Law:

Section:

Section 11(1), read with section 2(15), of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under - Executants of a deed created a wakf, assessee-AOP, in respect of a Dawakhana-belonging to them - Objects of charity included establishment of educational, commercial, industrial and cultural institutions, etc. - Object of trust was not to run said business but to utilise income of that business for charitable purposes - Whether assessee-AOP was a charitable trust entitled to exemption under section 11 even if source of its income was business - Held, on facts, yes Section 62, read with section 63, of the Income-tax Act, 1961 - Transfer of assets - Irrevocable transfer - Executants of assessee-wakf's deed transferred business of a dawakhana to assessee-wakf, income of which was for charitable purposes - Executants of deed, however reserved a right to make alterations and modifications regarding duties of mutawallis and administration of wakf and also to make changes in distribution of income among different objects of charity - Whether it could be said that executants had right to get income of assessee-wakf transferred to themselves and, therefore it was revocable transfer - Held, on facts, no Facts By a deed dated 28-8-1948, executants of the deed delivered a Dawakhana H, which belonged to them, to the God Almighty to create a wakf. The assessee was an AOP consisting of the mutawallis of the said wakf. The executants transferred their rights, etc., in accordance with the terms of the deed but reserved certain rights to make alterations in the conditions relating to the duties of the mutawallis and administration of the wakf and also to make changes in the distribution of income among the objects of charity. The income was divided into two, i.e., khandani income which was personal income of mutawallis and duly taxed, and qaumi income. A method was set up to determine the net profit of the wakf and also provided that 1/8th of this profit was to be transferred to a reserve fund. Directions were also given how this reserve fund was to be used. Out of the remaining profit 7/64th share of the net income went to the…

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