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TMI Blog1944 (3) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... hi Stores hereinafter described as the 'Stores', and whereas it is necessary to provide rules and regulations for the governance of the said Trust". That is followed by a paragraph detailing the purposes for which the trust is created and they are stated in the following terms:- "Devoting the income derived from the said amount of a lac of rupees in the education of students reading in schools, colleges, and patasalas, and in opening schools, colleges or any class or classes in the existing college or colleges, school or schools, in any subject or subjects, in opening and helping libraries and in establishing and assisting boarding houses, and in other charitable and religious institutions and also towards the maintenance of one or more of the said institutions and for the support of the inmates of any orphanage or orphanages". Then follow eighteen clauses mentioning the names of the trustees and laying down the regulations which would govern them in the discharge of the obligations. It is inter alia provided that "the trustees shall have the right of winding up the business of the said Stores which has been purchased out of a part of the funds of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Stores as well as from interest on the spare funds of the trust lying in deposit with Seth Laxminarayan Gadodia, relying on Section 4(3) (ia) only and insisting that the requirements of law were fully satisfied. The Income-tax Officer once more repelled this contention stating that inasmuch as the income was derived by the assessee, a charitable trust, from a business which was not covered by Section 4(3)(ia), it was not exempt from tax. It may be observed here that the assessee in this order was described as Gadodia Charitable Trust, Kucha Natwan, Delhi. Against this order an appeal was taken to the Appellate Assistant Commissioner by Seth Laxminarayan Gadodia signing for Gadodia Charitable Trust in the capacity of a trustee. The Assistant Commissioner agreed with the assessee's contention so far as the spare funds of the trust deposited with Seth Laxminarayan Gadodia were concerned, but he maintained the decision of the Income-tax Officer relating to the income derived from the Stores for the reasons stated by the said Officer. Being dissatisfied with the order of the Appellate Assistant Commissioner, the assessee took an appeal to the Income-tax Appellate Tribunal, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4(3)(i). In our opinion, it has the effect of granting exemption for business income strictly under the conditions specified in it. Admittedly the business in this case is neither carried on by a charitable institution nor does it carry out the primary objects of the trust in carrying on the business. Thus this contention too fails." The assessee, thereupon, required the Tribunal to refer the case to this Court under sub-section (1) of Section 66 of the Income-tax Act and propounded the following two questions of law:- (a) Whether the term "property" in Section 4(3)(i) of the Income-tax Act includes or excludes a trade or business held under trust or other legal obligation or/and income and profits therefrom derived? (b) Whether a business carried on in the terms of a trust is or is not a business "carried on in the course of the carrying out of a primary purpose of the institution" as used in Section 4(3)(ia) of the Income-tax Act? The Tribunal remarked that the first question was most inartistically worded and the second question was one of fact. But holding that a substantial question of law is involved in the case, it has referred to this Court the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvest their money in them alone if they wanted to escape from the burden of income-tax. It is clear that even in the Income- tax Manual issued by authority of the Government of India before clause (ia) was introduced in 1939, it was explicitly observed that the word 'property' in clause (i) does not bear the restricted meaning that it bears in Section 9 of the Act, but includes securities or business or share in a business. It is no doubt true that in the Manual issued after the amendment made in 1939, while repeating these instructions, it was further added that "a business income of a charitable or religious trust is specifically exempted when the income is applied solely to the purposes of the institution and either (a) the business is carried on in the course of the carrying out of the primary purposes of the institution, or (b) the business is carried on mainly by the beneficiaries of the institution". But no instructions departmentally issued can claim any binding force if they are inconsistent with the statute or go beyond it. It is obvious that the word 'trust' finds no place in clause (ia) itself and this aspect of the matter, as will appear lat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he scope of clause (i) has been so limited as to exclude it even if it is otherwise included in the term 'property'? Clause (i) evidently deals with property held under trust for religious or charitable purposes while clause (ia) refers to business carried on on behalf of a religious or charitable institution. If it were possible to hold that there could be no religious or charitable institution which was not held under trust, or, in other words, if it could be predicated that every religious or charitable institution must necessarily be held under trust, the observations made by the Full Bench may carry force. But an institution may be religious or charitable and may still not be held under trust. Take for example institutions like the Arya Samaj, the Anjuman-i-Himayat-i-Islam, the Brahmo Samaj, the Dev Samaj and even trading institutions like the All India Spinners' Association dealt with in All India Spinners' Association, In re***. It will be impossible to deny that all such institutions are either religious or charitable, but it is a matter of common knowledge that they are not held under trust. Clause (ia) as it stands cannot in any way derogate or subtract a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titutions as are held under trust. But even if this be so, in so far as clause (i) deals with special kind of such institutions and clause (ia) is general in its import, the former will not be affected by the latter unless there was a clear indication to the contrary. "A general later law does not abrogate an earlier special one by mere implication. In other words, where general words in a later Act are capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, that earlier and special legislation is not to be held indirectly repealed, altered or derogated from merely by force of such general words without any indication of a particular intention to do so. Having already given its attention to the particular subject and provided for it, the Legislature is reasonably presumed not to intend to alter that special provision by a subsequent general enactment unless that intention be manifested in explicit language": (Maxwell, p. 156). Generalia specialibus non derogant is too well known a maxim of law to require any further comment. But assuming that the institutions mentioned in clause (ia) were intended to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the construction of the English Income-tax Statute both the cases upon which the High Court relied and the flood of other decisions which has been let loose in this Board. The Indian Act is not in pari materia: it is less elaborate in many ways, subject to fewer refinements, and in arrangement and language it differs greatly from the provisions with which the Courts in this country have had to deal. Under such conditions their Lordships think that little can be gained by attempting to reason from one to the other". A similar warning was repeated in Bejoy Singh Dudhuria v. Commissioner of Income-tax, Calcutta***, Gopal Saran Narain Singh v. Commissioner of Income-tax, Bihar & Orissa#, and Kamakshya Narain Singh v. Commissioner of Income-tax, Bihar & Orissa##. In the last case at page 749, it is said: "The Indian Income-tax Act of 1922, which is a consolidating Act, is both in its general framework and its particular provisions different from the English Income Tax Acts, so that decisions upon the English Acts are in general of no assistance in construing the Indian Act". It was no doubt added that on some fundamental concepts, reference may be to some extent us ..... X X X X Extracts X X X X X X X X Extracts X X X X
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