Charitable objects control exemption where association's memorandum restricts income to religious and charitable purposes.

Income of an association was held exempt under the applicable income-tax provisions where its memorandum, read as a whole, sufficiently restricted application of funds to religious and charitable purposes. The controlling clauses were examined to determine whether they permitted non-charitable use, and the objects were found to adequately confine the income to exempt purposes. A merely theoretical possibility of non-charitable application was not enough to deny exemption, and the revenue challenge failed.

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Issues: Whether the respondent-association's income was exempt under section 4(3)(i) of the Indian Income-tax Act, 1922 and section 11 of the Income-tax Act, 1961.

Analysis: The relevant inquiry was whether the clauses in the memorandum of association permitted the income to be applied to non-charitable purposes. On examination of the controlling clauses, the High Court found that the objects sufficiently restricted the application of income to purposes that were religious and charitable. The Supreme Court found no reason to interfere with that conclusion.

Conclusion: The income was entitled to exemption under the applicable provisions, and the revenue challenge failed.

Ratio Decidendi: Where the objects of an association, read as a whole, sufficiently control the application of income to religious or charitable purposes, exemption under the relevant income-tax provisions cannot be denied on the ground of a merely theoretical possibility of non-charitable application.

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