TMI Blog1998 (2) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... ilding has been described in the judgment of this court in the case of Addl. CIT v. Gangabai Charities [1983] 142 ITR 718. The building as stated therein consists of a mandapam and other portions. The buildings are sought for celebrating weddings and reception for which, they are let out on rent. The building was constructed with a nucleus of a trust fund provided by Smt. Gangabai who was at that time in her 90's. The fund was administered by her son, Seetharama Rao, the owner of a hotel of the same name Dharmaprakash. Though Gangabai's funds amounted to Rs. 34,000 the funds which went into the completion of the building amounted to Rs. 6 lakhs. These facts are not in dispute. This building was assessed to wealth-tax for all the years up to 1975. When an appeal was preferred against the order of assessment made for the year 1975-76, the appellate authority allowed the appeal against the order of the Income-tax Officer who had held that the assessee was not entitled to the benefit of exemption, the appeal having been allowed on the ground that the property was held in trust for religious and charitable purpose for the benefit of the public. The appellate authority in its decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning schools for the development of Sanskrit learning, free or at such rents and on such terms and conditions as the trustee thinks reasonable and proper in the interests of the trust.' " The Supreme Court, interpreting the terms of that document for the purpose of deciding the claim of the assessee for exemption of its income under the Income-tax Act held that it was not possible from the terms of the document to conclude that, the trust was set out wholly for charitable and religious purposes. The Supreme Court also held that the purposes set out in the document were not the objectives of the trust but only the objects of those who wish to put the trust property to use. The court held "on a careful consideration of the language of the trust deed, we are of the view that the intention of the founder was to provide a building for the benefit of the public to be used by them for religious, charitable and/or cultural and social purposes". The court also noticed that there was no mention in the trust deed as to how the income derived from the trust property is to be utilised. It further noticed that the public use the building on payment of rent to the trustees. The trust deed howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed of. The Supreme Court in the case of Addl. CIT v. Surat Art Silk Cloth Manufactures Association [1980] 121 ITR 1, while considering the claim for exemption of the income of the trust under the Income-tax Act, observed "the law is well settled that if there are several objects of a trust or institution, some of which are charitable and some non-charitable and the trustees or the managers in their discretion are to apply the income or property to any of those objects, the trust or institution would not be liable to be regarded as charitable and no part of its income would be exempt from tax. In other words, where the main or primary objects are distributive, each and every one of the objects must be charitable in order that the trust or institution might be upheld as a valid charity : Vide Mohd. Ibrahim v. CIT [1930] 57 IA 260 and East India Industries (Madras) P. Ltd. v. CIT [1967] 65 ITR 611 (SC). But if the primary or dominant purpose of a trust or institution is charitable, another object which by itself may not be charitable but which is merely ancillary or incidental to the primary or dominant purpose would not prevent the trust or institution from being a valid charity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , section 5(1) would not be attracted, and no exemption can be claimed thereunder. The trust deed in unambiguous terms provides, inter alia, as under: "That the trust property, more particularly described in the schedule below shall be used for religious, charitable, social, cultural and other allied purposes." The purposes for which the property can be put to use, therefore, are not confined to religious or charitable use, nor can it be said that the pre-dominant purpose for which the property will be used are religious and charitable. The property can be used for social, cultural and other allied purposes at the sole discretion of the trustee. That is made clear by the last paragraph of the document wherein it is provided that the trustee may let or allow the said building or such portion or portions of the said building for the use of the public for social, cultural, religious, educational, etc., purposes, free or at such rents and on such terms and conditions as he thinks proper in the interests of the trust. It is also provided that he may make the building available for holding and conducting religious discourses for running schools for the development of Sanskrit learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Counsel is right to that extent. However, we cannot accept the further submission made for the assessee that the interpretation of the material document by the apex court and earlier by this court are also to be ignored while considering the assessee's claim for exemption under the Wealth-tax Act. Counsel for the assessee also submitted that the interpretation of the document by this court in the case reported in Addl. CIT v. Gangabai Charities [1983] 142 ITR 718, supports the assessee's claim. We are unable to agree with him on that submission. The construction of the trust deed by the apex court is very relevant for the purpose of considering the nature and effect of the document and in our opinion it has to be looked into, and relied upon for the purpose of deciding as to whether the terms of that document are such as to permit a claim being made in terms of section 5(1) of the Wealth-tax Act for exemption. Learned counsel for the assessee further contended that the emphasis in section 5(1) of the Act is on public purpose and that even if the purpose is social or cultural so long as it is of a public character, exemption can be claimed. We are unable to agree with that su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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