Trust exemption denied where deed allowed non-charitable objects and business activity; later rectification could not reopen reference proceedings.

Trust income was not exempt where the deed, as it stood in the relevant assessment years, authorised application of funds to non-charitable objects and permitted trade or business; on that record, exemption under the 1922 Act and sections 11 and 12 of the 1961 Act failed. A later rectification of the deed could not be used in reference proceedings because the High Court is confined to the material already on record and cannot direct fresh evidence on a subsequent event. The reference was therefore answered against the assessee, and the request for remand was rejected.

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Issues: (i) Whether the trust's income was exempt from tax under section 4(3)(i) of the Indian Income-tax Act, 1922 and sections 11 and 12 of the Income-tax Act, 1961. (ii) Whether, in these reference proceedings, the case could be remanded to the Tribunal to permit additional evidence of a subsequent rectification of the trust deed.

Issue (i): Whether the trust's income was exempt from tax under section 4(3)(i) of the Indian Income-tax Act, 1922 and sections 11 and 12 of the Income-tax Act, 1961.

Analysis: The trust deed, as it stood during the relevant assessment years, contained clauses empowering the trustees to apply funds to both charitable and non-charitable objects and to carry on trade or business. On the existing record, the trust was therefore not entitled to the statutory exemption claimed. The later rectification of the deed was a subsequent event and did not form part of the material on which the Tribunal had decided the references.

Conclusion: The claim to exemption failed and the answer was against the assessee.

Issue (ii): Whether, in these reference proceedings, the case could be remanded to the Tribunal to permit additional evidence of a subsequent rectification of the trust deed.

Analysis: In reference jurisdiction, the High Court could call for a supplementary statement only in respect of material already on the record and had no power to direct the Tribunal to collect fresh evidence of a later event. The statutory scheme contemplated additional evidence before the Income-tax Officer, the Appellate Assistant Commissioner, or in limited cases before the Tribunal, but not a remand for evidence of an event that arose after the Tribunal's order.

Conclusion: The request for remand and additional evidence was rejected.

Final Conclusion: The reference was answered against the assessee and in favour of the Revenue, and the court declined to reopen the factual record on the basis of a later rectification of the trust deed.

Ratio Decidendi: In income-tax reference proceedings, the High Court must decide the questions on the material already on the record and cannot direct the Tribunal to take fresh evidence of a subsequent event; exemption claims are tested on the trust deed and facts as they stood for the relevant assessment years.

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