Law: Income Tax Act, 1922

Section: 4(3)(i)

Law: Income Tax Act, 1922

Section: 4(3)(i)

Sections 11 to 13 of the Income-tax Act, 1961 [C orresponding to section 4(3)(i) of the Indian Income-tax Act, 1922] - Religious or Charitable Trust - Exemption of income from property held under - Assessment year 1952-53 - One D was carrying on business of lime - He made a will and bequeathed certain specified properties in favour of his two wives and residue in trustees for public charitable purposes - On his death, two wives executed a trust deed under which they entrusted entire business to trust Tribunal held that trust was valid and it enjoyed 8 annas share in lime business, other 8 annas being share of other two partners - Whether share of business income received by trustees was exempted under section 4(3)(i) of 1922 Act - Held, yes FACTS One 'D' engaged in different kinds of business made a will in 1929 in which he bequeathed certain specified properties in favour of his two wives and directed that the residue should vest in the trustees for public charitable purposes. 'D' died in 1930, and the will could not be proved since it suffered from certain technical defects. The two wives of the deceased, with a view to giving effect to the wishes of their deceased husband as reflected in the said will, executed a trust deed on 7-6-1930. Under the trust deed the two widows were to get only cash, jewellery, bank deposits, clothes and the proceeds of the insurance policies and the entire business was to be entrusted to the trust. The revenue's case before the Tribunal was that as the business of lime had not been specifically transferred to the trustees, therefore, the income therefrom did not fall within the ambit of the trust deed. In the alternative it was contended that the lime business had ceased to exist as such before the trust deed was executed since the lime business had been converted into a partnership under a deed dated the 10-4-1930, with the assessee trust through its secretary and two others as partners. The trust had eight annas share in the profits and the balance eight annas belonged to the other two partners. The Tribunal, inter alia, held that the trust was valid and it enjoyed 8 annas share in the lime business. On reference : HELD In…

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