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TMI Blog1967 (7) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... om the trust property as is spent on the maintenance and support of the members of the Shervani family and relatives is exempt under section 4(3)(i) of the Income-tax Act, 1922 ?" The reference has been made in respect of the assessment years 1957-58, 1958-59 and 1959-60. The corresponding previous years are the financial years ending on 31st March, 1957, 31st March, 1958, and 31st March, 1959. From the statement of the case it is clear that on 13th April, 1956, Shri M. R. Shervani and Shri N. A. Shervani jointly made a declaration of the trust which was registered on the following day. A copy of that trust deed has been annexed to the statement of the case and had been marked as annexure "A". The third paragraph of the trust deed reads : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efraying the management expenses to devote one-third of the income of the trust properties and assets mentioned in schedules A and B on the charitable purposes mentioned below : (a) Donations to public institutions, schools, colleges, dispensaries, hospitals, private vocational schools, Madras as for religious education and technical training centres. (b) To grant scholarships to needy and deserving students for purposes of education in schools, colleges within or outside India. (c) To grant medical aid and pay expenses for the treatment of poor and needy persons. (d) To give long term loans to needy and poor persons for building for residential houses at reasonable interest. (e) To contribute to the construction of roads, public garde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application thereto in which case it shall be deemed to be the income of the year in which it is so applied or ceases to be so accumulated or set apart." It was contended on behalf of the trustees before the Income-tax Officer that not only one-third income of the trust covered by clause 2(A) was exempt from taxation but also the one-third referred to under clauses 2(B) and 2(C). The Appellate Assistant Commissioner accepted the contention of the assessee that it was entitled to exemption of the income applied under clause 2(C) but rejected the claim in respect of the income applied under clause 2(B). They then filed an appeal before the Tribunal who allowed the appeal in part and remanded the case. The Judicial Member of the Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under a trust or other legal obligation for private religious purposes which does not enure for the benefit of the public." The factual position that emerges from the statement of the case submitted to this court by the Tribunal is that during the period May, 1956, to 31st March, 1957, the amount spent on maintenance aid was only Rs. 560 and that sum was given to four different persons. In the accounting period April 1, 1957, to March 31, 1958 (relevant to the assessment year 1958-59) such maintenance aid amounted in all to Rs. 2,870. The maximum payment of Rs. 1,250 was made to one Mrs. Sayed Jahan Begum at the rate of Rs. 250 per month from November 1, 1957, to March 31, 1958. The statement of the case clearly shows that this lady is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty. The trustees have absolute discretion unqualified by any considerations of indigence or charity in granting sums in their discretion to such persons as they choose. The word "those" is comprehensive enough to include any person and expression "deserving such support" can admit of the discretion being exercised on considerations not necessarily charitable. We have already quoted the definition of charitable purposes given in clause (xxii) of section 4 of the Act. The definition and the judicial precedents make it clear that relief to a person would not be a charitable object unless it involves an object of general public utility. In our opinion, all that clause 2(B) provides for is that one-third of the net income of the trust propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trustees of the Charity Fund v. Commissioner of Income-tax and Commissioner of Income-tax v. Moosa Haji Ahmed. Both these cases are clearly distinguishable and are based upon their own facts. In the Trustees of the Charity Fund v. Commissioner of Income-tax the provisions were very different from the one before us and there the object was clearly charitable. The Commissioner of Income-tax v. Moosa Haji Ahmed has followed the decision in Trustees of the Charity Fund v. Commissioner of Income-tax but there also the terms of the deed of agreement were different from those before us and on their basis it was held that the object was charitable. In view of what we have said above, we answer the question referred to us in the negative, in favou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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