Charitable trust obligation on advertising income secures tax exemption despite no formal trust deed.

Income from letting advertising space on an overbridge was held exempt under section 4(3)(i) because the property right itself was subject to a legal obligation for charitable use. The revised terms showed that the receipts were to be credited to a fund administered by trustees and applied solely for public amenities, satisfying the charitable purpose requirement. A formal trust deed was not necessary where the arrangement itself clearly created the trust or legal obligation, and the separate maintenance of receipts supported the conclusion that the income was accumulated for the specified object. The income was therefore excluded from the assessee's total income.

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Issues: Whether the income derived from letting out advertising space on the overbridge was exempt under section 4(3)(i) of the Indian Income-tax Act, 1922 and, if so, whether it could be assessed as the assessee's personal income.

Analysis: The property impressed with the obligation was the right to exploit the overbridge as advertising space, not merely the income after receipt. The revised terms and conditions showed that this right was held under trust or legal obligation and that the revenue was to be credited to a fund administered by trustees. The fund was to be applied solely for public amenities, which amounted to charitable purposes. A formal trust deed was not essential where the terms and arrangement clearly established the legal obligation. The separate maintenance of the receipts also supported the conclusion that the income was accumulated for the specified charitable object.

Conclusion: The income satisfied the conditions of section 4(3)(i) and was exempt from inclusion in the assessee's total income. The answer was in favour of the assessee.

Ratio Decidendi: Where property itself is held under trust or legal obligation for charitable purposes and the income is required to be applied or accumulated for that object, exemption is available under section 4(3)(i) even without a formal trust deed.

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