9911796707
TMI Blog1987 (7) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... ?" The respondent is a religious trust. Its income is exempt under section 11 of the Income-tax Act. The dispute in this case relates to the assessment year 1974-75. The controversy is whether the assessee had " app1ied " the income for one of the objects of the institution. The assessee is a religious institution. The profit and loss account showed that there was a surplus of Rs. 1,20,601 for this year. Out of the said amount, a sum of Rs. 51,396 was spent for construction of certain additions to its buildings. The buildings had been let out. The income by way of rent from those buildings was used for religious purposes. On August 15, 1968, the general body of the institution resolved to demolish an old building belonging to the church a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income within the meaning of section 11(1) of the Income-tax Act. In other words, it was argued that it is not an amount applied for religious or charitable purposes of the trust. Section 11(1) of the Income-tax Act exempts the income derived from property held under trust for charitable or religious purposes, to the extent to which the income is applied for those purposes. The only question is whether the sum of Rs. 51,396 spent on the construction of additions to the buildings owned by the religious institution, which were let out, and the income wherefrom was used for religious purposes, can be said to be an application of the income for religious or charitable purposes ? Section 11(1) envisages that income should be "applied" to such p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord 'applied' in the text means 'actually applied or actually expended'. Such application may be by adding to the corpus of the fund and not merely in the form of revenue expenditure for implementing the purposes of the trust." The decision in Satya Vijay Patel Hindu Dharamshala Trust's case [1972] 86 ITR 683 (Guj) was accepted in principle by the Madras High Court in CIT v. Kannika Parameswari Devasthanam and Charities [1982] 133 ITR 779 at page 783. We concur with the said two decisions and the statement of the law contained in Sampath Iyengar's Law of Income Tax, Vol. 1, p. 883. In the light of the above, we are of the view that the Appellate Tribunal was justified in holding that the sum of Rs. 51,396 was applied by the respondent (as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le trust within the meaning of section 4(b) of the Kerala Agricultural Income-tax Act. This decision was affirmed by the Supreme Court. In the said case, it was clear that 1/2 of the income of the trust properties was by way of provision to the descendants of the settlor; it was held to be only a "private trust" regarding the income applied to the said half. Further, investments (i.e., investments made by applying the 1/4th income of each year) itself was again to be applied substantially and essentially to benefit the descendants of the settlor, since half of it will again go by way of provision to the settlor's descendants and when a substantial portion of the income from the augmentation (investments) should again go to the benefit of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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