Law:

Section:

Charitable trusts-------   ---Business held in trust-Part of income applied to charitable purposes, whether exempt from tax-Income tax Act (XI of 1922), S. 4(3)(i), proviso (b).   Where a business or institution is itself held under trust for religious or charitable purposes it is "property held under trust" within the meaning of section 4(3)(1) of the Income-tax Act, 1922, and its income is exempt from taxation under section 4(3)(i). Such income is not brought back within taxation by proviso (b) to section 4(3)(i), as proviso (b) applies only to income derived from a business carried on on behalf of a religious or charitable institution.   A person who was carrying on a business of making and selling Ayurvedic medicines under the pane of Arya Vaidyasala, by his will vested the business on a trustee directing the latter to apply 60 percent. of the profits to charities and 40 percent. to the benefit of his family. On behalf of the Department it was contended that the 60 percent. which was payable to charities was liable to tax under proviso (b) to section 4(3)(i) as the income of the business was not wholly applied for charitable purposes:   Held, that as the business itself was held in trust proviso (b) was not applicable to the case and the 60 percent. was exempt under the main provision of section 4(3)(i).   Dharma Vijaya Agency v. Commissioner of Income-tax (1960) 38 I T R 392 ref.     STATEMENT OF CASE   By this application under section 66(1) of the Indian Income tax Act, the applicant requires the Appellate Tribunal to refer a question of law said to arise out of the Tribunal's order in I. T. A. Nos. 2295 to 2298 and 4903 of 1957-58 dated February 28, 1958, to the High Court. Inasmuch as, in our opinion, a question of law does arise out of the above order, we hereby draw up a state ment of the case agreed to by the parties and refer it to the High Court of Kerala.   P. S. Warriar was a noted and eminent Ayurvedic physician who was carrying onbusiness in Ayurvedic drugs under the name and style of Arya Vaidyasala. He was also running a hospital named by him as Arya Sikitsa Sala. He was also meeting…