and also with objects which are not religious and charitable and as it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s constituted under the deed, dt. 28th Nov., 1941? (2) The question whether the appellant is a religious or charitable trust is to be determined with reference to the deed, dated 28th Nov., 1941 or the deed, dt. 1st July, 1944? (3) Whether the objects of the trust constituted under the deed, dt. 28th Nov., 1941, are wholly religious and charitable? The AAC submitted a remand report answering the first question in the affirmative. The AAC answered the second question by stating that both the deeds have to be taken into account for considering whether appellant trust is a religious or charitable trust. The third question was answered by the AAC stating that the objects of the trust constituted under the deed dt. 28th Nov., 1941 are not wholly religious or charitable, since the trustee is given unfettered discretion to grant cash gifts to meet the marriage expenses of poor and deserving people. 5. The points for consideration are: (1) Whether the appellant is a trust, whose objects are charitable and religious, should be considered with reference to the deed, dt. 28th Nov., 1941 or 1st July, 1944 or both? (2) Whether the objects of the trust constituted under the deed, dt. 28th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the trust funds for disbursement to charitable purposes. Clause 12 spells out the purposes of charity. Memorandum of agreement, dt. 26th August, 1943 shows that the authors of the trust had decided to make it irrevocable trust. The trustee's declaration, dated 1st July, 1944, referred to the trust by its name 'Agastyar Trust'. From the documents, viz., partnership deed, dated 28th Nov., 1941, Memorandum of agreement, dated 26th August, 1943, trust deed, dated 1st July, 1944, the closing account of the firm on 7th July, 1944 and the High Court's judgment, dt. 26th Oct., 1961, it can be stated that the trust was started on 28th Nov., 1941. Subsequent deeds, dated 1st July, 1944, 5th July, 1944, 12th June, 1961, etc. only show the further continuance of the trust." The AAC has ultimately concluded that the appellant trust was constituted under the deed, dt. 28th Nov., 1941. No arguments were advanced challenging this finding of the AAC. So, the fact remains that a valid trust was created under the deed, dt. 28th Nov., 1941. The objects of the trust are enumerated under clause 8 of the deed, as under: "The said T.N. Venkatarama Chettiar shall from time to time after acceptance of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manage temples, shrines and other place of worship; (j) to do all such other things as may be necessary, incidental, conudcive or convenient to the attainment of the above objects or any of them and the decision of the trustees that any particular thing is necessary, incidental, conducive or convenient to the attainment of the above object or any of them shall be conclusive." Except the object mentioned in clause (i), which is common in both the deeds, the deed, dt. 1st July, 1944, has completely altered, modified and has made material additions to the objects set out in the earlier declaration of trust evidenced by the deed, dt. 28th Nov., 1941. Tutor on "Charities", 6th edition, page 131, has enunciated the legal principles with reference to decided cases as under:- "When a charity has been founded and trusts have been declared, the founder has no power to revoke, vary or add to the trusts. This is so irrespective of whether the trusts have been declared by an individual, or by a body of subscribers, or by the trustees." When a valid trust has been created with certain specified objects by the deed, dt. 28th Nov., 1941, even the authors of the trust have no power to alter, v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to s. 77 of the Indian Trust Act, where a trust becomes extinguished under certain circumstances. The circumstances specified in s. 77 of the Indian Trust Act do not exist in the present case. Moreover, the Indian Trust Act has no application to public or private religious charitable endowments. So, the Revenue's contention that the dedication and declaration of trust made in the deed, dt. 28th Nov., 1941, came to an end with the dissolution of the partnership firm and the question whether the appellant is a religious or charitable trust has to be determined with reference to the deed, dt. 1st July, 1944, lacks substance and is accordingly negatived. This point is answered in favour of the appellant. 11. Point No. 2 Clause 8 of the deed, dt. 28th Nov., 1941 gives discretion to the trustee Shri T.N. Venkatarama Chettiar to give money to the poor and deserving persons for celebration of marriages. The learned counsel for the Revenue contended that giving gifts for celebrating marriages is not charitable object and since it is open to the trustee to utilise the whole income of the trust in his unfettered discretion to an object which is not charitable without being himself open to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s". The Samskara Ratnamala quotes that "the trust of the Samskara is stated to be the discharge of the debts to the Gods and the pitris". In one of the very early decisions of the Madras High Court in Kameswara Sastri vs. Veeracharlu(7), there is an elaborate emdite and learned discussion of the concept of the Hindu marriage. Various authorities from Smrithis, Surithi and Upanishads are cited in extense and the court has observed: "A twice-born man who seeks final liberation without having studied the Vedas, without having begotten sons and without having offered sacrifices, sinks downwards......... A man is not fit for Karma without a wife. The wife is the chief factor for men in the attainment of Dharma, Artha and Kama which are the three out of the four ends of life, the last being final liberation.............The student, the house-holder, the hermit and the ascetic, constitute four separate orders. Since the men of the three other orders are really supported by the house-holder with gifts of sacred knowledge and food, the order of the house-holder is the most excellent order. In accordance with the precepts of the Veda and of the Smriti, the house-keeper is declared to be sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hay may apply to western countries following a different culture and religion and it may not be appropriate to apply them to Indian conditions. Perhaps, viewed in the present background of the great socio-economic changes brought about by the rapid phase of industrialisation and the great strides made in the fields of science and technology and the impact of western thought and culture, monetary assistance for the purpose of marriage may not appear to be a charitable object. But if we retrace out steps 35 years back, when the trust was created and taking into account the social custom, community outlook and the religious beliefs prevailing at that time, we have no difficulty in coming to the conclusion that creating a trust and setting apart funds for meeting marriage expenses of the needy and the poor is for a charitable object. An endowment for giving cash grants for the needy and the deserving persons to meet marriage expenses is the outcome of benevolence and piety born out of religious beliefs and the income from such a trust is, therefore, exempt under s. 4(3)(i) of the IT Act, 1922. We also make it clear that the income attributable to the trust created under the deed, dt. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
