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TMI Blog1989 (11) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... rch, 1979 with a direction to re-do the assessment in the light of the decision of the Supreme Court in the case of CIT vs. P. KRISHNA WARRIER (1964) 53 ITR 716 (SC). In compliance with the directions fresh assessments were made and the appeals arise out of the fresh assessments. 3. The assessee is a Managing Trustee of Arya Vaidaya Sala, Kottakkal. The material facts leading to the present appeals and the cross objections are as follows: 3.1. Shri P.S. Warrier, an eminent Ayurvedic Physician was carrying on business in Ayurvedic Medicines under the name and style "Arya Vaidya Sala". He was also running a hospital named 'Aryasikitsa Sala' and a school by name 'Arya Vaidya Patasala'. Shri Warrier executed a will whereby he created a tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arya Vaidya Patasala. The balance, if any that may remain out of the 10 per cent after disbursement of the Arya Vaidya Patasala, may be used for the Arya Vaidya Sala itself. The balance 15 per cent are to be deposited by the Trustees each year in approved banks as a reserve fund for the two thavazhies for a period of 20 years and the fund thus accumulated inclusive of interest is to be divided equally among the two thavazhies equally, i.e. in moiety, and it will be the duty of the trustees to invest the same on the authority of immovable properties. M. The trustees are not bound to pay any amount to the said two thavazhies after the expiry of 20 years. The 40 per cent of the profit to earmarked for 20 years and so released after the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill not be available to the assessee for these years for the proportionate value of the net wealth of the trust. 5. On the other hand, the learned counsel for the assessee contended that the only point to be decided was whether the business was carried on under trust and the dominant object was only for religious or charitable purposes. According to him, the business was run by the trust and the dominate object is of charitable or religious purposes in this case. In the earlier years also it was held by the Supreme Court that 60 per cent of the income from the business was exempt as it was allotted for the charitable or religious purposes. Reliance is placed on 53 ITR 176. Now the assessee claimed for the entire exemption u/s. 5(1)(i) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained or a business carried on by an institution, fund or trust referred to in cl. (22) or cl. (22A) or cl. (23B) or cl. (23C) of s. 10 of that Act." The question as to whether the income of the assets held by the assessee in trust required to be allotted wholly for charitable or religious purpose for the exemption under s. 5(1)(i) came for consideration before the Hon'ble High Court of Bombay reported in 106 ITR 709, wherein it is held that- "There is a difference in the language between the Indian IT Act, 1922, and the later enactment-the WT Act, 1957. Under s. 4(3)(i) of the Income-tax Act, to earn exemption, income should have been derived from property held under trust wholly or in part for religious or charitable purposes. If p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the trust on any one of the specified objects. The property of the trust was held primarily for a public purpose of a charitable nature in India and was wholly exempt under s. 5(1)(i)." According to us, the victim laid down in this decision fully supports the case of the assessee before us, for the reason that the dominant object in the trust deed of Shri Late P.S. Warrier is charitable in nature and in having apart 60 per cent of the income derived from the business held under the trust for charitable purposes. The allotment of 40 per cent of the income for the thavazhies benefit is only for a limited period of 20 years which period is fast approaching an end. In 127 ITR 192, the point for the consideration of the Hon'ble High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 21. As the assessment of the trustee would have to be made in the same status as that of the beneficiary, the status and liability of the beneficiary assume relevance and importance to fasten liability on the trustee. If the beneficiary cannot be made liable, the trustee also cannot be held liable. It is, therefore, necessary to consider whether the beneficiary will be exempt under s. 5(1) and for that purpose, the nature of the trust, whether it is a public charitable trust has to be considered. Sec. 5(1)(i) extends exemption stipulated in the section are: (1) the asset could be any property; (2) it should be held under trust or other obligation; (3) it should be held for charitable or religious purposes of public character; and (4) it s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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