LexYOGIRAJ CHARITY TRUST versus COMMISSIONER OF INCOME-TAX, NEW DELHI
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
947
YOGIRAJ CHARITY TRUST
v.
COMMISSIONER OF INCOME-TAX, NEW DELHI
March 30, 1976
[A. N. RAY, C.J., M. H. BEG AND JASWANT SINGH, JJ.]
Exen1ption from /ncome-tax-Rejigious and
charitable
purposes .. -I ndian
l11co1ne-tax Act, 1922-Section 4(3)(i)-Intent-Test
for
trea~ing a
Trust
incuJnt' as of a charitable 1wture and for entitlenient to exe111rti(!n u11Jer s. 4(3)
(i) ibid.
Charitable purposes under s. 4(3) of the Income Act includes relief of the
poor, education, medical relief and the advancement of any other object of
general public utility, but nothing contained in clause (i) and (ii) of s. 4(3)
applies and shall operate to exempt from the provisions of the Act that part of
the income from property held under a trust or other legal obligation for private
religious purposes which does not ensure for the benefit of the public.
,'\ii the six income-tax references made by the Income-tax Appellate_ Tribunal,
Delhi Bench under s. 66(1) of the Indian Income-tax
Act,
1922 as
to
''\vbether on the facts and in the circumstances of the case the income of the
tirust whic.h was spent on the religious and charitable purp6ses within the tax-
able territories was exempt under s. 4(3) (i) of the Indian Income Tax Act.
1922" \Vere answered in the negative and in favour of Revenue, by the Division
Bench of the Delhi High Court holding "that the property of the trust cannot
be held to be v.··holly for religious or charitable purposes".
The terms of the
trust deeds in all the cases are similar and the pattern of financial dealing of
the various trusts is also the same as could be seen from the objects of the
trusts particularly clauses (5) (a), which are, inter alia, as follows :-
A
B
c
D
(i) To open, found, construct, establish takes over, equip, promote,
conduct, maintain, support, subsidise, grant aids and make dona-
E
tions to schools, colleges, Pathshalas, boarding
houses.
reading
clubs, libraries, art, music or literary societies and other institution~,
educational or otherwise, w;sociations, printing
presses,
journals,
newspapers, periodicals, and other religious, commercial, industrial,
legal, medical, engineering scientific or other knowledge or train-
ing.
(ii) To give stipends. scholarships, travelling expenses allowances and
monetary aids to students and scholars in India and abroad engaged
F
in any of the pursuits referred to in sub-clause {i).
(iii) To found, construct, maintain, support, assit_;t or
grant
aids
or
subscriµions to temples, prayer or congregational halls or other
buildings for cultural, social or religious discourses.
(iv) To open, found conduct, maintain, or contribute to the opening
and maintaining of such institutions where work at living wageS
can be provided to poor and deserving people and also be conducive -
to the development of industries and benefit of the poor.
G
(v) To open, found, establish, equip, finance assist, maintain or contri-
bute to religious commercial technical industrial or
commercial
concerns, institutions, associations or bodies imparting any type of
traiiaing or providing employment to persons.
(vi) To give donations. subscriptions or contributions to anv
other
Charitable Trust in Jaipur State or outside.
-
Clauses 11 and 16 of the deed give an uncontrolled discretion to the trustees
to spend the whole of the trust fund on any of the non-charitable obiects of
the trust. The non-charitable obJects authorise the opening and maintaining of
commercial institutions where work at Jiving wa~es can be orovided to the
H
948
SUPREME COURT REPORTS
(1976] 3 S.C.R.
A
poor and also to contribute to commercial, technical, industfial or commercial
concerns, institutions associations or bodies imparting any type of training .or
providing ep1ployment to persons.
B
c
D
E
F
G
H
Dismissing the appeals by Special Leave, the Court held :-
( 1) In order to claim the benefit of exemption under s. 4(3)(i) of the
Act the property must be held under trust or other legal obligation wholly for
religious or charitable purposes.
The only relaxation is that all the primary
objects of the trust must be of religious and charitable nature and the existence
of any ancillary or secondary object which is not of a religious or charitable
nature but which is intended to subserve the religious and charitable objects
may not prevent the grant of an exemption.
This is because such an ancillary
or secondary obje1:t even thoughExcerpt shown. Read the full judgment & AI analysis in Lexace.