Public religious and charitable trust treated as exempt, except for a separate payment clause in the deed.

A trust deed will be treated as public religious and charitable where, on construction, its dominant objects are worship of deities, relief to the poor, upkeep of a dharamsala, a public Sanskrit school, and support for hospitals and other religious or educational institutions. The fact that control of the fund remained with nominees of the settlors did not by itself destroy the trust's charitable character. Only the provision in clause (d), involving payments to certain ladies, stood apart; the rest of the income was held to fall within public religious and charitable purposes and was eligible for exemption under section 4(3)(i) of the Income-tax Act, 1922, subject to lawful application or accumulation.

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Issues: Whether the trust deed created a public religious and charitable trust so that, except for the provision in clause (d), the income would be exempt under section 4(3)(i) of the Income-tax Act, 1922.

Analysis: The trust deed provided for worship of deities installed in a bazar area, sadabrata for distribution of food to the poor and persons attending the temple, upkeep of a dharamsala, a Sanskrit patasala open to the public, and application of the balance of income for hospitals and other religious or educational institutions. Although control of the fund remained with persons nominated by the settlors and clause (d) made provision for payments to certain ladies, the controlling test under the Income-tax Act was whether the property was held wholly or partly for religious or charitable purposes enuring to the benefit of the public. On construction of the deed, all clauses except clause (d) were directed to public religious and charitable purposes. The absence of public management did not, by itself, deprive the trust of its charitable character for income-tax purposes.

Conclusion: The trust was public religious and charitable in nature except for clause (d), and the income, other than the sum attributable to that clause, was eligible for exemption under section 4(3)(i) of the Income-tax Act, 1922, if otherwise applied or accumulated in accordance with law.

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