Trust income exemption fails where deed allows independent non-charitable objects alongside charitable purposes.

Income from trust property is exempt under section 4(3)(i) of the Indian Income-tax Act, 1922 only where the property is held wholly for religious or charitable purposes. A trust deed that permits the trustees to apply the property to independent objects, including any non-charitable object, falls outside that exemption even if charitable objects are also included. Non-charitable purposes such as carrying on business, industrial or commercial concerns, when capable of independent operation and not merely incidental to the charitable objects, prevent the property from being regarded as held wholly for charity. On that basis, the trust income was not exempt and the question was answered against exemption.

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Issues: Whether the income derived from the trust property was exempt under section 4(3)(i) of the Indian Income-tax Act, 1922 when some of the trust objects were non-charitable and the trustees had discretion to apply the property to any of the stated objects.

Analysis: Exemption under section 4(3)(i) is available only where the property is held wholly for religious or charitable purposes. Although charitable purpose includes objects of general public utility, the clause requires that all the objects of the trust be religious or charitable in nature, except for an ancillary object that merely supports the primary charitable objects. Where the trust deed allows the trustees to apply the property to independent objects and any one of those objects is non-charitable, the trust property cannot be said to be held wholly for charitable purposes. The deed in question authorised the trustees to establish or carry on business, industrial or commercial concerns, and to use the trust property in a manner that could fully support a non-charitable object. Those non-charitable objects were not merely incidental; they were capable of independent operation and were not subordinate to the charitable objects.

Conclusion: The income of the trust was not exempt under section 4(3)(i) of the Indian Income-tax Act, 1922, and the question was answered in the negative.

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