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 - Exemptions of income from property held under - Assessment years 1957-58 to 1959-60 - Whether relief to a person would not be a charitable object unless it involves an object of general public utility - Held, yes - Two persons jointly made a declaration of trust and it was decided to devote income of trust property partly on charitable objects and partly towards members of donor's family - Whether amount spent or provided to be spent on maintenance and support of donor's family could not be a charitable object and could not, therefore, fall under section 4(3)(i) of Act, 1922 - Held, yes FACTS Two parsons jointly made a declaration of the trust which was registered on the following day. Several properties and assets were settled on a trust to devote the income of the property partly on charitable objects and partly towards the maintenance of the members of the donor's family.' The board of trustees passed the following resolutions to the effect that the intention of the donors was never to strictly limit the benefit of expenditure for the members of the family and relatives only, but that there should be no bar against the relatives and family members to apply for maintenance and that any one without restriction of caste, creed or religion if he was considered to deserve support could be paid out of portion of this income set aside for maintenance of the families. They passed another resolution on the same day to the effect that remuneration be paid to the trustees and that the entire 1/3rd income be spent for charitable purposes. On the strength of the trust settlement read with the two resolutions, the trustees made an application for refund of the entire income-tax that was deducted from the dividend income received by the trustees. It was contended on behalf of the trustees before the ITO that not only one-third income of the trust covered by clause 2(A) was exempt from taxation but also the one-third referred to under clauses 2(B) and 2(C). The AAC accepted the contention of the assessee that it was entitled to…

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