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TMI Blog1998 (9) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case, the Income-tax Appellate Tribunal has rightly held that the activity of the trust relating to the exploitation of film distribution rights and realisation of income therefrom is a business carried on by the assessee-trust in the course of actual carrying out of the primary purpose of the trust, and so the provisions of section 13(1)(bb) of the Income-tax Act, 1961, are not applicable to the case ? (3) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal has rightly held that the income realised by the assessee-trust by exploitation of the film distribution rights is part of the corpus of the trust and not 'income' under section 2(24) of the Income-tax Act, 1961 ?" The assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons by the donor for "acquiring or establishing or supporting a hospital as soon as possible either by 'yourselves' or any other trust or institution which has for the object the provision of medical relief". It was further stated in that letter that monies made available to the trust "shall form part of the corpus of your trust". The assessee received various sums from the distributors who had been given the right to exploit the four movies ; Ram and Shyam, Manha Earisha, Julie and Prem Nagar. The Income-tax Officer sought to tax the amounts so received on the ground that the assessee was carrying on business in film distribution which was not directly connected with the carrying out of the objects of the trust and therefore under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gious purposes and the provisions of that section and section 13 shall apply accordingly." Contributions made with a specific direction that they shall form part of the corpus of the trust are not to be treated by section 12 as income of the trust. Such contributions to the corpus do not constitute taxable income. All other contributions are deemed as income derived from property held for the purpose of the trust for the purpose of section 11 and section 13. If the amounts received by the assessee pursuant to the donations by way of assignment of copyrights are part of the corpus, such amounts not being income of the trust are not subject to the limitations and restrictions set out in section 11 and section 13. The Tribunal on appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in a film is undoubtedly property. Under the provisions of the Copyright Act, a copyright can be assigned and when the assignment had been made without valuable consideration, it is open to the donor to impose conditions subject to which the assignment is made. It is for the assignee to accept or reject these conditions. The copyrights in the movies for the exploitation of which the assessee-trust received amounts were assigned to the trust subject to the express condition that the amounts realised from the exercise of the rights of ownership of the copyrights would be utilised only for the purpose of constructing the hospital or making the sums available to the trust that would construct hospitals or dispensaries as also to the further c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssigned to the trust, before such assignment from the donor. The monies payable under those agreements were after the assignment made payable to the trust and the trust was given permission to utilise the monies in the trust as part of the corpus till such time as those monies were used for constructing the hospitals by the trust or through another trust. Thus the amounts realised were for the specific purpose of carrying out the objects of the trust. The amounts so received were also the amounts which form part of the corpus of the trust. The view taken by the Assessing Officer and the Appellate Assistant Commissioner that the donor had no right to give directions regarding the manner in which the amounts realised from the distribution a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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