LexTHE EAST INDIA INDUSTRIES (MADRAS) PRIVATE LTD., MADRAS & ANR. versus THE COMMISSIONER OF INCOME TAX, MADRAS
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THE E,\Sl' INDIA INDUSUlQ':S (MAl>RAS) PRIVATE LTD., A MADRAS & ANR. v. THE COMMISSIONER OF INCOME TAX, MADRAS April 3, 1967 [J. C. SHAH, S. M. SJKRI AND V. RAMASWAMI, JJ.] Indian Income-tax Act, 1922 (Act 11 of 1922), Ss. 4(3)(1) Olld 15- B-DoMtion to Trust-One object not charitable in Mture, and income to be utilised for any one of the objects-I/ exempted. The assessee claimed exemption from tax under s. 14-B of the Income- 1ax Act, 1922 for a sum donated to a Trust, whose most of tbe objects were charitable and religious in nature. but one was not, and it was open lo the tru!W'.es to utilise the income of any one of the objects to the ex- clusion of all other objects. Tbe Revenue rejected the claim for exemp- tion, but the Appellate Tribunal allowed it as it had in relation to the previous assessment year held that the Trust was a public trust. On reference, the High Court answered the question against the assessee. In appeal to this Court, the assessee contended that ( i) this particular ob- ject must not be read isolated from the other objects of the trust but having regard to the immediately preceding object which was to run hospitals and dispensaries, the impugned object, vi:., the manufacture of pharmaceutical and medicinal preparations must be deemed to be for the purpose of carrying out the earlier object, and (ii) the High Court acted in excess of jurisdiction in raising a new question which was not raised by the Appellate Tribunal, namely, whether the trust itsdf was constituted for wholly religious or charitable purposes within the meaning of s. 4 (3) (i) of the Act. HEID :-The appeal must fail. (i) There was no connection between the two objects of the trust and upon an interpretation of the document as a whole, it could not be said that the earlier object was the dominant object of the trust and the latter was a subsidiary object. In view of the absolute power of selection granted to the trustees to select between charitable and non-<:haritable objects, the provision of s. 4 ( 3) ( i) of the Act could not be applied to the Trust and no exemption could be granted to the assessee under s. 15-B of the Act. [360D-E, G] Mohammad Ibrahim Riza v. Commissioner of Income-tax, Nagpur, 57 I.A, 260; Oxford Group v. Inland Revenue Commissioners (1949] 2 All. E.R. 537 and Keren Kayen1eth Le Jisroel. Ltd. v. Inland Revenue Con1rs. 17 T.C. 27, 40 applied. (i) The High Court was within its jurisdiction in examining the ques- tion whether the Trust was eligible for exemption from income-tax under s. 4(3) (i) of the Act. Even where a question of law was not raised be- fore the Tribunal but the Tribunal deals with it, it must be deemed lo be one arising out of its order. [364B-D] Commissioner of Income-tax, Bombay v. Scindia Steam Navigation Co. Ltd, 42 I.T.R. S89, followed. CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1399 of 1966. B c D E F G H A B c D E F BAST INDIA INDUSTRIES v. C.I.T. (Ramaswami, J.) 357 Appeal by special leave from the judgment and order dated October 25, 1961 of the Madras High Court in Tax Case No. 62 of 1958 (Reference No. 37 of 1958). S. Swamlnathan and R. Gopa/krishnan, for the appellant. Veda Vya.sa, S. K. Aiyar, S. P. Nayyar and R. N. Sachihey, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by special leave, from the judgment of the Madras High Court dated October 25, 1961 in T.C. No. 62 of 1958. The assessee, the East India Industries Limited, paid a donation of Rs. 7 ,500 to a trust called "the Agastyar Trust" and claimed exemption from tax under s. 14-B of the Income-tax Act, 1922. hereinafter called the 'Act'. The trust had been created by the partners of a business firm, K. Rajagopal and Company. This firm had been carrying on business in waste paper. Under the terms of the partnership it was setting apart 80 per cent of the profits for charitable and religious purposes. On July l, 1944, a trust deed was executed,,liy Venkatarama Chetti. The claim of the assessee to exemption from tax was rejected by the Income Tax Officer on the ground that the trust did not fulfil the conditions laid down under s. 15-B of the Act. The Appellate Assistant Commissioner to whom an appeal was preferred took the same view. The matter was taken up in further appeal to the lncome- tax Appellate Tribunal which observed that in relation to the pre- vious asses
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