Law:

Section:

Section 11 of the Income-tax Act, 1961 [Corresponding to Section 4(3)(i) of the Indian Income-Tax Act, 1922] - Charitable or religious trust - Income from Property Held Under - Assessment years 1957-58 to 1966-67 - Whether a charitable trust may be created by words sufficient to show intention and so long as there is a clear manifestation of intention to create a charitable or religious trust and there is a formal vesting of ownership of property, dedication is complete - Held, yes - AAC found that assessee was manager or shebait of Gurdwara and that all monies received at Gurdwara were used and spent towards religious, educational and charitable purposes and that income received from shops by way of rent was also utilised for said purposes - Whether since entire income had to be applied for religious and charitable purposes, same was liable to be exempted - Held, yes FACTS In response to the notice issued by the ITO, the assessee stated that he had renounced the world at the age of 14 years and was a sanyasi. He was looking after the management of the Gurudwara as shebait or manager and that the income made by the said Gurudwara was not his personal income. It was also alleged that the offerings and donations received from the public by the Gurudwara were utilised for religious and charitable purposes and, therefore, the income received from the voluntary contributions and from the property owned by the Gurudwara were exempt under section 4(3)(i) and (ii) of the, 1922, Act. The ITO held that the assessee had been receiving contributions in his individual capacity and that the assessee retained absolute control over the management and affairs of the Gurudwara and, therefore, he was not entitled to exemption of the income. On those findings, the ITO assessed the said income as the personal income of the assessee. On appeal, the AAC held that the income in question was not that of the assessee but of the Gurudwara which was solely and exclusively engaged in religious and charitable activities. The finding given by him further was that the properties in question from its inception, belonged to the Gurudwara on account of which the same was liable to exemption…

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