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TMI Blog1973 (12) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion must be answered in the affirmative and in favour of the revenue. In order to appreciate the point involved in the second question, a few facts may be stated : Khan Bhahadur H. M Bhiwandiwalla died in Bombay on 19th February, 1920, leaving a will dated 28th April, 1919, with a codicil thereto dated 11th February, 1920. The will is in Gujarati language. The said will was proved and probate granted by the Bombay High Court on 11th December, 1920. The then executors and trustees under the said will executed a deed of trust on 26th July, 1926 ; the same was registered on 1st September, 1926, under the Indian Registration Act. A copy of the said trust deed has been annexed to the statement of the case as annexure " A " and contains material portions of the will and the codicil. In annexure " A " reference was made to the trust declared in the will and the relevant portion of the will in which the trust referred to runs as follows : " GH.--With the exception of one big substantial house situate on the other land known as that of Bomonji Kashinath as to the chawls, houses, etc., which are on the remaining land, the same shall be pulled down and a sum of three to five lakhs shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be paid to whomsoever may ask (for the same) and to whomsoever may need (the same) or under the supervision of the trustees the outlays in connection with the death ceremonies shall be made should any one die within up to five years (outlays) in connection with him alone (shall be made) not thereafter. In this manner Rs. 54,000 (Fifty-four thousand) shall be paid by my executors out of my collective Punji. " The trust was assessed to wealth-tax for the assessment year 1957-58. Before the Wealth-tax Officer it was, inter alia, contended that the trust being a public charitable trust, the assets were exempt under the provisions of section 5(1)(i) of the Wealth-tax Act. The Wealth-tax Officer held that the considerations which applied to exemption under section 5(1)(i) of the Act were analogous to the considerations to the exemption allowed under section 4(3)(i) of the Indian Income-tax Act, 1922, and determined the ratio of wealth liable to be taxed on that footing at 195 : 258. There was an appeal against the assessment to the Appellate Assistant Commissioner before whom the trustees contended that they should have been given exemption on the whole of the trust property under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a public purpose of a charitable nature. In the view of the Tribunal the claim for exemption under section 5(1)(i) succeeded wholly or failed wholly, depending upon the trust being wholly for a public purpose of a charitable nature or not. According to the Tribunal, therefore, the claim for exemption failed wholly. The learned counsel for the assessee has submitted three propositions for our consideration : (1) that on a proper construction of the relevant provisions in the deed of trust, the property must be regarded as one held under trust wholly for a public purpose of a charitable or religious nature in India ; (2) that if in the opinion of the court it was not proper to accept the first proposition and hold that the trust property was held wholly for a public purpose of a charitable or religious nature in India, in any event it was primarily or predominantly held for such purpose and, therefore, the same was liable to be exempted under the provisions contained in section 5(1)(i) of the Wealth-tax Act ; and (3) that, in any case, the assessee was entitled to be given exemption proportionately or pro tanto. In order to appreciate these propositions reference will have to be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim exemption under the provisions of section 5(1)(i) of the Wealth-tax Act. That involves a proper construction of the said section. Section 5(1)(i) of the Wealth-tax Act reads as follows : " 5. (1) Wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee-- (i) any property held by him under trust or other legal obligation for any public purpose of a charitable or religious nature in India. " On behalf of the revenue it was submitted that it was necessary that the trust should be wholly for a public purpose of a charitable nature, and that in the view we have taken of the first object the assessees' claim for exemption was liable to be rejected. It is necessary, in order to consider this aspect of the matter, to set out the provisions of section 4(3)(i) of the Indian Income-tax Act, 1922, which are in the following terms : " 4. (3) Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them : (i) subject to the provisions of clause (c) of sub-section (1) of section 16, any income derived from property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o use Halsbury's expression, of slovenly draftsmanship. If one turns again to section 4(3)(i) of the Indian Income-tax Act, 1922, under clause (i) to earn the exemption, income is required to have been derived from property under trust wholly or in part held for religious or charitable purposes. If it was wholly held on trust for religious or charitable purposes, the whole of the income is exempt, and in case of property held in part only for such purposes the income applied or finally set apart for application thereto is exempt. This is of course subject to other requirements mentioned in the sub-section and in the proviso. Now, in the case of the Wealth-tax Act, where a property is held on trust for objects which are partly charitable and partly non-charitable, there cannot be any apportionment as is to be found under the Indian Income-tax Act. Such apportionment is possible only in case of income and is not possible with respect to the corpus or assets which yield income. In my view, the omission of the word " wholly " in the above section of the Wealth-tax Act and the omission of a similar provision as is to be found in the later part of the sub-section in the Indian Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the provisions of section 5(1)(i) of the Wealth-tax Act, 1957, and consequently although the property held under trust may not be wholly for religious or charitable purposes as required under section 4(3)(i) of the Indian Income-tax Act, the trust may nevertheless be a trust for a public purpose of a charitable nature within the meaning of section 5(1)(i) of the Wealth-tax Act. We are not concerned with the first argument, which, it may be mentioned, was rejected. Considering the second argument, it was observed that " the effect of all the terms of the deed was that the relief and help to the poor Vaishya Hindus or other Hindus was primarily and predominantly confined to the members of the settlor's family and the members of the Seksaria families of Nawalgadh and elsewhere ". According to the court, the object of the trust as whole was predominantly to provide maintenance and marriage expenses to the members of the settlor's family, and remotely, if any, to the Vaishya Hindus or other Hindus. Accordingly, it was held that the trust deed in that case could not constitute a trust for any public purpose of a charitable nature within the meaning of section 5(1)(i) of the Wealth-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clause earlier set out. In my opinion, that would not be a fair or a proper reading of the relevant provision. As set out earlier, broadly speaking, there are five objects indicated, four of which are such as may be described as objects of the nature specified in section 5(1)(i) of the Wealth-tax Act. Here, one aspect may be emphasized, and that is that these objects are not disjunctive but conjunctive. The position might have been different if disjunctive word or words had been used to demarcate the different objects of the trust and the trustees had been given a discretion to utilise the whole income of the trust on any of the objects. If there was such a provision it would have been possible to urge that the trustees to the deed of trust could utilise the entire income for an object which was not an object of a public charitable nature, and by reason of such provision the trust cannot be said to be one with an object primarily and predominantly of a public charitable nature and would accordingly fail to qualify for exemption. In my judgment the view taken by the Tribunal as to the requirements of section 5(1)(i) of the Wealth-tax Act was not warranted by the wording thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X
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