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 Properties Held Under - Assessment year 1951-52 - Assessee society was getting subscription from persons belonging to 'K' community scattered all over India - Assessee had also income from house property - Objects of assessee in memorandum were to curtail unnecessary social luxuries of 'K' community, purchase and maintain materials for use in marriages and other social religious ceremonies of 'K' community, contribution towards marriage expenses of members of said community, establishment funds for preservation and erection of monuments and doing acts, deeds and things for welfare of said community - Whether, on facts, it could be said that income derived by assessee was not held under trust or other legal obligation wholly for charitable or religious purposes and thus same was not exempt under provisions of section 4(3)(i) of 1922 Act - Held, yes FACTS The assessee society was getting subscription from persons belonging to 'K' community scattered all over India. In addition the assessee also had income from a house property. It was stated in the memorandum of association that income arising out of the said house property was to be spent amongst other activities of running dispensary, schools, etc. in the village from which place all the 'K's' came. The claim of the assessee that it was entitled to exemption under section 4(3)(i) of 1922 Act was negatived by the ITO. On appeal, the AAC, held that a part of the income from this house property was devoted to charitable objects only and such, a portion of the income was exempt under section 4(3)(i) of 1922 Act. On further appeal to the Tribunal, this claim to partial exemption was overruled. According to the Tribunal whether the objects of the society were charitable or not, had to be gathered from the memorandum of association and if the association or its executive committee was entitled to spend amounts under any of the clauses of the objects clause, some of which were charitable in nature and others not, the only conclusion to come to was that…

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