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TMI Blog2009 (9) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(a) as both of them are holy waters. JM did not agree with the proposed order of the AM. HELD THAT:- The word or has always separated religious and charitable purposes. The decisions to which I have referred have all along considered the provision relating to grant of exemption containing word or . Therefore, rejection of claim of the assessee on account of word or is unjustified. We do not find that donation to a church or construction of a church is not a purpose which is not of general public utility. Therefore, the contention of the Department that expenditure on religious activities could not be given exemption cannot be accepted, particularly in the context of our polity. We are aware that most of the religious and charitable activities go together in this country. According to the AO, erection of chapels and convents was religious in nature. Accordingly purpose of the trust was held to be partly religious and partly charitable and exemption denied to the assessee. It is difficult to appreciate or agree with aforesaid conclusion. How erection of chapels and convents can be treated purely religious in nature and not charitable. No relevant facts have been brought on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are two appeals filed by the assessees who are claiming the benefits under s. 11 of the IT Act, 1961. The common assessment year is 2003-04. These appeals are directed against the orders of the CIT(A)-I, Calicut, dt. 21st Feb., 2007 and 20th Nov., 2006 respectively. Both the appeals arise out of the assessment orders passed under s. 143(3) of the Act. 2. Even though these appeals are filed for two different assessees, the issue raised in both the appeals is common. Therefore, these two appeals are heard together and disposed of through this common order. 3. In both these cases, the AO has denied the benefits provided under s. 11 to the assessees on the ground that the assessees are societies/trusts established for carrying on activities of charitable as well as religious purposes. According to the AO, the law of s. 11 does not allow the assessees to carry on both the charitable and religious purposes simultaneously. According to the AO, an assessee may be entitled for the benefits of s. 11 if it is carrying on activities relating to charitable purposes or else it is carrying on the activities relating to the religious purposes. But if the assessee is carrying on activities of cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Jammu & Kashmir High Court in the case of Ghulam Mohidin Trust vs. CIT (2001) 168 CTR (J&K) 367 : (2001) 248 ITR 587 (J&K) where the Court has held that where the objects are distributive and in that way both religious as well as charitable, then the institution is not entitled for exemption under s. 11. 7. The Revenue has further contended that in order to make a claim for exemption under s. 11, the property from which the income is derived should be held under the trust or other legal obligations and the property should be so held for charitable or religious purposes which enure for the benefit of the public and no part of the income or property of the trust should be used or applied directly or indirectly for the benefit of the settlor or other specified persons, except to the extent permitted in the case of trusts constituted prior to 1st April, 1962. In the case of charitable trusts created on or after the 1st day of April, 1962, the further conditions are that the trust should not be created for the benefit of any particular religious community or caste and no part of the income should enure directly or indirectly for the benefit of the settlor or other specified persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In that case the Court was mainly examining whether the assessee therein was carrying on charitable activities or non-charitable activities. Rather than a distinction between charitable activities and religious activities, the Court was primarily examining whether the activities were non-charitable also so that the objects of the assessee left to the discretion of the trustees would defeat the very purposes for which exemption has been granted under s. 11. It is in that context the Court examined if the assessee was carrying on religious activities whether it was meant for a particular community or caste, so that the assessee is not entitled for the exemption under s. 11. The Court did not examine the law relating to exemption under s. 11 as such and has not held in that judgment that an assessee should not be entitled for the exemption only for the reason that the assessee is carrying on charitable as well as religious activities. 10. The learned counsel for the assessee further submitted that all these legal and judicial expositions have been considered by the very same Tribunal in the case of Calicut Islamic Cultural Society, Kozhikode, mentioned supra and the rule of precedenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court has deliberated upon this issue so that we may prefer that judgment of that High Court to the judgment of the Co-ordinate Bench of the Tribunal. If the judgment of the jurisdictional High Court is not available on a subject, the judgment of another High Court is to be followed by the Tribunal as a matter of judicial propriety and discipline. In such a situation also if there are judgments of more than one High Court, the latest judgment of the High Court should be followed. In that case, the judgment of the Andhra Pradesh High Court in the case of CIT vs. Social Service Centre delivered on 9th Feb., 2001 is the decision later than the judgment of the Jammu & Kashmir High Court in the case of Ghulam Mohidin Trust. The Andhra Pradesh High Court in the case of CIT vs. Social Service Centre has delivered the judgment accepting the contentions of the assessee and that being the later judgment, we have to follow that. Therefore, even before contributing our mites to the merit of the issue we have to state that we have to follow the judgment of the Co-ordinate Bench in the case of Calicut Islamic Cultural Society, Kozhikode and if we follow the judgment of another High Court, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as belonging to the same class and same character. They are to be held analogous in nature. Both the activities are eligible for the benefits. Both the activities fall under the category of exemption. Benefits cannot be denied to a trust for the reason that it is carrying on religious activities. Benefits cannot be denied to an assessee for the reason that it is carrying on charitable activities. So functionally speaking, for the purpose of s. 11 charitable activities as well as religious activities both are analogous and belong to same specie. 16. When that legal proposition is accepted, it is perverse to argue that an assessee carrying on charitable activities alone or religious activities alone will be entitled for the benefits under s. 11 and an assessee will not be entitled to for such benefits if the assessee is carrying on charitable as well as religious activities. There is no room for such an interpretation. If the law grants exemption to charitable activities and if the same law grants exemption to religious activities, then there is no reason why exemption should not be given to an assessee where the assessee is carrying on charitable as well as religious activities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sees are maintaining chapels or madrassas for offering prayers. There is nothing on record to say that entry is restricted to any particular community or caste to offer prayers in those places. Of course there will be certain regulations in behaving in such places, which does not mean that entry is prohibited to a particular person or class of persons. As far as these two cases are concerned, it is not possible to say, as a matter of fact, that the assessees are carrying on religious activities only for the reason that they are maintaining chapels or madrassas. Even if the maintenance of the chapels or madrassas is considered to be religious activities, even then s. 11(1)(a) nowhere provides that activities of religious purposes are not entitled for the benefits of s. 11. On the other hand the law provides that activities of religious purposes are also entitled for benefits of s. 11. 19. When the law has categorically provided in s. 11(1)(a) that the benefits are available to assessees carrying on activities of charitable as well as religious purposes, there is no provocation to read down the law and state that the benefits will be available only if the assessee is carrying on cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or caste, of course with the exception to scheduled castes, backward classes, scheduled tribes or women. As per s. 11, after 1st April, 1962. the trust cannot be both for charitable or religious purposes. Sec. 11(1)(a) clearly prohibits both purposes. For the purpose of appreciation, s. 11(1)(a) is reproduced hereunder: "11(1) Subject to the provisions of ss. 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income- (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property;" 4. Sec. 11(1)(a) clearly postulates the condition of income derived from property held under trust wholly for charitable or religious purpose. It is not the combination of both purposes. Therefore, after 1st April, 1962, there cannot be a trust with the combination of both charitable and religious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the assessee society was registered only on 13th Jan., 1972. As the society was registered only on 13th Jan., 1972, hence the benefit conferred under s. 11 is not available to a mixed trust formed after 1st April, 1962 and it is not available to the assessee society. To that extent, I differ to the finding of my learned Brother. 5. Further, coming to Expln. 3 to s. 80G, the said Explanation specifically excludes religious purpose from the sphere of charitable purpose for the purpose of s. 80G. A moot point may be put, then what is the purpose of Expln. 3 to s. 80G. Explanation 3 takes care of the mixed trust activities which were being carried out before 1st April, 1962 and for that only Explanation is inserted. Hence, on this score also, there cannot be a mixed trust after 1st April, 1962. The decision of the Hon'ble Jammu & Kashmir High Court in the case of Ghulam Mohidin Trust is directly applicable wherein their Lordships have relied on the decision of the Hon'ble Supreme Court in the cases of State of Kerala vs. M.P. Shanti Verma Jain (1998) 149 CTR (SC) 279 : (1998) 231 ITR 787 (SC), Yogiraj Charity Trust vs. CIT 1976 CTR (SC) 211 : (1976) 103 ITR 777 (SC) and East India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessees who are carrying on charitable and religious activities, entitled for the benefits of s. 11 for the asst. yr. 2003-04 in respect of income derived from property held under trust wholly for charitable and religious purposes in the light of the expression provided by the Act in s. 11(1)(a) as 'income derived from property held under trust wholly for charitable or religious purposes......' 2. Whether, after 1st April, 1962, can there be a mixed trust? 3. Whether, the construction of dome, chapel or convent, etc. amounts to religious purpose or it is simply an object of general public utility?" 2. The facts are that The Society of Presentation Sisters, Calicut is a trust registered under s. 12A of the IT Act with the CIT. It filed a return declaring nil income for the above asst. yr. 2003-04 on 29th Dec., 2003. The return was accompanied by audited accounts and assessee claimed exemption of its income as a charitable institution. On scrutiny of books of accounts, AO noted that receipts and payments account includes the following debits: 1. Chapel running expenses 2. Chapel articles 3. Religious books, and 4. Religious function expenses The AO was of the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no "general public utility". Prayer halls are no doubt, connected with religion only. It is, therefore, to be held that the objects of the trust are partly charitable and partly religious. There was no apportionment of income between these different objects of the trust, and it was left to the exclusive discretion of the society to spend whatever they liked and hence the assessee is not entitled to claim exemption under s. 11 of the IT Act in respect of its income. The decision of Hon'ble Jammu & Kashmir High Court in the case of Ghulam Mohidin Trust vs. CIT (2001) 168 CTR (J&K) 367 : (2001) 248 ITR 587 (J&K) is applicable to the facts of the assessee's case." Total income of assessee trust was taken at Rs. 1,49,05,230 and exemption claimed under s. 11 was denied. The assessee was assessed as an AOP. Wayanad Muslim Orphanage 5. The facts of the aforesaid case are that the assessee is registered trust under s. 12A with the CIT. It filed a return declaring nil income on 15th Feb., 2004. 6. During the scrutiny of the case, assessee was asked to file copy of trust deed/memorandum of association of the trust from which AO found that it has the following objects noted in the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that trusts which are partly religious and partly charitable, are not entitled to exemption, the AO placed reliance on the decision of Hon'ble Jammu & Kashmir High Court in the case of Ghulam Mohidin Trust vs. CIT. Accordingly, exemption claimed by the assessee under s. 11 was denied and its total income was taken at Rs. 1,67,66,760 in the status of an AOP. 8. Assessees being aggrieved took up the matter in appeal before the CIT(A). CIT(A) noted orders of the AO in both the cases. He further noted the submissions advanced on behalf of the assessees. 9. In appeal by The Society of Presentation Sisters, it was contended that AO has misconstrued requirement of s. 11 (1)(a). It was argued that section provided that a charitable trust should be wholly charitable and should not engage in any non-charitable activity. Likewise, wholly religious trust should be religious and not engaged in any private religious or non-religious activity. Exemption could not be denied if trust had mixed objectives i.e. charitable and religious authorized by the memorandum. Income of trust can be applied both for religious and charitable purposes. It cannot be presumed that charitable purposes cannot incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . therefore, not entitled to exemption under s. 11(1)(a). He held that AO had rightly applied latest decision of Jammu & Kashmir High Court in the case of Ghulam Mohidin Trust. The case of CIT vs. Barkate Saifiyah Society and other decisions relied upon by representative of the assessee were not applicable to the facts of the case. Learned CIT(A) further rejected the contention of the assessee that both the religious and charitable purposes are entitled to exemption and, therefore, there was no logic in not granting exemption to a trust which is partly charitable and partly religious. Reference in the appellate proceedings was also made to provisions of s. 115BBC and s. 10(23C)(v) of IT Act to support assessee's claim. However, the learned CIT(A) held that above provisions did not advance the case of the assessee. The view of the AO was accordingly upheld. 12. Both the assessees challenged the order of CIT(A) in further appeal before Cochin Bench of the Tribunal. These appeals were disposed of by a consolidated dissenting order. According to the learned AM, who wrote the leading order, the issue in appeals stood recently decided by the Cochin Bench in the case of Calicut Islamic C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the benefit of a particular community or caste. He further observed, "So functionally speaking for the purpose of s. 11, charitable activities as well as religious activities both are analogous and belong to same specie. When that legal proposition is accepted, it is perverse to argue that assessee carrying on charitable activities alone or religious activities alone will be entitled for the benefits under s. 11 and an assessee will not be entitled to for such benefits if the assessee is carrying on charitable as well as religious activities. There is no room for such an interpretation." 12.3 The learned AM further observed that apprehension of the Revenue that above interpretation will render s. 11 (1)(b) after 1st April, 1962 nugatory, is not well founded. The learned AM held that s. 11(1)(b) is provided not to tinker with the expression "charitable or religious purposes" but is meant for restraining multiple objectives of charitable as well as non-charitable activities. Even the ratio laid down in the case of Ghulam Mohidin Trust is in fact speaking in above direction. According to learned AM, s. 11(1)(b) does not contradict between charitable purposes and religious purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust created or established after 1st April, 1962. Both the appellant trusts before the Tribunal were created after 1st April, 1962. In other words the income under both charitable and religious purposes cannot be combined together and assessee has to choose either of the charitable activities or religious activities, but not both. This view was derived on the basis of the word 'or' in s. 11 (1)(a) disjoining charitable-religions purposes. (2) Explanation 2 to s. 13(1)(b) which forfeits the exemption of public charitable trust, if any part of income is for the benefit of any particular religious community or caste. According to learned JM, after 1st April, 1962. "There cannot be a trust with the combination of both charitable and religious purposes. This is the view taken by the AO while rejecting the assessees' claim". In the case of The Society of Presentation Sisters, the AO found that the objects and cls. (a) to (f) are charitable, but part of cl. (g) insofar as it relates to construction of chapels and convents is religious in nature. The learned JM held that the trust is partly charitable and partly religious. The learned JM noted assessee's contention that convent referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at decision in the case of Ghulam Mohidin Trust was directly applicable to the facts of the case. He further observed that the word 'or' cannot be read as 'and'. He relied upon the following decisions: (i) State of Kerala vs. M.P. Shanti Verma Jain (1998) 149 CTR (SC) 279 : (1998) 231 ITR 787 (SC), (ii) Yogiraj Charity Trust vs. CIT 1976 CTR (SC) 211 : (1976) 103 ITR 777 (SC), and (iii) East India Industries (Madras) (P) Ltd. vs. CIT (1967) 65 ITR 611 (SC). As per his proposed order, the learned JM dismissed both the appeals. 15. On account of above difference, the matter has been referred under s. 255(4) of the IT Act. 16. In order to resolve above differences, the case was fixed and I have heard Smt. Lalitha Nair for Society of Presentation Sisters and Shri R. Krishna Iyer for Wayanad Muslim Orphanage. For the Revenue, Shri A.K. Thattai, CIT, senior Departmental Representative appeared and argued. Facts and circumstances of the case in the light of argument of parties have been examined. The submission of the parties were the same as were advanced before the lower authorities. There is no dispute on facts. The only controversy involved is whether assessee trusts who have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income- (b) in the case of income derived from business, carried on behalf of a religious or charitable institution, unless the income is applied wholly for the purposes of the institution and either- (i) the business is carried on in the course of the actual carrying out of a primary purpose of the institution, or (ii) the work in connection with the business is mainly carried on by beneficiaries of the institution....... (iii) Any income of a religious or charitable institution derived from voluntary contributions and applicable solely to religious or charitable purposes." 17.1 There have been some changes in the above provisions but basic and fundamental principles as far as controversy before me is concerned remain the same without any material difference. The word "or" has always separated religious and charitable purposes. The decisions to which I have referred have all along considered the provision relating to grant of exemption containing word "or". Therefore, rejection of claim of the assessee on account of word "or" is unjustified. 17.2 In the case of Fazlul Rabbi Pradhan vs. State of West Bengal AIR 1965 SC 1722, their Lordships of Supreme Court noted the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t either charitable or religious, there is no doubt that the exemption under s. 11(1)(a) will be available to the assessee. In the instant case we find that, in spite of the apparently wide language of the clauses of the deed of trust, in fact reading the trust deed as a whole, it transpires, particularly in the light of the decision of the Bombay High Court in Advocate General of Bombay vs. Yusufalli (l922) 24 Bom LR 1060 : AIR 1921 Bom 338, 360, that the apparently wide discretion has to be exercised within the four corners of the Wakf and for Dawat purposes. What are Dawat purposes, have been described by Marten, J., at p. 1102, in Yusufalli's case and, in our opinion, it is only within the four corners of Dawat purposes as recognized by the Dawoodi Bohra community that the Mullaji Saheb can use the corpus or the income of this fund." 17.5 In the case of CIT vs. Barkate Saifiyah Society, the objects of the trust were noted as, under: "(i) To help the poor and needy. (ii) Medical relief. (iii) Provision for education. (iv) To carry out the religious activities." The AO denied exemption to the assessee trust under s. 11(1) with the finding that the trustees did not carry out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e thereof, it for any period during the previous year- (i) any funds of the trust or institution are invested or deposited after the 28th day of February, 1983 otherwise than in anyone or more of the forms or modes specified in sub-s. (5) of s. 11; or (ii) any funds of the trust or institution invested or deposited before the 1st day of March, 1983 otherwise than in anyone or more of the forms or modes specified in sub-s. (5) of s. 11 continue to remain so invested or deposited after the 30th day of November, 1983; or (iii) any shares in a company (not being a Government company as defined in s. 617 of the Companies Act, 1956 (1 of 1956), or a corporation established by or under a Central, State or Provincial Act) are held by the trust or institution after the 30th day of November, 1983. " It is to be stated that there is no material change in above provision of s. 13 as far as assessment years with which I am concerned in these cases. Their Lordships analyzed provision of s. 13 and held that they were applicable in the following circumstances: "By reading the aforesaid section, it is clear that it carves out an exception to s. 11 or 12 by providing that in those cases which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of any particular religious community or caste. Clauses (c) and (d) would be applicable to a trust which is either for charitable purposes or religious purposes or partly charitable and partly religious. Hence it can be stated that if a charitable trust is established only for the benefit of any particular religious community or caste, then provisions of s. 11 would not be applicable. But in the case of a trust or an institution for religious purposes wherein certain activities can be termed as charitable activities for the benefit of any particular religious community or caste, cl. (b) would not be applicable." 18, In the case of CIT vs. Social Service Centre, the AO had found, that the trust was mainly engaged in religious activities namely, donation to church or construction of a church and exemption was denied because the expenditure was incurred for donation to a diocese and for construction of a church. The Tribunal reversed the order of the AO. 19. On further appeal, their Lordships of Andhra Pradesh High Court observed as under: "2. Now the only question is whether an institution which has been given exemption as a charitable institution can claim exemption for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the primary or dominant purpose would not prevent the trust or institution from being a valid charity. This principle had been laid down by the Supreme Court in CIT vs. Andhra Chamber of Commerce AIR 1965 SC 1281, then it was reiterated in CIT vs. Bar Council of Maharashtra AIR 1981 SC 1462. Considering these judgments, we are of the view that the Tribunal was right. Therefore, this appeal is dismissed." It is clear from plethora of authorities where after considering provisions of s. 11(1)(a) that so far as aforesaid provision is concerned, no distinction is made between charitable and religious purposes. A charitable institution can have religious purposes; whereas a religious institution may be partly charitable. Most of the decisions were given under 1961 Act. Even where decision was on consideration of 1922 Act. there is no material difference as is demonstrated in the above discussion. Their Lordships of Supreme Court have held, as noted earlier, that charitable and religious purpose overlaps in India. Even otherwise relief and help to the poor, medical help to the needy, looking after of deity and temples (mosque, church included) are no doubt religious purposes but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der s. 13(1)(b) or any other clause of the section. There is no finding that trusts in question are charitable institutions created or established for the benefit of any particular religious community or caste. As already submitted, provision of cl. (b) of s. 13(1) is applicable only to a charitable institution and not to any institution which is created both for charitable and religious purposes. There is no elaboration as to how any particular religious community or caste is to be benefited from the trust in question. No violation of provision of s. 13 of the Act has been stated or established. The finding or basis for denial of exemption under s. 11 (1)(a) is that trusts are partly religious and partly charitable, whereas exemption is permissible to wholly charitable or wholly religious trusts. Such basis is not legally tenable. 22. In the case of The Society of Presentation Sisters, the AO noted expenses under the following four heads: 1. Chapel running expenses 2. Chapel articles 3. Religious books, and 4. Religious functions. According to the AO above objects were religious. After considering objects of the trust, he observed that objects (a) to (h) are charitable. Out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Members of the Tribunal by issuing circulars. The learned AM, all the same, again referred to decision of Supreme Court in the case of Union of India vs. Raghubir Singh, in support of the proposition. The learned JM, however, has not said anything on above, except that he differs from the view taken by the leaned AM who has relied upon decision of already existing Cochin Tribunal in the case of Calicut Islamic Cultural Society. He has not said anything as to the propriety of not following the decision of a Co-ordinate Bench. Nor the learned JM has stated that it is a fit case to review the decision of Co-ordinate Bench, by referring the matter to a Larger Bench. No value has been attached to settled law or even to directions of Supreme Court issued from time to time debarring the Benches from taking a different view on identical facts, without referring to a Larger Bench. 25.1 The Hon'ble Delhi High Court, in a recent decision in the case of Thironi Chemicals Ltd. vs. Dy. CIT (IT Appeal No. 417/Del/2004) delivered on 23rd Jan., 2009 has observed as under: "It may be mentioned that in DLF Universal Ltd. vs. CIT, IT Appeal No. 854 of 2007 decided on 11th Jan., 2008 [rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 13(1)(b) are applicable in this case. At any rate, I have elaborately discussed above that provision of s. 13 has no application in this case and a trust which is partly religious and partly charitable, is entitled to exemption under s. 11(1)(a) of the IT Act. 26.3 The learned JM, thereafter laid great emphasis on letter of the assessee dt. 27th March, 2006 wherein contention raised was that assessees trust was charitable but subsequently learned AM has held it to be partly charitable and partly religious. I am of view that no adverse inference can be drawn from what is stated by the assessee in letter dt. 27th March, 2006 wherein assessee claimed that its trust is wholly charitable. In my considered opinion, facts and circumstances of the case are required to be considered in the light of statutory provisions to decide the case. On consideration of the relevant facts, in my view the assessee is entitled to exemption under s. 11(1)(a) of the IT Act. No case has been made out to apply any clause of s. 13 of the IT Act. 26.4 The learned JM has also relied upon decisions of Hon'ble 'Supreme Court in the cases of: (1) State of Kerala vs. M.P. Shantiverma Jain; (2) Yogiraj Chari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that the trust might be upheld as a valid charity. If no definite part of the property or its income is allocated to charitable purposes and it would be open to the trustees to apply the whole income to any of the non-charitable objects, no exemption can be claimed. [East India Industries (Madras) (P) Ltd. vs. CIT (1967) 65 ITR 611 (SC) and Mohammad-Ibrahim Riza Malak vs. CIT AIR 1930 PC 226]. ............. In CIT vs. Radhaswami Satsang Sabha (1954) 25 ITR 472 (All), several industrial and commercial concerns were started for the benefit of the Satsanghis. Those were not run for individual profits nor were the profits distributed among the members. The concerns were started in furtherance of its objects of religious and cl1aritable nature." The Court ultimately laid down the test to be applied and held as follows: 'The test is that if one of the objects of the trust deed is not of a religious or charitable nature and the trust deed confers full discretion on the trustees to spend the trust funds for an object other than of a religious or charitable nature, the exemption under s. 4(3)(i) of the Act is not available to the assessee [Lakshmi Naram Lath Trust vs. CIT (1969) 73 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 14 of the trust deed, in the light of provisions of s. 13 and decision of Supreme Court in the case of State of Kerala vs. M.P. Shanti Verma Jain and recorded as under, for denying exemption to the trust: "8. The ratio of the above decision squarely applies to the facts of the present case. In this case also the objects of the assessee-trust contained in cls. 13 and 14 of the Instrument of trust clearly show that the dominant purpose of the trust is promotion of Muslim theology among Muslim intelligentsia. Another object is promotion of science and technology but that too among the Muslim intelligentsia. Similarly, in cl. 14 of the Instrument of trust which confers powers on the trustees to give financial assistance by way of ex gratia grants or loans on easy terms to scholars of educational institutions to enable them to prosecute their further studies and research in science and technology, it is specifically provided that the selection for such grants has to be confined to Muslims only. The trustees, however, have been given a discretion to extend this benefit to such other communities as in their opinion are backward in this regard. It is obvious that the author of the trust ..... X X X X Extracts X X X X X X X X Extracts X X X X
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