Charitable purpose: promotion of trade and industry qualifies as public utility, so income exempt under section 4(3)(i).

Whether income is exempt under section 4(3)(i) turned on two legal tests: (a) whether promotion of export trade and related activities qualifies as a 'charitable purpose' and (b) whether the receipts were 'derived from property held under trust.' Relying on precedent, the analysis held that advancement of trade and industry for economic prosperity constitutes an object of general public utility and thus a charitable purpose, and that 'property' in section 4(3)(i) includes a business or organisation. Applying the test that income must 'directly and substantially arise' from such property, grants and subscriptions were held to satisfy that nexus and the income was held exempt.

---

---

Issues: Whether the assessee's income is exempt under section 4(3)(i) of the Income-tax Act.

Analysis: The Court examined whether the Council's objects-promotion of export trade and related activities-constitute "charitable purposes" within the meaning of section 4(3)(i) and whether the income was "derived from property held under trust". Relying on precedent (including the Supreme Court's decision in Commissioner of Income-tax v. Andhra Chamber of Commerce and J. K. Trust v. Commissioner of Income-tax), the Court held that advancement or promotion of trade and industry for economic prosperity is an object of general public utility and falls within the statutory definition of charitable purpose. The Court further analysed the statutory phrase "property held under trust" and the scope of "property" in section 4(3)(i), accepting authorities that "property" includes business or organisation. It applied the test of whether the income "directly and substantially arises" from such property and found that the grants and subscriptions were payments that arose directly from the Council's business/organisation, which was held for charitable purposes under its memorandum and licence.

Conclusion: The income of the assessee is exempt under section 4(3)(i) of the Income-tax Act; the question referred is answered in the affirmative and the Commissioner must pay the costs of the assessee.

---