1974 (4) TMI 26

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ions of Rs. 11,61,775 given by the four donor-companies to the trust and specifically earmarked by the respective donors for object 2(A) of the trust, which is wholly charitable, and donations of Rs. 60,250 not so earmarked, but actually spent for charitable purposes only, was liable to tax as assessable income of the trust ? " It appears that during the assessment years in question the Geep Flash Light Industries Ltd., Messrs. Sherwani Sugar Syndicate (P.) Ltd., Mahalakshmi Syndicate (P.) Ltd. and Great Eastern Commercial Corporation Ltd. made voluntary donations to Messrs. Sherwani Trust, Allahabad (which was constituted in 1956), amounting to Rs. 11,61,775 on the express condition that the income arising out of these moneys shall be s....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... paragraph 5 of the trust deed were not amenable to the same conditions. So, to the extent to which the income from the properties received by the trust subsequent to its creation was concerned, the same would be exempt from income-tax to the extent it is utilised for charitable purposes only. At the instance of the Commissioner of Income-tax the Tribunal has referred the question mentioned above for our opinion. Section 11 of the Income-tax Act, 1961, in so far as it is material for our purposes, reads : " 11. (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income-- (a) income derived from property held under tru....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... derived from property which is held under a trust which is charitable in part only. In view of this construction of clause (b) it will serve no useful purpose to determine whether the subsequent acquisitions of property by the trust would also be governed by paragraph 2 of the deed in relation to the application of income arising out of such property. Even if it be assumed that the department was right in contending that such subsequent acquisitions of property will be governed by paragraph 2, with the result that one-third of the income would be liable to be applied for maintenance and support of the members of the Sherwani family and relatives (which was held to be partly not a charitable purpose), yet to the extent to which the income d....