1962 (3) TMI 112

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..... i Agastyar Trust, Madras, is a trust constituted under the registered deed dated 2nd July, 1944, by one T.N. Venkatarama Chetti. The objects of the trust are many, and some of them are of religious and charitable character. One of the objects of the trust is thus set out in the deed of trust: To manufacture, buy, sell and distribute pharmaceutical, medicinal, chemical, and other preparations and articles such as medicines, drugs, medicinal and surgical articles, preparations and restoratives or foods. An item of property held by this trust is a one-third share in a registered firm of partnership styled Indian Metal and Metallurgical Corporation of Madras. This firm is carrying on business, and, admittedly, the share income of the .....

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..... nt, proviso (b) to section 4(3)(i) was applicable and would enable the assessee to prevent the income from being taxed. We are unable to see how the assessee can see to bring itself within the proviso if the main provision (section 4(3)(i) cannot apply. The exemption of income of trust properties from taxation is provided for in section 4(3)(i). One of the essential requisites of such immunity to tax is that the income must be from property held under trust or other legal obligation wholly for religious or charitable purposes. A Multipurpose trust with objects, religious or charitable, mixed with objects not religious or charitable, cannot come within the scope of that section, if there is no compelling obligation on the trustee administeri .....

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..... to be held in trust wholly for charitable or religious purposes. The Agastyar Trust is thus ineligible to the exemption contemplated by section 4(3)(i). We have again perused the provisions of the trust deed constituting the trust and we see no reason to differ from the above conclusion. We are, therefore, of opinion that Sri Agastyar Trust is not a trust, in respect of which the income from its properties can be exempted from taxation under section 4(3)(i) of the Act. Learned counsel for the assessee contends that, in the present case, both the department and the Tribunal proceeded on the basis that the trust is one which falls within the ambit of section 4(3)(i) and that the only question mooted was whether proviso (b) to section .....

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