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Issues Involved:
1. Whether the income from Gordhandas Govindram Family Charity Trust is held under trust wholly for charitable purposes and is exempt under Section 4(3)(i) of the Indian Income-tax Act, 1922. 2. Whether any part of the property was held in trust for charitable purposes and income arising therefrom is exempt under Section 4(3)(i) of the Act. Issue-wise Detailed Analysis: Issue 1: Whether the income from Gordhandas Govindram Family Charity Trust is held under trust wholly for charitable purposes and is exempt under Section 4(3)(i) of the Act. The High Court examined the trust deed executed on 11th June, 1941, which established the Gordhandas Govindram Family Charity Trust. The trust deed specified that the income should be used primarily for the benefit of poor Vaishya Hindoos or other Hindoos, but this was subject to conditions and directions outlined in subsequent clauses. Clause 3(a) to (q) prioritized the benefit of the members of the Seksaria family, while sub-clauses (r) to (u) provided for the benefit of poor Vaishya Hindoos in general. The Tribunal had concluded that the primary object of the trust was to benefit the members of the Gordhandas Govindram family, with charity being a secondary objective. The High Court agreed, noting that the trust's primary purpose was to benefit the poor members of the settlor's family, with any public benefit being too remote and illusory to qualify as a charitable purpose under the Income-tax Act. The Court emphasized that for a purpose to be considered charitable, it must involve an object of general public utility. Relief of poverty restricted to the settlor's family does not meet this criterion. The Court concluded that the trust did not settle property wholly for charitable purposes and, therefore, the income was not exempt from taxation under Section 4(3)(i) of the Act. Issue 2: Whether any part of the property was held in trust for charitable purposes and income arising therefrom is exempt under Section 4(3)(i) of the Act. The Tribunal found that no portion of the income of the trust was specifically set apart for any charity or applied thereto. The High Court noted that the trust deed did not allocate any specific portion of the income for charitable purposes. Given this finding, the second question did not arise for consideration, as it was contingent on the existence of a specific allocation for charitable purposes. Separate Judgments: CHAGLA, C.J.: Chagla, C.J., delivered a detailed judgment, emphasizing that the primary object of the trust was to benefit the poor members of the settlor's family, and any public benefit was too remote to qualify as a charitable purpose. He also discussed relevant case law, including English decisions, and distinguished the Indian context, where relief of poverty must involve an object of general public utility. TENDOLKAR, J.: Tendolkar, J., agreed with the answers provided by Chagla, C.J., but added observations regarding the bequest for marriage expenses. He emphasized that individual marriages could not be considered objects of public utility and reiterated that the trust primarily benefited the settlor's family, excluding the public from substantial benefit. Conclusion: The High Court answered both questions in the negative, concluding that the income from the Gordhandas Govindram Family Charity Trust was not held under trust wholly for charitable purposes and was not exempt from taxation under Section 4(3)(i) of the Act. The assessees were ordered to pay the costs of the reference.
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