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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 ..... ust 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 students and scholars in India and abroad, engaged in any of the pursuits referred to in sub-clause (i). (iii) To found, construct, maintain, support, assist or grant aids or subscriptions to temples, prayer or congregational halls or other buildings for cultural, social or religious discourses. (iv) To open, found, conduct, maintain, or contribute to the opening and maintaining of such institutions where work at living w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 purpose under section 4(3) of the Act includes relief of the poor, education, medical relief and the advancement of any other object of general public utility, but nothing contained in clause (i) or clause (ii) of section 4(3) applies and shall operate to exempt from the provisions of the Act that part of the income from property held under a trust or other legal obligation for private religious purposes which does not enure for the benefit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 income to any of the objects, the whole trust fails and no part of the income is exempt from tax. Where the objects are distributive, each and every one of the objects must be charitable in order 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit 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 apply 60 per cent. of the income of the business vested in trustees to charitable purposes and 40 per cent. for the benefit of the family. The question was whether 60 per cent. of the income was liable to tax under proviso (b) to section 4(3)(i) of the Act on the ground that the entire income was not applied for charitable purposes. The question that arose in that case dealt with the meaning of the expression "part" as used in section 4(3)(i) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 whole or any part of the trust property or fund for all or any other purposes of the trust. This court found that there was no special trust and no particular item of property had been burdened with the performance of any specific object of the trust. It was open to the trustees to utilize the income for any one of the objects of the trust to the exclusion of all other objects. It would not be a violation of the trust if the trustees devoted the entire inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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