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Issues Involved:
1. Whether the bhents (offerings) made by the followers of the Radhaswami faith of the Dayalbagh school to the deity vest in the Sabha under a legal obligation wholly for religious and charitable purposes within the meaning of Section 4(3)(i) of the Income-tax Act. 2. Whether the income derived by the respondent Sabha from bhents is also exempt from taxation under Section 4(3)(ii) as being solely applicable to charitable and religious purposes. 3. Whether the starting of industrial and commercial concerns by the Radha Swami Satsang Sabha of Dayalbagh, Agra, out of the funds can be held to be in furtherance of its objects of a religious and charitable nature as contemplated by the definition given in the explanation to Section 4(3) of the Income-tax Act. 4. Whether the income derived from the concerns mentioned above is income derived from property held under a legal obligation for religious and charitable purposes and as such exempt from taxation under Section 4(3)(i) of the Act. 5. Whether the income derived from the concerns mentioned above is income derived from business carried on by the Sabha as a charitable and religious body in the course of carrying out its primary purposes of a religious or charitable nature to be applied solely to those purposes and hence also exempt under Section 4(3)(ia) of the Income-tax Act. 6. Whether the income which was the subject matter of the assessments relating to the years 1939-40, 1940-41, 1941-42 was already exempt under Section 4(3)(i) and the addition of Section 4(3)(ia) was only made by the Legislature by way of an amplification of the scope of the exemption under Section 4(3)(i) and as such Section 4(3)(ia) could retrospectively apply to the assessments relating to the aforesaid years. Issue-wise Detailed Analysis: 1. Bhents Vesting in the Sabha under Legal Obligation: The court examined whether the bhents (offerings) made by the followers of the Radhaswami faith of the Dayalbagh school to the deity vest in the Sabha under a legal obligation wholly for religious and charitable purposes within the meaning of Section 4(3)(i) of the Income-tax Act. It was found that the bhents vest in the Sabha under a legal obligation wholly for religious or charitable purposes. The court concluded that the offerings were made to the deity Radhaswami Dayal through the Sabha, and the Sabha held these properties under a legal obligation to apply them to religious and charitable purposes. 2. Exemption of Bhents Income under Section 4(3)(ii): The court addressed whether the income derived by the respondent Sabha from bhents is also exempt from taxation under Section 4(3)(ii) as being solely applicable to charitable and religious purposes. It was concluded that the bhents are voluntary contributions made to the Sabha, a religious and charitable body, to be applied solely to religious or charitable purposes. Therefore, the income derived from bhents is exempt from taxation under Section 4(3)(ii). 3. Industrial and Commercial Concerns in Furtherance of Religious and Charitable Objects: The court examined whether the starting of industrial and commercial concerns by the Radha Swami Satsang Sabha of Dayalbagh, Agra, out of the funds can be held to be in furtherance of its objects of a religious and charitable nature. The court found that the various commercial and industrial activities undertaken by the Sabha were not undertaken with a motive of commercial or private gain but were undertaken in furtherance of its primary purpose to be applied to such purposes which were primarily religious and charitable. The activities were intended to ultimately ameliorate the condition and welfare of the Satsangis, a section of the public, and to improve their mental, educational, and economic conditions, thus qualifying as charitable purposes within the meaning of the Act. 4. Income from Concerns as Income from Property Held under Legal Obligation: The court addressed whether the income derived from the concerns mentioned above is income derived from property held under a legal obligation for religious and charitable purposes and thus exempt from taxation under Section 4(3)(i) of the Act. The court concluded that the income derived from industrial and commercial concerns is the income from property held under trust wholly for religious or charitable purposes and is exempt from income-tax under Section 4(3)(i) of the Indian Income-tax Act. 5. Income from Business Carried on by the Sabha as Exempt under Section 4(3)(ia): The court examined whether the income derived from the concerns mentioned above is income derived from business carried on by the Sabha as a charitable and religious body in the course of carrying out its primary purposes of a religious or charitable nature to be applied solely to those purposes and hence also exempt under Section 4(3)(ia) of the Income-tax Act. The court found that since the income derived from industrial and commercial undertakings of the Sabha is exempt from income-tax under Section 4(3)(i), it is not necessary to apply Section 4(3)(ia) to such income. 6. Retrospective Application of Section 4(3)(ia): The court addressed whether the income which was the subject matter of the assessments relating to the years 1939-40, 1940-41, 1941-42 was already exempt under Section 4(3)(i) and whether the addition of Section 4(3)(ia) was only made by the Legislature by way of an amplification of the scope of the exemption under Section 4(3)(i) and as such Section 4(3)(ia) could retrospectively apply to the assessments relating to the aforesaid years. The court concluded that the income derived from industrial and commercial undertakings of the Sabha is exempt from income-tax under Section 4(3)(i) of the Act, and the rest of the question does not arise. However, Section 4(3)(ia) provides exemption to a different type of income which does not come under Section 4(3)(i). Conclusion: The court upheld the Tribunal's decision that the Sabha was entitled to exemption under certain provisions of Section 4(3) of the Indian Income-tax Act and provided detailed answers to the questions referred for decision, affirming the religious and charitable nature of the Sabha's activities and the exemption of its income from taxation.
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