Written constitution restricting funds to charitable objects can constitute a legal obligation for tax exemption.

A written constitution binding the standing committee, managing committee and members can satisfy the requirement that property be held under trust or other legal obligation for exemption under section 4(3)(i) of the Income-tax Act, 1922. Where the governing instrument restricts the collection and use of funds to the association's stated charitable objects, a formal deed of trust is not essential. If the property cannot be applied for purposes outside the objects clause, the statutory condition is met and the exemption is available.

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Issues: Whether the properties of the assessee-association were held under trust or other legal obligation so as to qualify for exemption under section 4(3)(i) of the Income-tax Act, 1922.

Analysis: The assessee was constituted under a written constitution whose terms bound the standing committee, the managing committee, and every member. The constitution authorised the collection and administration of funds only for carrying out the objects of the association. A formal deed of trust was not essential if the governing instrument created a binding obligation restricting the use of property to the stated charitable objects. On those facts, the property could not be used for any purpose outside the objects clause, and the statutory requirement of property being held under trust or other legal obligation was satisfied.

Conclusion: The properties were held under trust or legal obligation, and the assessee was entitled to exemption under section 4(3)(i) of the Income-tax Act, 1922.

Ratio Decidendi: A written constitution binding the members and office-bearers, which restricts the use of property to the association's charitable objects, is sufficient to constitute a trust or legal obligation for the purposes of exemption, even without a formal deed of trust.

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