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TMI Blog1983 (11) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... count is set apart finally for the purpose of religious and charitable objects set out therein, that the sums lying to the credit of the Charity account as on the date of the partnership deed and all future amounts that will be credited to it out of the profits of the business in future years shall be disbursed by one T. N. Venkatarama Chetty as trustee of the said fund for carrying out the religious and charitable objects mentioned therein. The religious and charitable objects contemplated by the partnership deed are the conduct of temple festivals in Madras and other places like Conjeevaram, Tirupathi, Srirangam, Salem and other places, medical relief, giving of alms including food to the poor on occasions of Hindu festivals as selected by T. N. Venkatarama Chetty in his discretion, gift of sums of money to poor deserving persons for celebration of marriages and generally on any object of general public utility like educational institutions, orphanages, choultries, work houses and hospitals, etc. The partners retained the power to revoke the trust created thereby. The partnership deed was to take effect from July 14, 1940. By an agreement dated August 26, 1943, entered into bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that giving cash grants for the needy and deserving persons to meet marriage expenses is a charitable object and the assessee was entitled to exemption under section 4(3)(i) of the Indian Income-tax Act, 1922 ?" (5) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee-trust was entitled to the exemption under section 4(3)(i) of the Indian Income-tax Act, 1922 in respect of the income attributable to the trust created under the deed dated November 28, 1941 ?" For the assessment years 1962-63 to 1973-74, the assessee-trust claimed exemption under s. 11 of the I.T. Act, 1961. The ITO having rejected the claim, the matter was taken in appeal. That appeal having failed the assessee went before the Income-tax Appellate Tribunal. The Tribunal, however, following its earlier decision relating to the assessment years 1957-58 to 1961-62 held that the assessee is entitled to the exemption under s. 11 of the 1961 Act as it is a charitable institution. As against the said decision of the Tribunal, the Revenue sought to refer very many questions but the Tribunal referred only one question in T.C. Nos. 64 to 76 of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Tribunal. However, after hearing the parties at some length on these reference applications, we are satisfied that the questions already referred in T.Cs. Nos. 64 to 76 of 1978 and T.C. No. 592 of 1978 are comprehensive enough to include the questions sought to be referred to this court by the Revenue in the reference applications. The questions sought to be referred in the reference applications are only different facets of the main question already referred. The common question that has already been referred is whether, on the facts and circumstances of the case, the assessee-trust was entitled for exemption under s. 11 read with s. 2(15) of the I.T. Act, 1961. The questions sought to be referred in T.C.Ps. Nos. 384 to 394 of 1982 and T.C.P. No. 115 of 1980 merely deal with the character of the trust and the extent to which the exemption could be claimed, even if the trust is treated as charitable institution. Therefore, we are of the view that there is no necessity to make a separate reference on the questions set out in the above reference applications. Hence, we dismiss the reference applications as unnecessary as the common question referred in T. Cs. Nos. 64 to 76 of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also the income of an association cannot also be included in the total income. The corresponding provision under the 1961 Act is s. 11 which so far as it is relevant is as follows : " 11. Income from Property held for charitable or religious Purposes.(1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of twenty-five per cent. of the income from such property; (b) income derived from property held under trust in part only for such purposes, the trust having been created before the commencement of this Act, to the extent to which such income is applied to such purposes in India; and, where any such income is finally set apart for application to such purposes in India, to the extent to which the income so set apart is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indirectly for the benefit of any person referred to in subsection (3) ........." Charitable purpose " has been defined in section 2(15) thus: ' " Charitable purpose " includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility not involving the carrying on of any activity for profit.' It is in the light of these provisions the claim of the assessee-trust for exemption in respect of its entire income should be considered. The question whether the same assessee-trust was entitled to exemption under s. 4(3) of the 1922 Act came up for consideration before this court in CIT v. East India Industries (P.) Ltd. [1962] 46 ITR 1086 (Mad), Sri Agastyar Trust v. CIT [1963] 48 ITR 673 (Mad) and before the Supreme Court in East India Industries (Madras) Pvt. Ltd. v. CIT [1967] 65 ITR 611. In CIT v. East India Industries (P.) Ltd. (1962] 46 ITR 1086 (Mad), one M/s. East India Industries (P.) Ltd. had made a donation of Rs. 7,500 to the Sri Agastyar Trust and claimed exemption from tax under s. 15B of the 1922 Act. Taking note of the fact that the trust had been created by the partners of a business firm, M/s. K. Rajagopal and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the trust and no exemption could be granted to the trust under s. 15B of the Act. After setting out the various clauses in the trust deed dated July 1, 1944, the Supreme Court observed (p. 615): "The question to be considered is whether the property from which the income of the Agastyar trust is derived is held under trust or other legal obligation wholly for religious or charitable purposes within the meaning of section 4(3)(i) of the Act. In the present case, it appears from the deed of trust that one of the objects of the trust, namely, item 4, is not for charitable or religious purposes. Item No. 4 is to manufacture, buy, sell and distribute pharmaceutical, medicinal, chemical, and other preparations and articles such as medicines, drugs, medical and surgical articles, preparations and restoratives of food. It may be that most of the other objects of the trust are religious and charitable in nature but if item No. 4 is not charitable, then the conditions envisaged by section 4(3)(i) of the Act are not fulfilled and the exemption conferred by section 15B of the Act cannot be applied. Clause 5(i) of the trust deed states that the trustee shall have power to apply the whole or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Trust is a charitable institution entitled to the benefit of exemption under s. 4(3)(i) of the 1922 Act. According to the Revenue, the Tribunal as well as this court is bound by the, said decision of the Supreme Court and, therefore, the assessee in this case, namely, the Agastyar Trust, should be held not entitled to the exemption under s. 4(3)(i). The learned counsel for the assessee, however, contends that since the Supreme Court has proceeded on an erroneous basis that the trust was constituted for the first time under the document dated July 1, 1944, executed by the trustee, overlooking the fact that the trust had been earlier constituted in the year 1941 under deed of partnership, it is open to the Tribunal and this court to go behind the said decision and give their decision by taking note of the objects mentioned in the partnership deed which created the trust for the first time. According to the learned counsel for the assessee, both this court, in CIT v. East India Industries (P.) Ltd. [1962] 46 ITR 1086 and Sri Agastyar Trust v. CIT [1963] 48 ITR 673 and the Supreme Court in East India Industries (Madras) P. Ltd. v. CIT [1967] 65 ITR 611, were not aware of the creation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the trust or the trustees from the declared purpose would amount only to a breach of the trust and would not detract from the declaration of the trust, and that therefore, the subsequent conduct of the founder or the trustees in dealing with the funds of the trust long after its creation may not put an end to the trust itself. Though we can prima facie agree with the submission of the learned counsel for the assessee that a charitable trust once validly created for certain charitable objects and properties have been dedicated for those objects, it is not open to the founder or the trustees appointed by him to enlarge the objects of the trust so as to make it a non-charitable trust, it is unnecessary for us to go into that question in detail as the Supreme Court has already rendered a decision regarding the constitution and the nature of the Agastyar trust in East India Industries (Madras) P. Ltd. v. CIT [1967] 65 ITR 611 (SC), and it is not open to us to go behind that decision on the ground that the said decision was rendered on an erroneous basis that the trust was created only by the trust deed dated July 1, 1944, while in fact the trust has been created under an earlier partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come and that such questions if decided by a court on a reference made to it would be res judicata in that the same question cannot be subsequently agitated. The Full Bench has relied on the decision in Hoystead v.Commissioner of Taxation [1926]AC 156, where in their Lordships of the Privy Council observed (p. 165) : " Very numerous authorities were referred to. In the opinion of their Lordships it is settled, first, that the admission of a fact fundamental to the decision arrived at cannot be withdrawn and a fresh litigation started, with a view of obtaining another judgment upon a different assumption of fact; secondly, the same principle applies not only to an erroneous admission of a fundamental fact, but to an erroneous assumption as to the legal quality of that fact. Parties are not permitted to begin fresh litigations because of new views that they may entertain of the law of the case, or new versions which they present as to what should be proper apprehension by the court of the legal result either of the construction of the documents or the weight of certain circumstances ...... Thirdly, the same principle namely, that of setting to rest rights of litigants, applies to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een rendered by the Supreme Court regarding the constitution and nature of the trust. That cannot change from year to year though the actual income in respect of which exemption is claimed year after year may differ. There are no additional or new facts placed by the assessee for the subsequent years so as to call for a fresh decision on the constitution and the nature of the trust. The Supreme Court was aware of and in fact has referred to the terms of the partnership deed executed under which the trust is said to have been created earlier. None the less, it has taken the later trust dated July l, 1944, as constituting and setting out the terms of the trust and issues relating to the nature of the trust, have been decided with reference to the terms of the trust deed. Though the learned counsel seeks to convince us that the later document of the year 1944 is invalid to the extent it modifies the objects set out in the partnership deed and that the nature of the trust has to be determined only with reference to the objects set out in the partnership deed, it is not possible for us to go behind the decision of the Supreme Court on the ground that the Supreme Court has proceeded on a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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