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TMI Blog1984 (12) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... and that the income derived by the trust was not assessable as business income? 2. Whether, on the facts and in the circumstances of the case, the letting out of the building involved the earning of income and, as such, the assessee was carrying on an activity for profit? 3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the rental income derived from the property held in trust was so derived fully for charitable purposes ? " A few facts may be noticed One K. China Venkata Subbaiah of Nellore executed a will on October 20, 1918. Under the will, he settled in trust his movable and immovable properties for the development mainly of a choultry for the Vysya community visit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. It would appear that for the assessment year under consideration, a fresh look has been given and the Income-tax Officer felt that this trust must be considered to have come into existence on December 5, 1967, on which date it was registered under the Societies Registration Act. Inasmuch as the trust enured for the benefit of the Vysya community, the Income-tax Officer thought that it was for the benefit of particular religious community as envisaged by section 13(1)(b) of the Act and, consequently, the income derived by such a trust for the benefit of particular religious community was not exempt under the Act. In that view, the Income-tax Officer brought to assessment the income of Rs. 21,982. The assessee contested the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above decision of the Appellate Assistant Commissioner. The Appellate Tribunal affirmed the view of the Appellate Assistant Commissioner and dismissed the appeal. It may be mentioned that before the Tribunal, a further argument was raised that the assessee-trust was deriving income by letting the building involving the earning of income and, as such, the assessee is carrying on an activity for profit within the meaning of section 2(15) of the Income-tax Act and, consequently, the income derived by the trust would not qualify for exemption. The Tribunal negatived this contention also on the ground that letting out of the properties belonging to the trust did not amount to an activity for profit as envisaged by section 2(15) of the Act. Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be an institution in existence which may be in the nature of a trust or held under any legal obligation. The will dated October 20, 1918, executed by the late K. China Venkata Subbaiah had undoubtedly brought into existence a trust for the benefit of the Vysya community. Trustees were duly appointed under the will. Objects were specified and the manner in which the trust fund should be utilised was specified in the will. These requirements are sufficient to render the purpose as coming within the purview of a trust created under the will dated October 20, 1918. There is also legal obligation imposed under the will to hold the properties for the purposes specified in the will. The Act does not lay down any requirement that in order to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o existence prior to April 1, 1962, its income would qualify for exemption under section 11 of the Act even if it enured for a particular community. This proposition is not disputed before us by the learned standing counsel for the Revenue. The other question that requires consideration is whether letting out of the property belonging to the trust amounted to an activity for profit. In the first place, there is no material to indicate what activities were involved in the matter of letting out a property to derive income. Even otherwise, it cannot be said that any activity for profit is involved if admittedly a public charitable trust lets out its property. This proposition is fairly settled in the decisions of the Supreme Court in Addl. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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