1983 (11) TMI 54 - HC - Income Tax

Summary

Issues Involved
1. Constitution of the Trust.
2. Determination of Charitable and Religious Nature.
3. Continuation of Trust Post-Dissolution.
4. Charitable Nature of Specific Activities.
5. Entitlement to Exemption under Income Tax Acts.

Summary

Issue 1: Constitution of the Trust
The court examined whether the assessee trust was constituted by the deed dated November 28, 1941, or by the deed dated July 1, 1944. The Tribunal held that the trust was constituted by the 1941 deed. The court noted that the Supreme Court had previously considered the trust constituted by the 1944 deed. The court ruled that it cannot go behind the Supreme Court's decision, which had taken the 1944 deed as constituting the trust.

Issue 2: Determination of Charitable and Religious Nature
The Tribunal held that the question of whether the assessee was a trust with wholly charitable and religious objects should be determined solely with reference to the 1941 deed. The court, however, noted that the Supreme Court had already determined the nature of the trust with reference to the 1944 deed, which included non-charitable objects. Thus, the court held that it was bound by the Supreme Court's decision and could not re-evaluate the nature of the trust.

Issue 3: Continuation of Trust Post-Dissolution
The Tribunal held that the trust created by the partnership deed dated November 28, 1941, continued even after the dissolution of the partnership. The court did not specifically address this issue separately but implied that the Supreme Court's decision, which considered the trust's nature based on the 1944 deed, was binding.

Issue 4: Charitable Nature of Specific Activities
The Tribunal held that giving cash grants for the needy and deserving persons to meet marriage expenses is a charitable object. The court did not specifically address this issue separately, as it concluded that the Supreme Court's decision, which found non-charitable objects in the 1944 deed, was binding.

Issue 5: Entitlement to Exemption under Income Tax Acts
The court examined whether the assessee trust was entitled to exemption u/s 4(3) of the Indian I.T. Act, 1922, and u/s 11 of the I.T. Act, 1961. The Tribunal had upheld the exemption. The court, however, noted that the Supreme Court had previously ruled that the trust included non-charitable objects and thus was not entitled to exemption. Consequently, the court held that the trust was not entitled to exemption under either the 1922 or 1961 Acts.

Conclusion
The court concluded that it was bound by the Supreme Court's decision, which had determined that the trust included non-charitable objects based on the 1944 deed. Therefore, the trust was not entitled to exemption under the relevant sections of the Income Tax Acts. The common question in T.Cs. Nos. 1610 to 1613 of 1977 and 64 to 76 of 1978 and T.C. No. 592 of 1978 was answered in the negative and against the assessee. The other questions in T.Cs. Nos. 1610 to 1613 of 1977 were returned unanswered as they had become unnecessary. The Revenue was awarded costs from the assessee.