Gangabai Charities v. Commissioner Of Income-Tax And Anr

GANGABAI CHARmES v. COMMISSIONER OF INCOME-TAX AND ANR. JULY 24, 1992 B [KULDIP SINGH AND YOGESHWAR DAYAL, JJ.] Income Tax Act; 1961-Section JJ(l)(a)-Construction of trust deed-Kalyana Mandapam and Printing press---lncome derived by trust-Whether exemption entitled, A trust, namely, "Ganga Bai Charities" was created on 13.9.1958, to construct and provide a building for the benefit of the public to be used for religious, charitable cultural and social purposes. The founder of the trust contributed Rs. 34,000 to the trust fund. · D With that fund a plot of land was purchased and the construction of a building was begun. The fund was augmented by her son from his own contributions as well as from outside donations. The building was completed at the cost of about Rs. six lakhs and it E [was being let ][out ][as ][a marriage ][mandapam ][to be used by the members ][of ]the public. The income derived fro~/letting out the Kalyana Mandapam r.ame to Rs.1,06,392.00 in the year ending March 31, 1963. For the sub-sequent years also the income was substantial. The trust was also running a printing press and sizeable income was being from the press. income-tax proceedings were initiated against the trust. The appellant-trust contended that the income derived from the property was being held wholly for religious and charitable purposes and as such was.exempt under Section 11 ofthe Income Tax Act. The Income-tax Officer holding that the· income earned by the trust was taxable, rejected the contention of the trust. On appeal the Appellate Assistant Commissioner reversed the In-come-tax Officer's order, holding that the trust was a charitable trust and H [its income was entitled to exemption ][under ][Section ][11 ][of ][the Act. ] On the question, whether the Gangabai Charities, a trust was en-titled to exemption under Section ll(l)(a) or the Income Tax Act, 1961, this Court dismissing the appeals of the assessee-trust, D HELD : 1.01. The crux of the statutory exemption under Section l(l)(a) of the Income Tax Act, 1961 is not the income earned from property held under the trust but the actual application of the said income for religious and charitable purposes. It is, therefore, necessary to indicate in E the trust-deed the broad objectives for which the income derived from the property is to be utilised. There is no mention in the trust-deed as to how the income derived from the trust property is to be utilised. The public uses the building on payment or rent to the trustees. What is to be done with the money so collected has not been provided in the trust deed. There is no mandate in the trust deed that the income derived from the trust F property is to be spent on religious or charitable purposes. [632C-D] 1.02. On a careful reading of the trust~deed it is not possible to cull-out in clear terms a specific charitable/religious object to conclude that the trust was set up wholly for or religious purposes. The "religious, G charitable, cultural and social" purposes referred to in the deed are not avowed as the objectives of the trust.itself. What the founder of the trust · intended to convey was that ihe building to be constructed out of the funds provided by her and supplemented from other sources, must be heed for the benefit of the public for being used by them for religious, charitable, cultural or social purpose~. [631 F·G] H [1992) 3 S.C.R. SUPREME COURT REPORTS 628 626