Charitable trust exemption survives where a binding supplementary deed removes family-benefit discretion and restores wholly charitable objects.

A public charitable trust continued to qualify for exemption under section 11 after a supplementary deed of 1958 removed the family-specific wording found in the original deed. The amended deed substituted a wider charitable description, curing the non-charitable feature that had earlier allowed discretion to benefit the settlor's family. The Court treated the supplementary deed as genuine, acted upon, and binding on the trustees, and held that the Indian Trusts Act, 1882 did not apply proprio vigore to a public trust with indeterminate beneficiaries. As the trust funds could no longer be applied to a non-charitable family purpose, the trust remained wholly charitable and retained exemption.

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Issues: Whether the assessee-trust remained entitled to exemption under section 11 of the Income-tax Act, 1961 after execution of the supplementary deed of 1958, and whether the amended trust deed removed the non-charitable feature noticed in the original deed.

Analysis: The original trust deed contained an object enabling aid to members of the settlor's family, and that discretion had earlier been treated as sufficient to deny exemption. The supplementary deed of 1958 deleted the family-specific words and substituted a wider description, thereby aligning the object with charitable purposes. The Court held that the Indian Trusts Act, 1882 does not apply proprio vigore to public charitable trusts, and the consent-based rule in section 11 could not invalidate the amendment in the context of a public trust with indeterminate beneficiaries. The supplementary deed was treated as genuine, acted upon, and binding on the trustees, and the defect identified in the earlier decision no longer survived. The Court also accepted that the settlor could clarify and rectify the original intention, and that the trust funds could no longer be applied for a non-charitable family purpose.

Conclusion: The assessee-trust was entitled to exemption under section 11 of the Income-tax Act, 1961, and the Tribunal was not justified in denying that status.

Ratio Decidendi: Where a public charitable trust deed is validly clarified by a binding supplementary deed so that the trustees no longer have discretion to apply the trust fund to a non-charitable object, the trust continues to qualify as wholly charitable for the purposes of exemption.

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