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 - Exemption of income from property held under - Assessment year 1942-43 - Assessee created a trust - As per terms of trust deed certain income arising from trust property was to be utilised for religious and charitable purposes - During relevant assessment year, surplus income arose from trust property - Up to a particular date, surplus income was paid to assessee personally but for remaining period assessee utilised said surplus income also for charitable and religious purposes - Whether, on facts, for period during which surplus income was paid to assessee personally it could not escape taxation, however, for subsequent period during which surplus income was utilised for religious and charitable purposes, it was exempt from taxation under section 4(3)(i) of 1922 Act - Held, yes FACTS By his will, dated the 8-2-1886, 'K', who died the day following, made provision for a number of capital funds and annual sums to be applied for purposes which were religious or charitable in character. In each case where payments had to be made the total amount which could be expended annually was fixed by the will, and the sum total of these limit, so far as annual payments ere concerned, amounted to Rs. 26,050. One of the executors of the will was the assessee's father and he was also the heir of the testator. The testator's estate began to produce a surplus income and in 1900 and 1903 the assessee's father commenced proceedings in the High Court to have destination of this surplus income and past accumulations of it determined. It was decided that the assessee's father was beneficially entitled to the surplus, but he, being of a charitable disposition, desired that the surplus should go to similar objects by the bounty. Accordingly by a deed of settlement dated the 1-4-1908, there was a settlement of parts of the testator's estate and of part of the accumulated surplus which was calculated to be sufficient to producer the annual sum of Rs. 26,050 and it was that trust fund, which was the "property" within the meaning of section 4(3)(i)…

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