Law: Income Tax Act, 1961

Section: 2,2(24),11,12,13,13(1)(bb)

Income-tax--Exemption---Charitable purpose---Charitable trust---Copyrights in films assigned to trust subject to distribution arrangements made by donors prior to such assignment ---Monies received by trust under assignment directed specifically to be held as donations forming part of corpus for construction of hospital---Trust did not do business of film distribution---Specific direction that monies shall form part of corpus---Monies received from distributors under assignment not income of trust---Indian Income Tax Act, 1961, Ss.2(24), 11, 12 & 13(1)(bb). The assessee was a trust, whose objects as set out in the deed were medical relief, education and relief to the poor including construction, maintaining cholutries, public halls, kalyana mandaparn for the benefit of the public free of charge, medical relief to the sick and suffering irrespective of caste, creed and community, constructing and maintenance of hospitals, dispensaries, maternity and children homes; and education of the public by establishing schools and other educational institutions. The assessee-trust received donations by way of assignment of the copyrights of several movies produced by film producers. The author of the trust was a producer of films and a member of the family which owned a film studio in a portion of which a hospital was to be built by the trust. While making assignment of the copyrights, the respective donors had informed the trust that the assignment of the copyrights of the films was subject to the distribution arrangement already made with several distributors, details of which were made known to the trust. The monies payable to the donor under these distribution arrangements were thereafter to be paid to the trust and those monies were required to be held by the trust as donations by the donor for acquiring or establishing or supporting a hospital. The donors specifically stated that monies so made available to the trust shall form part of the corpus of the trust. The assessee received various sums from the distributors who had been given the right to exploit four movies. The Income-tax Officer brought these sums to tax as income of the trust, on the ground that the…

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