1961 (1) TMI 80

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....ENT M. S. Menon, J. This is a reference by the Income-tax Appellate Tribunal, Madras Bench "A", under section 66(1) of the Indian Income- tax Act, 1922. The question referred is: "Whether 60% of the income of the assessee applied to the development of Arya Vaidyasala and the conduct of the hospital and school aforesaid is not exempt under section 4(3)(i) having regard to clause ....

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....ause (i) of sub-section (3) of section 4 is subject to clause (c) of sub-section (1) of section 16. We are not concerned with clause (c) of sub-section (1) of section 16. There is a proviso to clause (i) of sub-section (3) of section 4. The portion of that proviso that arises for consideration in this case reads as follows: "Provided that such income shall be included in the total income--....

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....its conclusion that the proviso to clause (i) of sub- section (3) of section 4 is inapplicable to this case is correct and has to be sustained. It is settled law that a business itself can be held on trust for religious or charitable purposes and that the income derived from such a business will fall within the ambit of the exclusion granted by clause (i) of sub-section (3) of section 4. The only....

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....harma Vijaya Agency, v. Commissioner of Income-tax [1960] 38 I.T.R. 392, 412: "On a fair reading of clause (i), it must be held, in my judgment, that there is nothing in proviso (b) to clause (1) of section 4(3) which in any manner touches the case of a business which is held under trust for religious or charitable purposes. The income derived from such business is not to be included in the....