Charitable trust exemption under wealth tax upheld where dominant objects were charitable and incidental non-charitable activities did not dominate.

A trust qualifies for wealth-tax exemption under section 5(1)(i) when its dominant object is charitable and its income is applied for charitable purposes, even if it carries on incidental non-charitable activities. The trust deed in question showed objects such as education, free library, removal of differences among people, consolidation of sects, and other public-utility aims. Activities like dispute settlement, chit operations, and deposit collection were treated as incidental rather than primary objects. On that basis, the trust was held entitled to exemption for the relevant assessment years, with the issue answered in favour of the assessee and against the Revenue.

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Issues: Whether the assessee-trust was entitled to exemption under section 5(1)(i) of the Wealth Tax Act, 1957, for the relevant assessment years on the footing that its objects and application of income were predominantly charitable.

Analysis: The trust deed disclosed objects of education, free library, removal of differences among people, consolidation of sects, advancement of public utility, and other charitable aims. The trust also had incidental activities such as settlement of disputes, conducting chits, and collection of deposits, but these were found not to be its primary or predominant objects. For wealth-tax purposes, a trust need not be wholly and exclusively engaged in charitable activity if its dominant purpose is charitable, and the evidence showed that the income and funds of the trust had been applied for charitable purposes throughout.

Conclusion: The assessee was held entitled to exemption under section 5(1)(i) of the Wealth Tax Act, 1957, and the question was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: For wealth-tax exemption, a trust qualifies as charitable if its primary or predominant object is charitable and its income is applied for charitable purposes, even if it carries on incidental non-charitable activities.

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