Law: Income Tax Act, 1922

Section: 11,13

Income-tax---Charitable purposes---Charitable trust---Exemption---Trust established in 1941 by partnership deed executed by two partners of a partnership firm--¬Document executed in 1944 by sole trustee purporting to be a declaration of trust and containing a clause which did not embody charitable purposes--¬Case arising subsequently with regard to donation to trust---High Court and Supreme Court considering document executed-in 1944 and holding that the trust was not charitable in nature---Original trust deed not brought to notice of Supreme Court and not considered by it---Supreme Court decision did not preclude Tribunal from considering entire material on record---Document executed in 1944 was non est because trustee had no power to alter provisions of trust deed---Trust established by original trust deed was charitable in nature---Hence trust entitled to exemption---Indian Income-tax Act, 1922, S.4(3)(i)---Indian Income Tax Act, 1961, Ss. 11 & 13---[CIT v. Shri Agastyar Trust (1984) 149 ITR 609 reversed]. On 28th November, 1941, a partnership deed was executed between K. Rajagopal and V. S. Nanjappa Chettiar. By this document, the said parties agreed to carry on business in partnership; but clauses (4) to (8) of the deed contained an agreement amongst the partners that out of the net profits of the business, after payment of all charges and expenses, 80 per cent. shall be set apart and allotted to charitable and religious objects. The amounts which were to be credited to the charity account in the books of business were to be utilised by the trustee for carrying out the objects of the trust. The partnership deed appointed V. son of one of the partners as the sole trustee. The aforesaid partnership deed whereby the appellant-trust was created, contained a clause which gave the partners a right to revoke the trust which had been created by the partnership deed. By a subsequent document executed on August 26, 1943, this clause containing the power of revocation was deleted. On July 1, 1944, the sole trustee executed a document purporting to be a declaration of trust. It referred to the carrying on of the partnership business by the earlier founders of the…

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