Application of income for religious trust construction allowed as exemption under section 11 was upheld.

Where a trust's objects are charitable or religious, expenditure on construction of a dharmshala, temple and allied religious structures was treated as application of income for the trust's purposes and qualified for exemption under section 11. The tribunal followed an earlier coordinate Bench view for a prior year and accepted that the construction of the buildings and temple fell within charitable or religious application of income, so the Revenue's disallowances were unsustainable. The technical objection that the assessments were null and void was not examined further.

---

---

Issues: Whether the assessee-trust was entitled to exemption under section 11 on expenditure incurred for construction of dharmshala, temple and other religious buildings, and related machinery.

Analysis: The trust objects were treated as charitable and religious. The earlier coordinate Bench order for a preceding assessment year had already accepted that construction of buildings and temple was an application of income for charitable or religious purposes. Following that view, and on consideration of the trust objects and the case law relied upon, the expenditure on construction of the temple and other religious buildings was held to be allowable as application of income for the purposes of the trust. The technical objection that the assessments were null and void was not examined further.

Conclusion: The assessee-trust was entitled to exemption under section 11, and the disallowances made by the Revenue were not sustainable.

Ratio Decidendi: Where the objects of a trust are charitable or religious, expenditure incurred on construction of dharmshala, temple and allied religious structures constitutes application of income for the purposes of the trust and qualifies for exemption under section 11.

---