Mixed trust objects defeat charitable exemption where trustees may apply income or corpus to a non-charitable purpose.

A trust is not treated as held wholly for charitable purposes where its deed includes an independent non-charitable object and gives trustees discretion to apply income or corpus to that object. Here, although several objects were charitable, the trust also permitted application for the welfare of employees of the trust or institutions conducted by it, which was not charitable in the relevant sense. Because that object was not merely incidental and could be validly pursued under the deed, the licence-fee income from trust property did not qualify for exemption under section 4(3)(i) and was taxable.

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Issues: Whether the licence-fee income derived by the trustees was exempt under section 4(3)(i) on the footing that the trust property was held wholly for charitable purposes.

Analysis: The trust deed contained several charitable objects, but it also included an object for the welfare of the employees of the trust or institutions conducted by the trust, which was not charitable in the relevant sense. The deed further empowered the trustees to apply the income or even the corpus, in their absolute discretion, to any one or more of the stated objects. On that construction, the non-charitable object was not merely incidental or ancillary but an independent object of the trust. Since the trustees could validly apply the trust property to that object without breaching the deed, the trust could not be treated as one created wholly for charitable purposes.

Conclusion: The exemption under section 4(3)(i) was not available, and the answer to the referred question was against the assessee.

Final Conclusion: Income from the trust property was taxable because the trust was not exclusively charitable in its objects and powers of application.

Ratio Decidendi: A trust is not created wholly for charitable purposes where one of its independent objects is non-charitable and the trustees have power to apply the income or corpus to that object.

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