TMI Blog1982 (10) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of the Madhya Pradesh Public Trusts Act by order of the Registrar, dated May 14, 1968. While so registering the trust, the nature and objects of the trust are stated as follows : " 1. The trust has been created by the late Laxmi Narayan by means of a registered trust deed, dated 25-2-65 by setting apart his house situated in Chowk, Bhopal, valued at about Rs. 64,000 for purposes of constructing and maintaining a Dharmshala, which shall be open to visitors and general public for use. The trust will construct some shops to be let out on rent and the income derived from this source will be devoted primarily to the running and maintenance of the dharmshala and surplus, if any, to any other social, educational or philanthropic purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assengers staying in the dharmshala were required to pay room rent, the trust was carrying on an activity for earning profit by letting out the rooms on hire. The assessee went up in further appeal before the Income-tax Appellate Tribunal which held that the excess income realised from the rent of the shops was not utilised for any religious or charitable purposes and the same was, therefore, taxable. The assessee-trust did not dispute before the Tribunal that 75% of the income of the trust had not been applied for religious or charitable purposes, but was accumulated and the other conditions mentioned in the proviso to sub-s. (2) of s. II of the Act had not been complied with. In the ultimate analysis, the Tribunal held that this excess in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public utility would, therefore, be charitable under the Indian law. In Mahakoshal Shaheed Smarak Trust's case, the object of the trust was to commemorate and perpetuate the sacred memory of the martyrs of Mahakoshal who lost their precious lives in the Congress movements for the attainment of India's independence from 1920 to 1945. This object was to be attained by constructing buildings and establishing institutions of a permanent character, such as a spacious hall, library, reading room, etc. The spacious hall erected by that trust provides a venue for social and cultural gatherings and benefits the general public although some charge is levied for making the building available. It was held that the object of that trust is of general pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition " for " as used therein. This proposition was held to connote the end with reference to which something is done. It was, therefore, held that it is not enough that as a matter of fact an activity results in profit but it must be carried on with the object of earning profit and profit making must be the end to which the activity must be directed or, in other words, the predominant object of the activity must be making of profit. The charitable purpose should not be submerged by the profit-making motive; the latter should not masquerade under the guise of the former. Where the predominant object of the activity of the trust is the carrying out of an object of general public utility and not to earn profit, it will not lose its character ..... X X X X Extracts X X X X X X X X Extracts X X X X
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