Law:

Section:

Section 11 of the Income-tax Act, 1961 [Corresponding to section 4(3)(i) of Indian Income-tax Act, 1922] - Charitable or religious trust - Exemption of income from property held under - Assessments year 1958-59 to 1963-64 - A trust was created in respect of shares, patents, inventions and designs etc., - Trustees carried on business by utilising process - In October 1958, trustees were authorised to conduct researches, develop processes and products and to manufacture and market them to raise funds for fulfilment of aims and objects of trust - Whether for accounting years relevant to assessment years 1958-59 and 1959-60, when trust was not authorised, income of trust could not be regarded as income derived from property held under trust meaning of section 4(3)(i) of 1922 Act and therefore, income of within trust for these assessment years was not exempt under 1922 Act - Held, yes - Whether income after authorisation, for assessment years 1960-61 and 1961-62, was exempt under 1922 Act - Held, yes - Whether however, income of trust was not exempt for assessment years 1962-63 and 1963-64 under section 11(1) 1961 Act since business carrying on by it was activity for profit - Held, yes FACTS One 'C' created a trust in respect of the shares, patents, inventions and designs and other properties. A few days after the execution of the trust, 'C' donated, in August, 1955, the following inventions to the trust for their exploitation: 1.A process for manufacturing sizing softener (olein). 2.A process for manufacturing sizing antiseptic (microlin). The process in item 2 above for manufacturing, sizing antiseptic was being utilised in a manufacturing business carried on by the trust. The income derived therefrom was being applied for the charitable objects set out in the indenture of trust. In October, 1958, the indenture of trust was amended by adding clause 2(j), which authorisied the trustees to conduct researches in all branches of science, and, to develop processes and products and to manufacture and market them to raise funds for fulfilment of aims and objects of trust. The assessee-trust claimed that the income of the trust from the manufacturing business carried on…

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