Law:

Section:

- Section 4(b) - Madras Agricultural Income-tax Act, 1955 CASES REFERRED TO Dasaratharami Reddi v. Subba Rao [1957] 11 MLJ (SC) 175 and Vadivelu v. Rajabadar [1964] ILR 2 Mad. 832. JUDGMENT Veeraswami, J.-On an application from Sadaya Pillai Trust by its trustee, the Agricultural Income-tax Officer, Kumbakonam, by his order dated August 31, 1962, exempted from tax, under section 4(b) of the Madras Agricultural Income-tax Act, 1955, the income from certain lands specified in the order as being wholly held under trust for religious or charitable purposes. The Commissioner of Agricultural Income-tax, in exercise of his powers under section 34 and by order dated November 4, 1965, set aside the exemption and directed that the income should be brought to tax in accordance with law. This is on his view that, if any excess out of the income derived from the properties remained after the performance of the objects of the trust, such excess income might be appropriated for himself by the turn trustee for the time being. 2. In our opinion, the order of the Income-tax Officer granting exemption is correct. The relevant provision in the Act is clause (b) to section 4. That section defines "total agricultural income". But such income does not include under clause (b) "any agricultural income derived from property held under trusts or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes, the income applied thereto". This clause contemplates two categories of trust : (1) property held under trust wholly for religious or charitable purposes and (2) property so held in part only for such purposes. The income from the first category will not form part of the total agricultural income. But, under the second category, that will be so only to that part of the income not applied for such purposes. The test is not, therefore, how the income is utilised but how the property is held. In other words, the question…

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