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Issues involved: Interpretation of trust deed for eligibility of exemption u/s 11 of the Income-tax Act, 1961.
Summary: The High Court of Kerala addressed the question of whether a charitable trust, formed for medical relief to the poor, qualifies for exemption u/s 11 of the Income-tax Act. The trust deed specified charitable objects including medical relief, relief of the poor, and education. The Income-tax Officer initially denied exemption, citing the trustees' textile business for financing a hospital construction. However, the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal ruled in favor of the trust, emphasizing the charitable nature of the trust's objects. The Court analyzed clauses 2 and 3 of the trust deed, concluding that clause 2 outlined charitable purposes while clause 3 merely empowered trustees to raise funds for trust activities. The Court clarified that the trust's business activities were solely to support its charitable objects and did not disqualify it from exemption u/s 11. Ultimately, the Court upheld the Tribunal's decision, granting the trust exemption under section 11 of the Income-tax Act.
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