GANGABAI CHARITIES versus COMMISSIONER OF INCOME-TAX AND ANR.

Citation: [1992] 3 S.C.R. 626 · Decided: 24-07-1992 · Supreme Court of India · Bench: KULDIP SINGH · Disposal: Dismissed

Judgment (excerpt)

A 
GANGABAI CHARmES 
v. 
COMMISSIONER OF INCOME-TAX AND ANR. 
JULY 24, 1992 
B 
[KULDIP SINGH AND YOGESHWAR DAYAL, JJ.] 
Income Tax Act; 1961-Section JJ(l)(a)-Construction of trust 
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deed-Kalyana Mandapam and Printing press---lncome derived by trust-
Whether exemption entitled, 
c 
A trust, namely, "Ganga Bai Charities" was created on 13.9.1958, to 
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construct and provide a building for the benefit of the public to be used 
" 
for religious, charitable cultural and social purposes. 
)...-. 
D 
The founder of the trust contributed Rs. 34,000 to the trust fund. · 
With that fund a plot of land was purchased and the construction of a 
building was begun. The fund was augmented by her son from his own 
contributions as well as from outside donations. 
The building was completed at the cost of about Rs. six lakhs and it 
E was being let out as a marriage mandapam to be used by the members of 
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the public. The income derived fro~/letting out the Kalyana Mandapam 
I 
r.ame to Rs.1,06,392.00 in the year ending March 31, 1963. For the sub-
sequent years also the income was substantial. The trust was also running 
a printing press and sizeable income was being from the press. 
... 
F 
income-tax proceedings were initiated against the trust. 
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The appellant-trust contended that the income derived from the 
property was being held wholly for religious and charitable purposes and 
as such was.exempt under Section 11 ofthe Income Tax Act. 
G 
The Income-tax Officer holding that the· income earned by the trust 
was taxable, rejected the contention of the trust. 
>--
On appeal the Appellate Assistant Commissioner reversed the In-
come-tax Officer's order, holding that the trust was a charitable trust and 
H its income was entitled to exemption under Section 11 of the Act. 
626 
GANGABAI v. C.I.T. 
627 
---{ 
J On further appeal by the department, the Tribunal upheld that .A 
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decision or the Commissioner but remitted the assessment to the Income· 
tax Officer to find out as to what extent in each year the trust income or 
accumulations were expended for charitable purposes. 
The Income Tax Appellate Tribunal referred the following question 
to the High Court under Section 256(1) of the Act:· 
"Whether it had been rightly held that the income of the trust would 
be entitled to exemption under Section 11 of the In-come Tax Act, 1961?" 
B 
The High Court answered the question in the negative and in favour C 
or the department, against which these appeals were filed by the assessee-
trust by special leave before this Court. 
On the question, whether the Gangabai Charities, a trust was en-
titled to exemption under Section ll(l)(a) or the Income Tax Act, 1961, 
this Court dismissing the appeals of the assessee-trust, 
D 
HELD : 1.01. The crux of the statutory exemption under Section 
l(l)(a) of the Income Tax Act, 1961 is not the income earned from property 
held under the trust but the actual application of the said income for 
religious and charitable purposes. It is, therefore, necessary to indicate in E 
the trust-deed the broad objectives for which the income derived from the 
property is to be utilised. There is no mention in the trust-deed as to how 
the income derived from the trust property is to be utilised. The public 
uses the building on payment or rent to the trustees. What is to be done 
with the money so collected has not been provided in the trust deed. There 
is no mandate in the trust deed that the income derived from the trust F 
property is to be spent on religious or charitable purposes. [632C-D] 
1.02. On a careful reading of the trust~deed it is not possible to 
cull-out in clear terms a specific charitable/religious object to conclude 
that the trust was set up wholly for or religious purposes. The "religious, G 
charitable, cultural and social" purposes referred to in the deed are not 
avowed as the objectives of the trust.itself. What the founder of the trust · 
intended to convey was that ihe building to be constructed out of the funds 
provided by her and supplemented from other sources, must be heed for 
the benefit of the public for being used by them for religious, charitable, 
cultural or social purpose~. [631 F·G] 
H 
"'· 
628 
SUPREME COURT REPORTS 
[1992) 3 S.C.R. 
A 
1.03. The intention of the founder was to provide a building for the 
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benefit for the benefit of the public to be used by them for religious, 
charitable and/or cultural and social purposes. It is nowhere stated in the

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