Predominantly charitable trust property qualifies for full wealth-tax exemption despite limited temporary private benefit.

Property held under a trust qualifies for full exemption under section 5(1)(i) of the Wealth-tax Act, 1957 where the trust, viewed as a whole, is predominantly charitable or religious in nature. The trust deed here earmarked the business and its income mainly for Arya Vaidya Sala, a hospital and a school, with only limited and temporary benefit to two thavazhies for twenty years. The omission of the word "wholly" from the provision supports exemption even where there is some private benefit, so long as the dominant character remains public charitable. The trust corpus retained its charitable nature, and full exemption was available.

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Issues: Whether the trust's properties were entitled to full exemption under section 5(1)(i) of the Wealth-tax Act, 1957 on the footing that the trust was primarily or predominantly for charitable or religious purposes.

Analysis: The trust deed showed that the business and its income were earmarked mainly for the Arya Vaidya Sala, hospital and school, with only a limited and temporary allocation to the two thavazhies for twenty years. The statutory exemption under section 5(1)(i) applies to property held under trust for a public purpose of a charitable or religious nature in India, and the omission of the word "wholly" from the wealth-tax provision supports exemption where the trust, considered as a whole, is predominantly charitable. On the facts, the dominant character of the trust was charitable, and the temporary private benefit did not destroy the public charitable nature of the trust corpus.

Conclusion: The assessee was entitled to full exemption under section 5(1)(i) of the Wealth-tax Act, 1957, and the revenue's appeals failed.

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