Law:

Section:

Section 11, read with section 2(15) of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under - Assessment years 1967-68 to 1970-71 - Assessee - Trust was formed with objects of providing relief to poor, advancement of education, medical relief, promotion of science, art and literature and any other object of general pubic utility for benefit of pubic - As per trust deed, trustees had power to hold any business undertaking and administer and manage it only for purpose of achieving object of general benefit - It was further mentioned that profit from business activity must feed charitable purpose under terms of trust - Whether, on construction of terms of trust deed, it could not be said that there was any profit-making object of assessee - Trust in carrying on business activities - Held, yes - Whether therefore, income derived by assessee - Trust was eligible for exemption under section 11 - Held, yes FACTS The assessee trust was constituted under a trust deed dated 27-8-1963. As per the trust deed, the objects of the trust, were relief of the poor, advancement of education, medical relief, promotion of science, art and of literature and any other object of general public utility for the benefit of the public. The powers of the trustees, as per the deed, included power to hold any business undertaking upon trust and to administer and manage the same. Clause(5) of the deed provided that after paying all costs and expenses, the trustees would utilise the net income of the trust for aforesaid charitable objects or purposes at such time or times and in such manner and on such proportions as the trustees might in their discretion think fit. During the relevant assessment years the assessee had earned commission as area managers of a company, but did not show the income in its return on the ground that the income earned was not liable to income-tax as the same had been derived from a business undertaking held under trust for charitable purposes, and had been applied to such purposes in India in terms of section 2(15) and section 11. The ITO, however, did not agree with the assessee and assessed the income derived by…

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