9911796707
TMI Blog1971 (11) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... by A. D. V. REDDY J. - His Exalted Highness Nawab Mir Sir Osman Ali Khan Bahadur, the ex-Nizam of Hyderabad and Berar, had created a number of trusts, public and private, during his lifetime. We are now, in these references made under the Income-tax Act and Wealth-tax Act, concerned with two such trusts with regard to the income from the trust properties being assessable to tax under either of those statutes. The first of these two trusts is known as the Azakhana Zohra Trust created by the Nizam under a trust deed dated March 29, 1951. In or about 1941, after the death of his mother, Zohra Begum, popularly known as Madar-e-Deccan, the Nizam in her sacred memory had constructed the Azakhana Zohra (mourning house) with Niazkhana (poor- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made under the earlier trust deed. In the same deed he had set apart a sum of Rs. 8 lakhs made up of 8,000 cumulative preference shares of the face value of Rs. 100 each in Greaves Cotton and Company Ltd., as a further fund for the upkeep and maintenance of the sacred buildings mentioned in the second schedule as additional provision, as he had under an earlier deed dated September 14, 1950, settled a sum of Rs. 40 lakhs for their upkeep and maintenance. The dispute now relates to the exigibility to tax of the corpus as wealth under the Wealth-tax Act an the income from the endowed amounts under the Income-tax Act, the investments made under the above deeds. The claim of the department is that these are not religious and charitable trusts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the prior years was also reopened and for all the years the income was subjected to tax. On appeal, the Inspecting Assistant Commissioner held that it was a public trust and directed the deletion of the tax, while on further appeal, the Appellate Tribunal held that it was not created for public charitable purposes and upheld the levy. Along with this tax, the trust property was also subjected to wealth-tax for the years, i.e., 1959-60 to 1965-66. With regard to the second trust, i.e., the Nizam's Supplemental Religious Endowment Trust, the department held that for the assessment year 1957-58 the trust was exempted from tax as it is entitled to the exemption under section 4(3)(i) of the Indian Income-tax Act of 1922, but subjected the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the public charities endowed with funds by private individuals like hospital, choultries, schools and colleges are of either religious or charitable nature, though named either after the donor or in the name of someone in whom he is interested and whose memory he desires to perpetuate. From the fact that the institution bears the name of a private person, the nature of the trust cannot be determined to be a private one. It is the object of the trust that has to be looked into. In this case, the trust deed itself says : " ....... of the religious and charitable considerations thereunto moving he the settlor doth hereby transfer and assign unto the Trustees the said sum of Rs. 2 lakhs, etc ...... " Though no words to the effect that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meant as a mark of courtesy to the erstwhile Rulers. Therefore, this cannot be a circumstance to be taken into consideration for saying that it is a private trust. There is no recital in the trust deed placing any restrictions on the right of the public to have access to the place during Moharram. The evidence shows that the public had free access to the building during the Moharram period and the fact that one building is meant for mourning, another for the purpose of poor-feeding and a third for a hospital itself shows that they are meant for charitable purposes. Two of the letters received from the trustees also indicate that sacred relics and articles of religious significance which did not belong to the Nizam exclusively are kept ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akhana attached thereto, the subject-matter of the earlier trust. With regard to this we have already found that they are charitable and religious institutions. Another trust created under the same deed is for the maintenance of the sacred buildings mentioned in the schedule. There is no discussion at all with regard to this trust in any of the orders of the Income-tax Officers or even the Tribunal, as all of them had considered the nature of Azakhana Zohra Trust alone, obviously being under the impression that, if any part of the trust deed is for a private purpose, the whole trust is vitiated, forgetting that there are two distinct and separate trusts with two different endowments, though under the same deed. We find the second trust unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
