Law:

Section:

Section 4 of the Income-tax Act, 1961 - Income - Diversion of, by overriding title - Settlor settled certain shares on two trusts, present assessees, under different trust deeds and appointed assessee as sole trustee to hold trust properties on his death for such charitable purposes as settlor might by will direct - According to his last will executors were to utilize income for establishing two institutions one in Bombay and second outside India and had absolute discretion to apply whole or part of income to one or other purpose - Trustee filed returns showing dividend income as main source of income of assessee, and claimed exemption under section 11(1)(a) - It further explained that because of huge estate duty liability, which was assessed on 10-6-1869, trust income could not be applied for charitable purposes during previous year ending on 31-3-1969 - Whether there was no charge on dividend income and, therefore, since no amount by way of estate duty was paid during previous year ending on 31-3-1969, there was no diversion of dividend income far less a diversion by an overriding title - Held, yes Section 11(1)(a) of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under - Whether on facts under head 'Income - Diversion of, by overriding title', trust properties were held wholly for charitable and religious purposes - Held, yes - Whether dividend income was exempt under section 11(1)(a) - Held, on facts, no - Whether when there was nothing to prove that income was accumulated by a conscious act on part of trustees for application to charitable or religious purposes in India, assessee's income to extent of 25 per cent could be exempted from tax on ground of accumulation - Held, no Sections 215 and 217 of the Income-tax Act, 1961 - Advance tax - Interest payable by assessee - Whether assessee had right of appeal against ITO's order charging interest under sections 215 and 217, on ground that levy of interest should be waived or reduced - Held, no Words and phrases - 'Charge' as occurring in section 74(2) of the Estate Duty Act, 1953 Facts The settlor settled certain shares out of his shareholding on two trusts,…

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