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TMI Blog1963 (3) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ons have been canvassed. They related to different matters and their nature can be understood only when they are stated. But shortly put, the first question raises a point that the appellant's liability is subject to maximum specified in a certain provision of the Act to which we will presently refer. The remaining four questions concern the appellant's claim for exemption out of his income of sums paid to charities. The first question with which we propose to deal was question No. 5 before the High Court. It was in these terms : " Whether condition (b) in the Schedule of Rates is applicable to Part I alone or to both Parts I and II. " The question is really one of the interpretation of the Act, to some of the provisions of which it is necessary to refer before proceeding further. Sub-section (2) of section 2 defines " agricultural income-tax " as " tax payable under this Act and includes super-tax. " Section 3 is the charging section and the relevant portion of it is as follows : " Agricultural income-tax and super-tax at the rate or rates specified in the Schedule shall be charged for each year ........ " Now the Schedule so far as material runs thus : SCHEDULE (See Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... num would be benefited. The respondent however says that there is no reason to think that the number of such persons was small nor that it was not intended to confine the benefit to them alone. We think that the contentions of the respondent State are of substance. We are unable to conclude from the fact that persons owning estates yielding income between Rs. 3,000 and Rs. 3,214 only would be benefited, that the expression " agricultural income-tax " must be understood to include super-tax so as to enlarge the scope of the benefit. The legislature may have intended to confer the benefit only on persons with a comparatively smaller income. There is nothing to show that it did not do so. In any case we do not think that we would be justified in including within the words " agricultural income-tax ", super-tax, for the simple reason that otherwise the benefit conferred would be restricted. We may add that there is nothing to show that persons with income between Rs. 3,000 and Rs. 3,214 per annum form a small number. Coming now to the first reason, it seems to us that the context requires that the definition of " agricultural income-tax " in section 2(2) should not be imported into c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r fund which is established in the Uttar Pradesh for a charitable purpose and is approved by the State Government for the purpose of the rule shall be exempt from liability to agricultural income-tax ... Explanation.----In this rule 'charitable purpose' includes relief of the poor, education, medical relief and the advancement of any object of general public utility. " It is not in dispute that the appellant spent large sums in charities. He maintained a number of hospitals and dispensaries and donated magnificently by way of scholarships to encourage deserving students. It appears that in the year 1355F his charities to the hospitals and dispensaries amounted to Rs. 1,06,542-1-9 and in the shape of scholarships, Rs. 68,537-1-8. We cannot help regretting that the matter could not be settled out of court and had to be litigated upon involving expense of moneys which could have been utilised for more useful purposes. The appellant's object in raising this question is to get exemption for the charities made by him which satisfied the definition of " charitable purpose " in the Explanation to the rule though the funds and institutions on which the benefit of the charities had bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y force. There is nothing to prevent the legislature from giving the Government the power to prefer and such power has to be given, if protection against the misuse of exemption is necessary, which we think it is. Further, it does not seem to us possible that the rule required approval of the Government only in cases where it was doubtful whether the institution or a fund had a charitable purpose. Either it had such a purpose or it had not. If any dispute arose, the matter had to be decided by the proper authorities, judicial or departmental. It was wholly unnecessary to provide for approval by the Government only in cases where it was doubtful whether the purpose of the institution was charitable or not. We, therefore, think that the answer to the question is that in spite of the Explanation no exemption can be granted under rule 17 unless the institution or fund is one for charitable purpose and has further been approved by the State Government for the purpose of the rule, that is, for the purpose of earning exemption under it. The next question which we take up is question No. 9 in the reference. That question reads thus : " Whether the hospitals which were subject to the ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the above item, in our opinion, means any grant paid either in cash, kind or even in services but it should be a real grant in the form of a donation. " We do not feel called upon in the present case to pronounce whether the contention of the respondent or the view expressed by the High Court is correct. All that we have here is inspection of the hospitals and dispensaries by the Government medical officers. We have nothing to show for what purpose such inspection was held. The inspection may have rendered no service at all to the hospitals and dispensaries for the purposes for which they exist. It may have been made only for Government's statistical purpose or for seeing that the health regulations prevailing in the State were being observed. We find it impossible to infer from the word " inspection " any idea of a service rendered to the patients in the hospitals or for the charitable object for which the hospital had been maintained. It has not, therefore, been shown that the inspection by the Government's doctors was a grant within the notification. Learned counsel drew our attention to certain rules made by the court of wards in connection with the hospitals and dispensa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution recognised by the State Government or a local authority were donations within the meaning of rule 117 ? (2) Whether the scholarships paid to students directly would amount to donations to an institution or to a fund within the scope of rule 17 ? " It is necessary to refer to another part of the notification under rule 17 to which we have earlier referred. The notification besides approving for the purpose of the rule certain hospitals and clinics as we have earlier stated, also approved of " educational institutions recognised or aided by the State Government or a local authority ". The point of the present question really arises under this part of the notification. It is not disputed that the institutions in contemplation were institutions recognised or aided by Government. We feel no doubt that when moneys are paid to such an institution to be distributed as scholarships to its students, this is a donation to the institution for the institution utilises it for its own purpose, namely, helping its students which it may otherwise have done with its own funds. The first part of question No. 10 must, therefore, be answered in the affirmative as the High Court has done. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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