Law:

Section:

Section 11 of the Income-tax Act, 1961 [Corresponding to section 4(3)(ii) of the Indian Income-tax Act, 1922] - Charitable or religious trust - Exemption of income from property held under - Assessment year 1946-47 - Assessee was appointed Mahant of a temple under a deed of trust, whereunder offerings made by devotees were completely under his control and he could spend them as he liked without consent of managing committee subject to condition that such spending would not be against his position as Mahant and against tenets of their religion - ITO treated said offerings as taxable income of assessee - Assessee claimed that as income was applicable solely to religious or charitable purposes, it was exempt under section 4(3)(ii) - Whether income could not be said to be applicable solely to religious or charitable purposes and as such, offerings were not exempt from tax under section 4(3)(ii) of 1922 Act - Held, yes FACTS The assessee was a Mahant of a temple who was appointed under a deed of trust according to which he got voluntary puja offerings bhents in two ways - one on account of his being Mahant of the gaddi and the second made of to the deity. Consequently, the managing Mahant had full control over the first kind of income. He could himself spend this income without the consent of the managing committee subject to the condition that he would not spend this income against his position as a Mahant and it would not be spent against the tenets of the Virakt religion. The ITO held that the offerings made to the Mahant, which he could utilize for his own purpose, was taxable income. On behalf of the assessee, however, exemption was claimed under section 4(3)(i) and (ii). On reference, it was not claimed that the case fell under section 4(3)( i) but it was urged that the income was applicable solely to religious or charitable purposes and was exempt under section 4(3)(ii). HELD The income could not be said to be applicable solely to religious or charitable purposes. The bhents or offerings to the Mahant were completely at his disposal and he could utilise them for any purpose he liked so long as that purpose was not contrary to the tenets of the Virakt religion…

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