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TMI Blog1982 (1) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... angir, settled 3,800 ordinary shares of the Bank of India Ltd., worth Rs. 4,75,000, on trust for the purposes set out in a deed of trust, which was duly executed. The settlor under the said deed was the said Lady Hirabai and the trustees were herself and one Aloo Kaikhushru Cama. Clause 3 of the said deed of trust, inter alia, provided that the net income of the trust fund was to be used till the period ending on the 10th March, 1973, or the date of the death of the survivor of the settlor's grandchildren, Jehangir and Ardeshir, whichever date was earlier, for the cosmopolitan charitable purposes set out in the said clause. It may be mentioned that there is no dispute that these purposes are such purposes to which the provisions of s. 15B of the Indian I.T. Act, 1922, were applicable and to which now the provisions of s. 80G of the I.T. Act, 1961, are applicable. Without referring in detail to the clauses of the said deed of trust, we may point out that from 10th March, 1973, up to 10th March, 1978, the net income of the said trust was to be utilised for the maintenance, support and benefit of both the said grandchildren of the settlor and the trust fund, including the accumulation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal, and the assessee filed her cross-objections therein. The Tribunal held that in view of certain decisions of this court, which have been referred to in the order of the Tribunal, only the facts present during the previous year should be taken into account in making the assessment and there should be no speculation on the future probabilities. The Tribunal rejected the contention of the department that the gift, in order to attract s. 5(1)(v), must be of the full interest in the property with a complete power of disposition. It also rejected the contention of the department that an initial gift to charity was not covered by s. 5(1)(v) of the said Act. On the basis of these conclusions the Tribunal held that the entire gift constituted by the creation of the said trust was entitled to exemption under s. 5(1)(v) of the said Act. Arising from the said decision of the Tribunal, the aforesaid questions have been referred to us for determination. Before dealing with the controversy arising before us, it may not be out of place to set out some of the relevant provisions of the said Act. The definition section under the said Act is s. 2. Clause (viii) of s. 2 of the said Act defines t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rting or constituting a fund for charitable purposes of the kind specified in the clause would be entitled to exemption in the same manner in which subsequent gifts to the fund would be entitled. In view of the aforesaid decision, as far as this court is concerned, this question will have to be answered in the negative, that is, in favour of the assessee. As far as the other three questions are concerned, they can be conveniently dealt with together. In this regard the submission of Mr. Joshi, the learned counsel for the Department, is that the gift constituted by the creation of the said trust cannot be said to be a gift for a charitable purpose, because it is not of the entire corpus of the trust fund. It is only gift Whereby for a period of 12 years income of the said trust fund is to be utilized solely for charitable purposes. It was urged by him, in the alternative, that charity could not be said to be the sole donee under the said trust, as the aforesaid grandchildren of the settlor were also entitled to certain benefits under the said trust and, hence, even assuming that there was a gift to charity, constituted by the creation of the said trust, it would be exempt only to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the terms of the settlement deed there was no joint donee along with the spouse in the year of assessment. The interest which the children and others had in the trust property was a contingent beneficial interest which would come into existence on the happening of the relevant event, namely, the death of the: wife. In the light of this reasoning the Division Bench held that in the assessment year the assessee was entitled to exemption under s. 5(1)(viii) of the said Act to the extent of the value of the gift involved in the settlement. If the principles laid down by this decision, which is binding on us, have to be applied to the facts of the present case, the conclusion, which would follow is that, in the present case, in the assessment year 1962, the charity was entitled to the benefit of the entire income of the said trust fund and hence the gift must be regarded as solely to the charity. During that year neither the grandchildren nor any of the other beneficiaries referred to in the said trust deed had any beneficial interest in the said fund. It is common ground that the charitable purposes for which the income of the trust was to be utilised were such as were covered by s. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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