1973 (3) TMI 57 - SC - Indian Laws

Whether a part of the trust created by one Abdul Sathar Haji Moosa by his will dated 25th day of Kanni 1099 M.E. is a public charitable trust within the meaning of section 4(b) of the Kerala Agricultural Income-tax Act 1950? Held that - The 3/4ths of the income of the B schedule properties was primarily earmarked for the benefit of near relations of the testator. Hence we are in agreement with the High Court that this part of the bequest cannot be considered as a public charitable trust. Appeals dismissed

Summary

Issues:
1. Determination of whether a part of a trust created by a will constitutes a public charitable trust under the Kerala Agricultural Income-tax Act, 1950.

Analysis:
The Supreme Court was tasked with deciding whether a portion of a trust established by a will qualified as a public charitable trust under the Kerala Agricultural Income-tax Act, 1950. The High Court had ruled that only a specific portion of the trust income fell under the charitable trust category, while the rest was allocated for other purposes. The appellant contended that the entire trust should be considered charitable, but the revenue authority disagreed. The High Court divided the income from the properties mentioned in the will into quarters, with one quarter designated for charitable purposes, two quarters for assisting the testator's poor relations, and the remaining quarter for corpus augmentation. The Court agreed that the first quarter was charitable but rejected the appellant's arguments regarding the other portions, leading to the current appeal for consideration.

The will outlined provisions for the maintenance and support of the testator's relations, specifying how the income should be allocated for their needs, education, and other expenses. Additionally, it detailed arrangements for the maintenance of specific descendants and the utilization of income from properties for investment and distribution. Notably, the will also addressed scenarios where the intended purposes became unfeasible, indicating alternative allocations for the income. The Court analyzed these provisions to determine that the majority of the income was primarily intended for the benefit of the testator's close relations, thereby concurring with the High Court's decision that this portion did not constitute a public charitable trust.

In a previous case, Trustees of Goydhandas Govindram Family Trust v. Commissioner of Income-tax, the Court had examined a similar provision and established legal principles guiding such matters. Relying on the precedent set by that decision, the Supreme Court dismissed the current appeals with costs, emphasizing the non-charitable nature of the major portion of the trust income. Furthermore, the Court addressed a preliminary objection raised by the department's counsel regarding the competency of the High Court to grant a certificate under the Constitution, noting that the objection was not raised during the High Court proceedings and was not pursued due to the dismissal of the appeals based on their merits.

In conclusion, the Supreme Court upheld the High Court's judgment regarding the classification of the trust income, determining that the major portion intended for the testator's relations did not qualify as a public charitable trust. The Court's decision was guided by the provisions of the will, legal precedents, and the specific allocation of income outlined in the trust document.