Law:

Section:

Section 11 of the Income-tax Act, 1961 (Corresponding to section 4(3)(i) of the Income-tax Act, 1922) - Charitable or religious trust - Exemption of income from property held under - Assessment years 1952-53 to 1960-61 - Sale trustee of the Wakf,Mullaji Sahib was empowered under trust deed to make use of income arising out of property for religious, pious, charitable or 'otherwise' - Whether, expression or 'otherwise' occuring in trust deed would have to be read ejusdiem generis with words which precede that expression and same could not have effect of enlarging nature of purpose for which income could be spent by trustee so as to hold that trustee had been empowered to spend income for purposes other than religious, pious or charitable so as to deny exemption - Held, yes - Whether merely because trust deed used expression that trustees would hold, possess and enjoy properties for their own use', which are normal covenant in conveyance, it could not be said that trustee had been given absolute power and discretion to use trust property and income for his own use so as to deny exemption - Held, yes FACTS By a deed of wakf certain properties were settled in trust in favour of Dawat-al-Hadiyah (Dawoodi Bohra Community) and the Dai-ul-Mutlak (Mullaji Saheb) being the spiritual head of the community was appointed the sole ex-officio trustee. The wakf properties were mainly immovable properties mentioned in the schedule to the document and the use and enjoyment of the properties and the income thereof was required to be made for the purposes set out in the operative part of the document. The management rested absolutely in Mullaji Saheb as the holder of the office of Dai-ul-Mutlak and his successors in office. In the assessment proceedings for the years in question the claim was made on behalf of the assessee (the trustees) that the income of the trust properties was entitled to the exemption under section 4(3)(i) of the 1922 Act. The ITO, while accepting that there was a validly constituted trust and that the objects of the trust were religious and/or charitable, rejected the claim of the assessee for exemption on the ground that the provisions of clause 14 of the…

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