COMMISSIONER OF INCOME-TAX KERALA AND COIMBATORE versus KRISHNA WARRIAR

Citation: [1964] 8 S.C.R. 36 · Decided: 29-04-1964 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

1964 
CJ.T., 
Modrt11 
•• 
Slvaklui Match 
Export Co. 
SWJ. 
SUPREME COURT REPORTS 
[rg64J 
so complied with, the taxing authorities would be bound to 
refuse to give the taxpayer the benefit claimed. When 
application for registration of the firm is made, the Income-
tax Officer is entitled to ascertain whether the names of the 
partners in the instrument are of persons who have agreed 
to be partners, whether ihe shares are properly specified and 
whether the statement about the shares is real or is merely 
a cloak for dis,ributing the profits in a different manner. 
If all persons who have in truth agreed to be partners have 
not signed the deed or their shares are not truly set out in 
the deed of partnership, it would be open to the Income-
tax Officer to decline to register the deed, even if under the 
general Jaw of partnership the rights and obligations of tke 
partners eo nomine thereto may otherwise be adjusted. As 
a corollary to this, if the requirements relating to the form 
in which the petition is to be presented are not complied 
with, and the relevant information is withheld, the Income-
tax Officer may be justified in refusing registration. 
In my view the High Court was in error in holding on 
the question submitted that the registration of the assessee 
under s. 26-A of the Income-tax Act was wrongly refused. 
The answer to the ques:ion referred to the High Court 
lhould be in the affirmative. 
ORDER 
In accordance with the opinion of the majority, the 
appeal is dismissed with costs. 
Appeal dismissed 
COMMISSIONER OF INCOME-TAX KERALA AND 
COIMBATORE 
v. 
KRISHNA WARRIAR 
(K. SUBBA RAo, J. C. SHAH, ANDS. M. SJKRI JJ.) 
ltteome 
Tax-Exemption 
from taxation-Businen 
held 
in 
trUll-
Pllrl of profit• to be utiliud for religiOIU or charitable purp"'•,_ 
l:! S.C.I< 
SUPREME COURT REPORTS 
37 
Business, if property-Indian Income-tax Act, 1922 
(11 of 1922), 
s. 4(3)(1). 
1164 
CJ.'I. 
A testator was carrying on business in Ayurvedic drugs under the ~ 
,., W: 
name and style of Arya Vaidya Sala. 
Under his will his 
properties, 
_ 
""
.including the business, were held under trust and the object of the trw.t 
y;as to utilise 60 per cent of the profits of the business for 20 yean 
and 85 per cent thereafter for religious and charitable purpo!!ieS. 
The 
assessment years in qu'tstion fell within 20 years from the death of 
the testator and the question was whether the 60 per cent of t.:ie 
income from the trust 1 properties was exempt from 
assessment 
to 
income-tax under s. 4(3)(i) of the Indian Income-tax Act, 1922. The 
lncome·tax authorities rejected the claim for exemption and 
asse~od 
the entire income from the said properties, on the ground that the 
.ubstantive cl. (i) of s. 4(3) was not applicable to the case but only 
el. (b) of tlie prmliso and that the conditions laid down thereunder 
were not complied with. 
HELD: (i) The business run under the name and 
style 
of 
Arya 
Vaidya Sala was property within the meaning of s. 4(3 )(i) 
of 
the 
Indian Income-tax Act, 1922, and as the entire business was held ia 
trust for uti[sing a part of its profits for religious or charitable pur-
poses, the said income Was exempt from assessment 
to • income-tai 
under that section. 
(ii) Cl. (b) of the proviso to s. 4(3)(i) was applicable only to a 
business not held in trust but carried on on behalf of a religious or 
charitable institution. 
(iii) A business held in trust wholly or in part for 
religion• or 
charitable purposes was not a business carried on on behalf 
of 
a 
religious or charitable institution. 
(iv) The dichotomy between the two expressions "wholly" and "'in 
part" in s. 4(3 )(i) was not based upon the dedication of the whole 
or a fractional part of the property, but between the dedication of lite 
said property the income from which was to be utilized wholly 
for 
religious or charitable purposes or in part for such purposes. 
(v) The expression ''such income" in the opening words 
of the 
proviso to s. 4(3) (i)' meant "income accruing or arising in favour of 
the trust". 
CML APPELLATE JURISDICTION: 
Civil Appeal Nos. 
606-610 of 1963. 
Appeals by special leave from the judgment dated Jan-
uary 20, 1961 of the Kerala High Court in Income-tax 
Referred Case No. 16 of 1959. 
K. N. Rajagopal Sastri and R. N. Sachthey, for the 
appellant (in all the appeals) . 
1964 
CJ.T. 
v. 
;,11na 
W arriat 
-:ubba Rao I. 
SUPREME COURT REPORTS 
S. T. Desai and Sardar Bahadur, for the respondent (in

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