Law: Income Tax Act, 1961

Section: 13(2)(h),10(22)

Wealth tax---Charitable purposes---Charitable trust---Exemptions---Denial of exemption where trust funds are diverted for benefit of persons mentioned in S.13---Educational trust---Trustees partners in firms---Irrevocably assigning share income from firm to trust---No infringement of S.13(2)(h) read with S.13(4) of Act---Trust entitled to exemption from wealth tax---Indian Income Tax Act, 1961, Ss. 11 & 13. The assessee was an educational trust and the trustees who happened to be partners of a firm assigned their share income irrevocably .to the trust. The Tribunal held that there was no infringement of the provisions of section 13(2)(h) of the Income Tax Act, 1961 read with section 13(4) of the Act. On a reference: Held, confirming the order of the Tribunal, that the assignment of the share income of the trustees to the trust would not result in any diversion of fund by the trust to the trustees. That the trust received income from a business was by itself not a ground to deny the benefit of section 10(22) of the Income Tax Act, 1961. The Tribunal was right in law in holding that the assessee was entitled to exemption from the levy of wealth tax for the assessment years 1973-74 to 1981-82. JUDGMENT R. JAYASIMHA BABU, J.---We find no substance in these references. The Tribunal has held that there was no infringement of the provisions of section 13(2)(h) read with section 13(4) of the. Income Tax Act, 1961, on the basis of the materials placed before it. No error in the consideration of materials has been brought to our notice. The Tribunal has held that there was no diversion of the trust's fund by the trustees for the benefit of any person mentioned in section 13(2) of the Act. The assessee is admittedly an educational trust. The fact that the trustees happen to be partners of firms and that they had assigned to…

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