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1. Whether the income of the assessee-trust is exempt under section 4(3)(i) of the Indian Income-tax Act, 1922? Detailed Analysis: The judgment of the court, delivered by KANTAWALA C.J., pertains to a reference made under section 66(1) of the Indian Income-tax Act, 1922, by the revenue for determining the exemption status of the income of the assessee-trust under section 4(3)(i) of the Act. The case involves trustees of a trust established by the Cutchi Lohana community in Bombay, with the assessment covering the years 1952-53 to 1959-60. The property in question was acquired in 1837 for charitable purposes, and although there was no formal trust deed, the trust was established through long-standing usage. The trust was registered under the Bombay Public Trusts Act in 1952, with the income being utilized for charitable activities benefiting the Cutchi community. The main contention raised by the revenue was the absence of a formal trust deed and the nature of the trust's activities not being solely charitable or religious. The court referred to the decision of the Privy Council in All India Spinners Association v. Commissioner of Income-tax, establishing that a formal trust deed is not necessary to constitute a charitable trust. The court found that the property was held in trust based on the conveyance deed from 1837 and the historical usage of the property for charitable purposes. It was noted that the income of the trust was utilized for charity as intended by the caste people, indicating a charitable trust. The court cited the case of Chaturbhuj Vallabhdas v. Commissioner of Income-tax, emphasizing that the term "charity" implies public benefit and recognized charitable intentions. The court also considered the objects clause in the trust's registration application, which included activities benefiting the poor, maintaining a temple, and the welfare of the community. The court rejected the revenue's contentions, stating that the absence of a formal trust deed does not negate the existence of a trust, and the trust's activities aligned with charitable purposes. The court interpreted the word "welfare" in conjunction with other charitable activities mentioned in the trust's objects clause, concluding that the trust's objectives were indeed charitable or religious in nature. Therefore, the court answered the question in the affirmative, ruling that the income of the trust is exempt from taxation under section 4(3)(i) of the Act. The revenue was directed to bear the costs of the assessee. The judgment provides a comprehensive analysis of the legal principles governing charitable trusts and the interpretation of trust activities for tax exemption purposes.
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