1981 (4) TMI 10 - SC - Income Tax

Appeal dismissed; association's memorandum restricts income to religious and charitable purposes, entitling it to s.11 and s.4(3)(i) benefits

SC upheld the HC's finding that the respondent association's memorandum objects, including sub-clauses relied on, sufficiently restrict application of ... Exemption of trust income under s.4(3)(i) of the Indian Income-tax Act, 1922 and s.11 of the Income-tax Act, 1961 - charitable and religious purpose test - construction of objects clause of memorandum of association - application of income to purposes wholly charitableConstruction of objects clause of memorandum of association - application of income to purposes wholly charitable - exemption of trust income under s.4(3)(i) of the Indian Income-tax Act, 1922 and s.11 of the Income-tax Act, 1961 - Whether the income of the respondent association was exempt under the relevant provisions for the assessment years 1960-61, 1961-62 and 1962-63 having regard to the objects contained in sub-clauses (4) and (5) of clause 3 and sub-clause (4) of clause 8 of the memorandum of association. - HELD THAT: - The High Court, after examining the cited sub-clauses of the memorandum and prevailing authorities, held that the objects sufficiently governed and controlled the application of the association's income so as to ensure that such income was applied to purposes which are entirely religious and charitable. The Income-tax Officer and the AAC had taken a contrary view that certain clauses permitted application to non-charitable purposes, whereas the Tribunal held the exemption was available. The High Court accepted the Tribunal's approach on construction of the objects and the test of application of income, finding no material to displace the conclusion that the income was applied to wholly religious and charitable purposes. The Supreme Court, upon hearing counsel, found no reason to interfere with the High Court's conclusion and dismissed the appeals.The income of the respondent association is exempt for the assessment years 1960-61, 1961-62 and 1962-63 under the said provisions, and the High Court's opinion is upheld.Final Conclusion: The High Court's opinion that the association's income was exempt under the specified provisions for the assessment years 1960-61, 1961-62 and 1962-63 was affirmed; the appeals are dismissed. The Supreme Court dismissed the appeals against the High Court judgment regarding income tax exemption for an assessee-trust under sections 4(3)(i) of the Indian I.T. Act, 1922, and 11 of the I.T. Act, 1961. The High Court found that the respondent association's objects sufficiently controlled the application of income for religious and charitable purposes. The appeals were dismissed, and costs were awarded in one set.