9911796707
TMI Blog1989 (9) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961 ? " The respondent (assessee) is a charitable trust. It was formed as per deed dated January 30, 1970. As the name itself indicates, its object was for affording medical relief to the poor by establishing hospitals, nursing schools, etc. The Income-tax Officer, construing the trust deed, held that since the trustees were carrying on a business in textiles, for the purpose of financing the construction of a hospital at Palai in a land taken on lease, it is pursuing an activity of general public utility and so the assessee did not qualify for exemption under section 11 of the Income-tax Act. In appeal, the Commissioner of Income-tax (Appeals) held that clauses 2 and 3 of the trust deed should be construed together and not in isolation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g under section 2(15) of the Act. It was submitted that the last limb of clause 2 in the deed specifies only such other acts of general public utility which, in the context, should be understood as "other acts of public utility" akin to the prior clauses occurring in clause 2. It was further submitted that clause 3 of the trust deed is only a power vested in the trustees to generate or augment the income of the trust so as to effectuate the carrying on of the objects of the trust specified in clause 2 of the trust deed. It is self-evident that clause 3 of the deed is not the object of the trust, but only a power vested in the trustees to pursue means to generate or augment the income of the trust. We considered the rival contentions presse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are akin to or similar to the prior or earlier clauses of clause 2. The Commissioner of Income-tax (Appeals) as also the Appellate Tribunal have taken the same view. In our opinion, the said view is plainly right. So, the tail end clause "such other acts of general public utility" should be and is confined to such other activities relating to "medical relief, relief of the poor and education", which will admittedly come within the first three clauses of section 2(15) of the Act. The only other question is whether clause 3 can be construed as an " object of the trust". We should state that even on a bare perusal of clause 3, it is evident that clause 3 only enunciates or specifies the power of the trustees to raise funds by certain meth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rust specified in clause 2 of the trust deed can be added or converted as forming the "corpus of the trust". With the above aspects in mind, if we scan clauses 2 and 3 of the trust deed, they will unambiguously point out that the objects of the trust, as per clause 2, are only to afford medical relief, relief of the poor and education ; clause 3 is only a power vested in the trustees to augment or raise or find funds for meeting the obligations cast on the trust by clause 2 of the trust deed, by taking any one or other steps contemplated in clause 3 of the trust deed. On these premises, we have no doubt in our mind that the Tribunal was right in holding that the respondent (assessee) is entitled to exemption under section 11 of the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
