Business as trust property: charitable exemption applies where the undertaking itself is held under trust for charitable purposes.

A principal agency business can constitute "property" capable of being held under a charitable trust under section 4(3)(i) of the Income-tax Act, 1922, because "property" is of the widest import and includes a business undertaking. The agency's service element and temporary, terminable character do not prevent it from being business property. The proviso inserted by Act 25 of 1953, which addresses income from business carried on on behalf of a charitable institution, operates in a different field and does not cut down exemption for business itself held on trust for charitable purposes. On that construction, income from the business remains exempt.

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Issues: (i) Whether the principal agency business carried on by the assessee was "property" capable of being held under charitable trust within section 4(3)(i) of the Income-tax Act, 1922; (ii) Whether the proviso to section 4(3)(i), as amended by Act 25 of 1953, applied so as to deny exemption to the income from that business.

Issue (i): Whether the principal agency business carried on by the assessee was "property" capable of being held under charitable trust within section 4(3)(i) of the Income-tax Act, 1922.

Analysis: The expression "property" was treated as of the widest import. A business undertaking may itself constitute property, and the fact that the agency involved performance of services did not prevent it from being business. The nature of a principal agency under the Insurance Act showed that it involved administrative and organising functions and procurement of business, and was not merely a personal service contract. The temporary or terminable character of the agency did not destroy its character as business property capable of settlement on trust.

Conclusion: The principal agency business was property within section 4(3)(i) and could validly be held on charitable trust.

Issue (ii): Whether the proviso to section 4(3)(i), as amended by Act 25 of 1953, applied so as to deny exemption to the income from that business.

Analysis: The proviso dealing with income derived from business carried on on behalf of a religious or charitable institution was held to operate in a distinct field from income derived from property held under trust. On a plain reading, the proviso did not cut down the exemption otherwise available for income from business itself held on trust for charitable purposes. The statutory language was considered clear, and legislative history or objects and reasons were not used to restrict that plain meaning.

Conclusion: The proviso did not apply to the assessee's business held under charitable trust, and the income remained exempt under section 4(3)(i).

Final Conclusion: The income from the principal agency business, being property held under charitable trust, fell within the exemption in section 4(3)(i) and was not excluded by the amended proviso.

Ratio Decidendi: Where a business itself constitutes property and is held under trust wholly for charitable purposes, income from that business is exempt under the general exemption clause, and a proviso aimed at business carried on on behalf of a charitable institution does not restrict that exemption unless the statute clearly says so.

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