9911796707
|
Home
Issues:
1. Exemption of income from properties held under trust under section 4(3)(i) of the Indian Income-tax Act, 1922. Detailed Analysis: The judgment of the Bombay High Court involved a dispute regarding the exemption of income from properties held under trust created by the assessee under section 4(3)(i) of the Indian Income-tax Act, 1922. The trust in question was established with the primary objective of spreading religious teachings and establishing educational institutions. The trust deed allowed for financial aid to be provided to poor members of the settlor's family for education or maintenance through the Trust Fund, Vidyapeeth, or related activities. The Income-tax Officer initially included the trust's income in the assessee's total income, considering it a private trust. However, on appeal, the Tribunal ruled that the income from the trust properties was exempt under section 4(3)(i) based on the trust deed's provisions and a Supreme Court precedent (Trustees of the Charity Fund v. Commissioner of Income-tax). The key contention raised by the revenue, represented by Mr. Joshi, was that the provision for providing financial aid to the settlor's family members indicated that the trust's income should not be exempt under section 4(3)(i). Section 4(3) of the Act outlines the categories of income that are not included in the total income, with clause (i) specifically addressing income derived from property held under trust for religious or charitable purposes. The court emphasized that the dominant intention of the trust was for religious and charitable purposes, as evidenced by the trust deed's provisions. Referring to the Supreme Court case Trustees of the Charity Fund, the court highlighted that a similar trust with provisions for aiding specific beneficiaries still qualified as a charitable trust under section 4(3)(i) if the primary purpose was charitable. The court concluded that the trust in question predominantly served religious and charitable objectives, and the provision for aiding the settlor's family members was merely a desire without restricting the trustees' discretion to utilize the income for charitable purposes. Drawing a parallel with the Supreme Court precedent, the court affirmed the Tribunal's decision that the trust's income was exempt under section 4(3)(i) of the Act. Consequently, the court answered the referred question in favor of the assessee, directing the revenue to bear the assessee's costs.
|
