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TMI Blog1986 (2) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment of the Act by the Act 9 of 1974. (3) Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that even the amount spent in this state in furtherance of the objects of the trust cannot be treated as allowable items of expenses and (4) Whether, on the facts and in the circumstances of the case, the Tribunal has any material in inferring and is it justified in entering into finding that the object of the trust is only to spend money for the propagation of a particular type of religion and for the services of its followers ? " The assessee is the president of the " M. S. P. Family Jain Trust " (hereinafter referred to as " the trust ") in Kalpetta North and the income assessed is the agricultural income from the properties of the trust. The assessment relates to the year 1974-75. The Agricultural Income-tax Officer brought the income of the trust to tax overruling the contention of the assessee that the trust is entitled to exemption under section 4 of the Act. His alternative contention that the income of the trust spent within the state is not taxable was also not accepted. The assessment order was confirmed in appeal by the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... community or caste is not entitled to the benefit of exemption under the aforesaid provisions of the Act. It would follow that if there is benefit to the public, a private religious trust is also entitled to the benefit of exemption. So also a charitable trust the benefit of which is not confined to particular religious community or caste is entitled to the exemption. The Tribunal declined relief to the assessee on the basis of its finding recorded at page 21 of the paper book produced in this case. The finding is extracted below: " As this trust is a private family trust, the exemption provided for under section 4(1)(b) and (c) is not applicable to the trust. The reasons for writing the trust have been elaborately dealt with in rule 2 of the M. S. P. Family Trust Rules. The definition clause also reveals that this is only a private trust. No doubt in rules 16, 17, 18 and 19, there are certain exceptions. According to these rules, the trust is permitted to utilise the fund for charitable purposes which enure for the benefit of the public. As the dominant object of the trust is to propagate a particular religion of M. S. P. Family and service to the followers of that religion wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gent persons. There are also provisions for medical aid to ailing persons. The trust is enjoined to strive for propagation of ahimsa and to do everything to defend the freedom of India. There are provisions to help students of other religions and to defray their expenses of education ; but in the matter of selection of such students, it is necessary to see that they are of good character and have qualities like ahimsa and kindness to all forms of life. The trust is enjoined to help poor agriculturists at times of natural calamities. There is also a provision to encourage vegetarian food habits among people with a view to foster kindness to all forms of life. B. K. Mukerjea in his Tagore Law Lectures on Hindu Law of Religious and Charitable Trusts, fifth edition, states at page 493 : " The distinction between a private and a public trust is that whereas in the former the beneficiaries are specified individuals, in the latter they are the general public or a class thereof. A religious endowment must, therefore, be held to be private or public according as the beneficiaries thereunder are specific persons or the general public or section thereof [Deoki Nandan v. Murlidhar, AIR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , according as the beneficiaries thereunder are specific persons or the general public or sections thereof." This decision was followed in State of Bihar v. Smt. Charusila Dasi, AIR 1959 SC 1002 and in Radhakanta Deb v. Commissioner of Hindu Religious Endowments, Orissa, AIR 1981 SC 798. In Charusila Dasi's case, on a construction of the deed of trust, the Supreme Court observed at page 1008 : " We must construe the deed of trust with reference to all its clauses and so construed, we have no doubt that the trusts imposed constitute public endowment. There is one other point to be noticed in this connection. The deed of trust in the present case is in the English form and the settlor has transferred the properties to trustees who are to hold them for certain specific purposes of religion and charity; that in our opinion is not decisive but is nevertheless a significant departure from the mode private religious endowment is commonly made." In the deed of trust construed by the Supreme Court in Trustees of the Charity Fund v. CIT [1959] 36 ITR 513, one of the objects of the trust was to provide " relief and benefit of the poor and indigent members of Jewish or any other commu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rust. We do not agree. The questions referred involve a challenge against the finding of the Tribunal and the answer to the questions necessarily involves consideration as to whether the assessee-trust is public trust or a private trust. That apart, the exclusion of exemptions under clause (b) or (c) of sub-section (1) as per clauses (a) and (b) of subsection (3) of section 4 is only with respect to private religious trusts with no benefit to the public or to charitable trusts for the benefit of any particular religious community or caste. The trust in the present case is both religious and charitable, and even if construed as a private religious trust, the benefit to the public provided for in the deed of trust takes it out of the exclusion in clause (a) of sub-section (3) of section 4 of the Act. Taken as a charitable trust, the benefits of the trust are not confined to any particular religious community or caste and for that reason, it does not fall under the exclusion in clause (b) of sub-section (3) of section 4. Hence, even if the trust is considered as of a private religious character, since it provides for benefits to the public, it is entitled to the exemption under sectio ..... 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