Trust deed governs exemption where charitable objects and income application satisfy section 2(15) and section 11 requirements.

The trust had to be tested under the 1941 deed, because a later declaration by the trustee could not alter the governing instrument without lawful authority. On that deed, the objects of temple festivals, medical relief, alms, marriage assistance for needy persons, and general public utility fell within charitable purpose under section 2(15), since no profit-making activity was required as the appointed means. The income was found to have been substantially applied to charitable objects, and the theatre construction was treated as application of income for the trust's purposes. The section 13 objection also failed, as no statutory disqualification from private benefit was established, so exemption under section 11 remained available.

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Issues: (i) Whether the trust had to be tested under the 1941 deed rather than the later trust deed executed by the trustee; (ii) whether the objects of the trust satisfied the definition of charitable purpose under section 2(15) and qualified for exemption under section 11; (iii) whether the income was applied to charitable purposes and whether the objections based on the business/finance dealings attracted section 13 so as to deny exemption.

Issue (i): Whether the trust had to be tested under the 1941 deed rather than the later trust deed executed by the trustee.

Analysis: The trust arose from the partnership deed of 1941, under which 80 per cent of the profits was earmarked for specified charitable and religious objects. The trustee's later declaration could not validly alter the original terms, because a trustee is bound by the instrument creating the trust and cannot vary it in the absence of lawful authority. The inconsistent portions of the later declaration were therefore inoperative.

Conclusion: The trust had to be examined with reference to the 1941 deed.

Issue (ii): Whether the objects of the trust satisfied the definition of charitable purpose under section 2(15) and qualified for exemption under section 11.

Analysis: The objects included temple festivals, medical relief, alms to the poor, marriage expenses for needy persons, and other objects of general public utility. Under section 2(15), the post-1961 test requires that the advancement of general public utility must not involve carrying on an activity for profit. On the deed as it stood in 1941, the trust was not obliged to run any commercial undertaking as the charitable object itself, and the objects were not shown to require a profit-making activity as their appointed means. The marriage-relief object was also treated as charitable in the social and religious context of the trust.

Conclusion: The trust satisfied section 2(15) and was entitled to exemption under section 11.

Issue (iii): Whether the income was applied to charitable purposes and whether the objections based on the business/finance dealings attracted section 13 so as to deny exemption.

Analysis: The income was substantially spent on charitable objects, and the construction of the theatre was treated as an application of income towards carrying out the trust's charitable objects rather than a disqualifying investment. The partnership interest and later financing arrangement were treated as assets or deposits of the trust and not as the charitable objects themselves. The record did not establish that the income or property of the trust inured to the benefit of the author of the trust so as to attract the statutory disqualification.

Conclusion: The income was applied for charitable purposes, and the exemption was not defeated by the section 13 objection.

Final Conclusion: The trust's objects were charitable, its income was applied for charitable purposes, and the assessee was entitled to exemption for the years in appeal.

Ratio Decidendi: For exemption under section 11, the trust must be judged by the governing trust instrument, and a charitable object of general public utility remains charitable only if its advancement does not require carrying on business as its appointed means; income applied to carry out the charitable objects is exempt, even where some trust assets yield income.

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