Law:

Section:

Section 5(1)(i) of the Wealth-tax Act, 1957, read with section 11 of the Income-tax Act, 1961 - Exemption - Charitable trust - Assessment years 1959-60 to 1965-66 - Whether from fact that institution bears name of a private person, nature of trust cannot be determined to be a private one - Held, yes - Ex Nizam of Hyderabad created two trusts - Under first trust, which was created in memory of settlor's mother, settlor constructed Azakhana Zohra (mourning house) with Niazkhana (poor feeding house) and Shafakhana (hospital) attached to it - Under second trust a sum was set apart for completing construction of said buildings and for management, maintenance and upkeep of same - Department took view that said trusts were not religious and charitable trust hence income from endowed amounts was taxable wealth and investment made under trust deeds was taxable income - Admittedly said sacred buildings were meant to be used only during periods of Moharram and Safar and there was no restriction on right of public to have access to said places during Moharram - Whether fact that one building was meant for mourning, another for purpose of poor feeding and a third for a hospital itself showed that they were meant for charitable purposes - Held, yes - Whether therefore both trusts were created wholly for religious and charitable purposes and they therefore attracted provisions of section 4(3)(i) of 1922 Act and section 11 of 1961 Act and also section 5(1)(i) of 1957 Act - Held, yes FACTS The Ex-Nizam of Hyderabad in scared memory of his mother, created two trusts, for construction of three buildings viz., Azakhana Zohra (mourning house) with Niazhana (poor feeding house) and Shafakhana (hospital) and for their maintenance. The claim of the trusts for exemption under section 11 of Income-tax Act and under section 5 of W.T. Act was rejected on the ground that those were not religious and charitable trusts and the corpus and the income from the endowed amounts were not, therefore, exempt from the levy of either wealth-tax or income-tax. On reference : HELD The three buildings constructed by the Nizam, viz. Azakhana Zohra (mourning house), and the Niazkhana (poor feeding house)…

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