TMI Blog1982 (5) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... s correct ? (2) Whether, on the material on record, could it be legally inferred that mere letting out of house property involved the carrying on of any activity for profit ?" The relevant assessment years are 1967-68 to 1971-72. The assessee is a trust. The assessee claims that it is a charitable trust entitled to exemption under s. 11 of the I.T. Act, 1961. This claim of the assessee has been negatived on the ground that the assessee is not a trust for a charitable purpose as defined in s. 2(15) of the Act. The assessee trust was constituted by a trust deed dated 31st October, 1947. It appears from the preamble of the trust deed that the Mahakoshal Provincial Congress Committee by resolution passed on 21st October, 1945, authorised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and to be raised hereafter and from donations, additions, alterations, repairs, etc., shall be done by the trustees out of the income of the trust and such funds as come to their hands. 3(d) They shall see that sufficient income accrues to the trust by letting out its premises from rents and profits, fruits and flowers, swimming pool and literary and other publications and in any other manner they deem necessary. 3(g) The trustees shall do all acts which are reasonable and proper for the realization, protection, benefit of the trust property and for the welfare, enlightenment and benefit of the beneficiary public." The findings reached by the ITO which were not disturbed in appeal go to show that land measuring 4,52,580 sq. ft. wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the trust could not be charitable as the trust was engaged in an activity of profit in that it was earning rental income from the buildings. Section 11 of the Act exempts from tax income from property held under trust for charitable or religious purposes. " Charitable purpose " is defined in s. 2(15) to include "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 ". The learned counsel for the assessee did not urge that the object of the assessee-trust is relief of the poor, education or medical relief. His argument is only that the object of the trust falls within the words " the advancement of any other object of gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended to be constructed in furtherance of the object of the trust. The primary items are construction of spacious hall, and establishment of library, reading-room, museum, swimming pool, parks, playgrounds, etc., which are obviously of great public benefit. Office building would be needed for housing the office of the trust, shops may be needed for letting them out to earn some income for expenses of the trust, guest houses may be needed for providing accommodation to those who visit Jabalpur for purposes of the trust. But these buildings are ancillary to the primary buildings and institutions of public benefit to be constructed and established in the furtherance of the object of the trust. In this connection it cannot also be lost sight o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial. If a memorial, as here, is a spacious hall useful to the general public for social and cultural activities or a library, garden and children's park for the benefit of the public, it is difficult to hold that the memorial is not of general public utility. In this connection we may refer to the case of Murray v. Thomas [1937] 4 All ER 545 (Ch D), where a war memorial in the shape of a village hall was held to be for a charitable purpose. The purpose in such cases is not merely to commemorate the dead but also to serve for the betterment of the living (see also Halsbury's Laws of England, vol. 5, 4th Edn., p. 337). The general observations made by the Calcutta High Court in Kedia Jatiya Sahayak Sabha Fund v. CIT [1963] 49 ITR 74, 81 (C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is true that under cl. 3(d) a trustee has the power to see that sufficient income accrues to the trust from rents by letting out its premises and from fruits and flowers, swimming pool and literary and other publications, but it is clear from cl. 3(g) that the trustees have to do all acts which are reasonable and proper for the realization, protection, benefit of the trust property and for the welfare, enlightenment and benefit of the beneficiary public. In other words, the income from the trust property is to be utilized for the benefit of the public. Thus, the income from trust property is to feed the object of public utility. The dominant object of the trust is, therefore, not to earn profit but to carry out the object of public utili ..... X X X X Extracts X X X X X X X X Extracts X X X X
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