Charitable trust accumulation remained exempt where unspent income was required to be applied to specified charitable objects.

Accumulated trust income was treated as exempt under section 4(3)(i) of the Indian Income-tax Act, 1922 where the trust deed required the unspent surplus to be applied to specified charitable objects. The deed directed the income to be carried forward for a dharamshala for pilgrims and for a Sanskrit chatuspati with scholarships, teachers' salaries, and student boarding and lodging, all of which were charitable in nature. Because the accumulation was for those stated purposes, immediate spending was not required for exemption, and there was no basis to assume the trustees would act contrary to the deed.

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Issues: Whether the accumulated balance of the trust income was exempt from tax under section 4(3)(i) of the Indian Income-tax Act, 1922 when the trust deed directed its application to specified charitable purposes.

Analysis: The trust deed required the unspent income to be carried forward for the establishment and maintenance of a dharamshala for pilgrims and for the establishment of a Sanskrit chatuspati with scholarships, salaries of pandits, and boarding and lodging expenses for students. These objects were charitable in nature. The carried-forward surplus was therefore treated as income accumulated for the stated charitable purposes, and there was no basis to presume that the trustees would act contrary to the deed. The fact that the money was not immediately spent did not take it outside the statutory exemption, since accumulation for the specified charitable objects satisfied the requirement of the section.

Conclusion: The accumulated balance was exempt under section 4(3)(i) of the Indian Income-tax Act, 1922, and the question was answered against the Revenue.

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