Law: Income Tax Act, 1961

Section: 11,2

(a) Income-tax----Charitable purposes---Charitable trust---Amendment of trust deed---Trust deed originally providing for construction of residential quarters and tenements for workmen of settlor company---Amendment of trust deed in 1945---Trustees empowered to construct residential buildings for workmen in general and in particular for workmen, staff and other employees of settlor company--¬Reference to "workmen in general" illusory---Trustees had discretion to construct residential buildings for employees of company---Employees of company need not be poor and needy---Objects of trust as amended in 1945 not wholly for charitable purposes---Subsequent amendment of trust deed in 1955--¬Deed as amended providing for construction of residential quarters for workmen in Kanpur and surrounding areas---Trustees given discretion to provide for advancement of other objects of general public utility---Trust deed as amended in 1955 was wholly for charitable purposes---Trust deed effective from 1955--¬Indian Income-tax Act, 1922, S.4(3)(i)---Indian Income-tax Act, 1961, Ss.2 & 11.--[Kamla Town Trust v. CIT (1982) 133 ITR 632 reversed on this point]. The assessee was a trust created by a trust deed dated October 27, 1941, executed by a company, which had its registered office at Kanpur. The objects of the trust deed were to construct a settlement or colony for their workmen together with amenities in the shape of hospitals, schools, temples, mosques, recreation places and for such other works directly concerning the amenities of workmen. On application by the company to the Town Improvement Trust two plots had been demised to the company at concessional rates for the welfare of its workmen by two deeds of indenture in 1936 and 1938. The company transferred both the plots by the trust deed of October 27, 1941, to the trustees for effectuating its object of settling these plots upon the charitable trust thereinafter mentioned in the deed. In 1945, the company filed a suit for rectification of the trust deed, and the deed was rectified. Clause 2(b)(i) of the deed as rectified laid down that the object of the trust was to construct "residential quarters chawals or buildings…

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