Good-faith payment to a believed charitable trust supported exemption, as non-charitable use was not established.

Payment made in good faith to a trust believed to be charitable was treated as not applied for a non-charitable purpose, so the assessee was entitled to exemption for the amount paid. The earlier tax authority reasoning that the recipient was not shown to be a charitable or religious trust was not decisive on the facts found. The Tribunal accepted that the assessee acted on the belief that the recipient was a charitable trust, and that this belief, together with the factual findings, prevented the amount from being charged against the assessee as a non-charitable application.

---

---

Issues: Whether the assessee was entitled to exemption in respect of the sum of Rs. 10,850 paid to Shri Lakshmi Nath Seva Trust.

Analysis: The assessee had made the payment in the belief that the recipient was a charitable trust. The earlier reasoning of the tax authorities, which proceeded on the footing that the recipient was not shown to be a charitable or religious trust, was not decisive in the reference. The Tribunal proceeded on the basis that the payment was made in good faith and that, in the facts found, the assessee could not be charged with having applied the amount for a non-charitable purpose. In the circumstances, the character of the recipient trust and the question whether it actually received the amount for charitable purposes were treated as not determinative against the assessee.

Conclusion: The assessee was entitled to exemption in respect of the sum of Rs. 10,850 paid to Shri Lakshmi Nath Seva Trust.

---