1998 (6) TMI 49

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....see is a trust. As per the trust deed, 60 per cent. of the income of the trust was to be spent for charitable and religious purposes and the remaining 40 per cent. was to be spent for the descendants of the settlor for a period of 20 years and thereafter, the entire income was to be utilised for charitable purposes. All the relevant assessment years fell during the interregnum period of 20 years, which expired on January 30, 1964. During the relevant assessment years, the assessee claimed exemption under section 5(l)(i) of the Wealth-tax Act (briefly "the Act"), in respect of the properties, held by the trust. The Wealth-tax Officer (WTO) took the view that inasmuch as only 60 per cent. of the total income was to be spent for charitable ....

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....bay High Court in Trustees of K. B. H. M. Bhiwandiwalla Trust v. CWT [1977] 106 ITR 709. It proceeds on the footing that there is a difference in the language between the Indian Income-tax Act and Wealth-tax Act. Whereas under the former, the income applied for charitable and religious purposes can be conveniently apportioned, the same is not possible for allowing exemption under section 5(1)(i) of the Act. It was held that for the purpose of wealth-tax either a property can be said to have been held for charitable and religious purposes or not at all ; apportionment is not possible. The Bombay High Court summed up the distinction in between the two Acts as follows (last paragraph at page 716) : "It is quite clear that there is change in....

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....the case of income, as stated earlier, arising from property held partly on trust for a public charitable purpose and partly for other objects, apportionment was possible and so section 4(3)(i) of the Indian Income-tax Act provided for exempting a portion of the income. As indicated earlier, this was not possible in respect of the corpus." Before the Bombay High Court, the Revenue contended the same thing which is being contended before us by learned senior standing counsel that unless all the objects of the trust are of public charitable nature, the corpus would not qualify for exemption. However, the contention raised on behalf of the assessee before the Bombay High Court was that if the primary or predominant objects of the trust are ....