Religious and charitable trust exemption upheld for Gurudwara income where dedication was clearly manifested without a formal deed.

Income from a Gurudwara and its attached shops was treated as exempt where the property was held under a legal obligation for religious, educational and charitable purposes. The assessee was found to be only the manager or shebait, and the rents and other receipts were applied to those purposes. The court accepted that a formal deed was not necessary when the intention to dedicate property to a charitable or religious trust was clearly manifested and the property had effectively vested for that object. On that basis, the income qualified for exemption under the relevant provisions of the Indian Income-tax Act, 1922 and the Income-tax Act, 1961.

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Issues: Whether the income from the Gurudwara and attached shops was entitled to exemption as property held under trust wholly for religious and charitable purposes under the relevant provisions of the Indian Income-tax Act, 1922 and the Income-tax Act, 1961.

Analysis: The finding accepted was that the assessee was only the manager or shebait of the Gurudwara and that the monies received, including rent from the shops, were applied towards religious, educational, and charitable purposes. The property was treated as Gurudwara property from its inception and as held under a legal obligation wholly for such purposes. A formal deed was not necessary where the intention to create a charitable or religious trust was clearly manifested and ownership had effectively vested for that purpose.

Conclusion: The income was exempt and the question was answered in favour of the assessee.

Ratio Decidendi: A charitable or religious trust may be validly created without a formal deed if the intention to dedicate property to religious or charitable purposes is clearly manifested and the property is held under a legal obligation to apply its income accordingly.

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