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TMI Blog1976 (3) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 4(3)(i) of the Indian Income-tax Act, 1922? The main judgment was delivered in Income-tax Reference No. 40 of 1965. The High Court answered the question in the negative. The trust in Income-tax Reference No. 40 of 1965 was taken as typical of all the cases. The deed of trust dated April 12, 1948, was made by Ramkrishna Dalmia. The trust was called "Jaipur Charitable Trust". In Jaipur Charitable Trust Rs. 10,000 was given on trust on the terms and conditions set out in the deed. The objects of the trust in clause 5(a) are, inter alia, as follows: (i) To open, found, construct, establish, take over, equip, promote, conduct, maintain, support, subsidise, grant aids and make donations to Schools, colleges, Pathshalas, boarding houses, reading clubs, libraries, art, music or literary societies and other institutions, educational or otherwise, associations, printing presses, journals, newspapers, periodicals, and other publications for imparting or developing religious, commercial, industrial, legal, medical, engineering, scientific or other knowledge or training. (ii) To give stipends, scholarships, travelling expenses, allowances and monetary aids to stud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceiving them: (i) Subject to the provisions of clause (c) of sub-section (1) of section 16, any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, in so far as such income is applied or accumulated for application to such religious or charitable purposes as relate to anything done within the taxable territories, and in the case of property so held in part only for such purposes, the income applied or finally set apart for application thereto: Provided that such income shall be included in the total income-- ....... (b) in the case of income derived from business, carried on 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 ...... (ii) Any income of a religious or charitable institution derived from voluntary contributions and applicable solely to religious or charitable purposes." Charitable pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haritable objects of the trust. The non-charitable objects authorise the opening and maintaining of commercial institutions where work at living wages can be provided to the poor and also to contribute to commercial, technical, industrial or commercial concerns, institutions, associations or bodies imparting any type of training or providing employment to persons. The revenue contends that these clauses are clearly non-charitable. Each clause is independent and distinct. According to the revenue it is neither ancillary nor secondary to the primary dominant purpose of the trust nor can it be said that these clauses subserve the main object of the trust. Engagement in commercial institutions giving employment on wages cannot be said to be charitable object. Some of the objects of the trust are non-charitable. The trustees have been authorised to utilize the income of the trust for any purpose mentioned in the trust deed. The question is whether exemption can be granted where some objects are charitable and some non-charitable. Where there are several objects of a trust, some of which, are charitable and some non-charitable, and the trustees in their discretion are to apply the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilized and applied wholly in carrying out the primary purposes of the trust the trust is entitled to claim exemption under proviso (b) to section 4(3)(i) of the Act. The appellant relied on the recent decision of this court in Sole Trustee, Loka Shikshana Trust v. Commissioner of Income-tax . The Loka Shikshana Trust was engaged in the business of printing and publication of newspaper and journals and the further fact that the activity yielded profit and there were no restrictions on the trust earning profits in the course of its business went to show that the purpose of the trust did not satisfy the requirement that it was one not involving the carrying on of any activity for profit. This court relied on the decision in All India Spinners' Association v. Commissioner of Income-tax namely, that the charitable purposes exclude objects of private gain. The appellant contended that there was no bar on the trust to carry on business under the Act provided the profits of business were utilized only for charitable purpose. The appellant relied on the decision of this court in Commissioner of Income-tax v. P. Krishna Warriar. In Krishna Warriar's case, the trustees were directed to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the object was charitable and the income was applied wholly for charitable purposes. In Radhaswami Satsang Sabha case 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 charitable nature. In the present case, the income-tax authorities found that the various industrial and commercial concerns were not started by Ram Krishna Dalmia in furtherance of the objects of the trusts. The concerns were started for the purpose of earning profits which were to be distributed to the shareholders who had invested share money in those concerns. This court in East India Industries (Madras) P. Ltd. v. Commissioner of Income-tax found that one of the objects of the trust was not for charitable or religious purposes. The object was to manufacture, buy, sell and distribute pharmaceutical, medicinal, chemical and other preparations. The other objects were charitable in nature. The trust deed in East India Industries (Madras) P. Ltd. case conferred power on the trustees to apply the whol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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