Law:

Section:

Section 11 of Income-tax Act, 1961 [Corresponding to section 4(3)(i) of Indian Income-tax Act, 1922] - Charitable trust - Exemption of income from property held under - Assessment years 1952-53 to 1957-58 - Trust was in relation to business - Objects of trust were charitable - Memorandum of association gave certain powers to trusts for achieving primary objects of charitable purpose - Whether assessee trust was entitled to exemption under section 4(3)(i) of 1922 Act - Held, yes FACTS The settlor created a trust in respect of his business. According to the memorandum of association, the trust, was not for profit of any kind and all the profits must be utilized only for the common moral, literary, scientific, medical and spiritual well-being of the public in general. The trust claimed exemption under section 4(3)(i) but the revenue rejected the claim relying on the certain paragraphs of the Memorandum of association which gave powers to the society to provide funds for refuges for domesticated animals and birds, to purchase land and eract buildings, to receive money on deposit or loan, at interest or otherwise from and to lend or advance money to, any person, firms and companies and to draw, make, accept, endorse, sell, execute, negotiate purchase and lend money, to discount, hold and dispose of cheques, promissory notes, bills of exchange, hundis and drafts, charter parties, bills of landing, warrants, debentures and other contracts, deeds and other instruments, and to cancel and vary any such instruments, without infringing any of the business of banking within the meaning of the Act 1949 of the Banking Companies. The Tribunal however allowed the assessee's claim holding that objects of the trust were for charitable purpose. On reference : HELD The trust was in relation to the property that was business. This was an aspect which one had to bear in mind in understanding the import of some of the wide expressions used in the memorandum of association. The last part of paragraph 2(a) which spoke of "organising other new enterprises of general utility and take any managing agencies" were subsidiary to the main purpose mentioned in that paragraph or organise the…

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