TMI Blog1961 (10) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... But in so far as the assessee, who made the donation to the trust is concerned, his claim to exemption from income-tax was negatived by the Income-tax Officer on the ground that the trust does not fulfill the conditions laid down under section 15B of the Act. The Appellate Assistant Commissioner to whom an appeal was taken held likewise. Apparently, before him the question whether the trust was one which complied with the conditions in proviso (b) to clause (i) of section 4(3) was more prominently argued. But, in any event, he held that since the trust itself was not entitled to the exemption contemplated under section 4(3)(i), the donor was likewise not eligible for exemption from tax on the amount of donation made to that trust. When the matter was taken up in further appeal to the Income-tax Appellate Tribunal, the Tribunal observed that in relation to the previous assessment year, it had held that the Agastyar Trust was a public trust and that any donation made to the said trust is an allowable deduction under section 15B. The matter was not further dealt with in greater detail regarding the scope of the exemption contained in section 4(3)(i) of the Act in relation to the Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n schools, colleges, workshops and other institutions for imparting general, technical, professional, industrial or other kind of education and training for the utility and welfare of the general public; (2) to make pecuniary grants by way of scholarship, etc., for the benefit of students, scholars or others; (3) to establish, maintain and conduct hospitals, clinics, dispensaries, etc., for affording treatment, cure, rest and other reliefs; (4) to manufacture, buy, sell and distribute pharmaceutical, medicinal and chemical and other preparations and articles such as medicines, drugs, medical and surgical articles, preparations and restoratives or foods; (5) to establish choultries, rest houses, to provide food, clothes and medicines free or at concessional rates; to make money grants to the poor for celebration of marriages and to afford relief to people in distress; (6) to engage and conduct research in, interpret and popularise nadis; (7) to promote and encourage the study of and research in religion and to propagate religious principles; (8) to buy, print, publish, sell for profit or distribute free or at concessional rate such literature as may be thought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to it and that which the trust got from the immoveable properties which it had owned belonged to entirely a different class which could never be assessable under the Income-tax Act. Since in this case the amount that was donated belonged to the latter group, it cannot be stated that the exemption contemplated by the Act under section 15B(2) was not available to the assessee. We are not quite clear about the scope of this discussion. But apparently, the Tribunal thought that the income of the trust could be placed under two difference categories, one which would not be assessable by reason of the use to which it was put, and the other realised by the association of the trust in a business which would be taxable. It is not necessary to pursue this line of reasoning any further as we consider it desirable to examine the question afresh. What is requisite under section 4(3)(i) is that the property from which the income is derived should be held under trust or other legal obligation wholly for religious or charitable purposes. If the property is not so held wholly for religious and charitable purposes, in so far as the charitable and religious purposes are concerned, it should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income in or towards payment of the expenses of the trust or for or towards all or any of the purposes of the trust provided any property or money held in special trust shall be applied only for that purpose and not otherwise. In the present case, there is no special trust, that is to say, no particular item of property has been burdened with the performance of any specific object of the trust. It follows, therefore, from the above clause that it is open to the trustees to utilise the income for any one of the objects of the trust to the exclusion of all others, that is to say, it would not be a violation of the trust if the trustees devoted the entire income to the carrying on of a business of manufacture, sale and distribution of pharmaceutical, medicinal and other preparations. If this object of the trust is neither charitable nor religious and if the trustees can expend the entire income of the trust on this non-charitable object, the question then would arise whether the property can be deemed to be held under trust or other legal obligation wholly for religious or charitable purposes. This question has undergone judicial examination. In Md. Ibrahim v. Commissioner of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding alcoholic liquors to those resorting to the bath at the bar and the restaurant which were already in existence. The question arose whether the income from the sale of tickets for admission to the bath and from the bar and the restaurant was exempt on the ground that the trust was a charitable trust. The Bombay High Court held that the object of the trust was the maintenance of a swimming bath for the benefit of the European public and it was object of general public utility. In dealing with the contention that the supply of refreshments to persons resorting to the bath cannot be said to be a charitable object, the learned judges observed: Mr. Joshi would be perfectly right if could satisfy us that one of the objects of the trust was to supply refreshments to the persons who went to the swimming bath, but, in our opinion, a clear distinction must be drawn between the object of the trust and the powers conferred upon the trustees of the trust which powers are incidental to the carrying out of the object of the trust. Now, the only object of the trust, and that is perfectly clear both from the original indenture of trust and the scheme framed by the High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee contends that this is not the question that was examined by the department and the officers below and that this court is therefore prevented from considering the eligibility of the Agastyar Trust to exemption under section 4(3)(i) in its fuller scope, but that the question of law arising from the order of the Tribunal must be confined to the examination of such eligibility only under section 4(3)(i)(b). In putting forward this argument, reliance is apparently placed upon the limited consideration which the Tribunal gave to the matte. We have referred to the fact that in so far as the assessment year 1955-56 is concerned, the matter was not considered by the Tribunal at length. It referred only to an earlier case it had dealt with. The judgment of the Tribunal in that case is printed as annexures C . The Tribunal thought that the income of the trust could be classified under two heads: (1) income derived from donations made to it and income from the immovable properties which it owned and (2) income which it earned in business. The Tribunal apparently took the view that even if the income which the trust earned in business was not exempt, the income derived from donatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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