JUDGMENT

RAY. C. J.:— These appeals by special leave are from the judgment dated 26 May, 1970 of the High Court of Delhi.

2. The question referred to the High Court under Section 66 (1) of the Income-tax Act, 1922 referred to as the Act was as follows:-

"Whether on the facts and in the circumstances of the case the income of the trust which was spent on the religious and charitable purposes within the taxable territories was exempt under Section 4 (3) (i) of the Indian Income Tax Act, 1922."

3. The main judgment was delivered in Income Tax Reference no. 40 of 1965.

4. The High Court answered the question in the negative.

5. The trust in Income Tax Reference No. 40 of 1965 was taken as typical of all the cases. The deed of trust dated 12 April, 1948 was made by Ramkrishna Dalmia. The trust was called "Jaipur Charitable Trust". In Jaipur Charitable Trust Rs. 10,000 was given on trust on the terms and conditions set out in the deed.

6. The objects of the trust in clause 5 (a) are, inter alia, as follows:

(i) To open, found, construct, establish, take over, equip, promote, conduct, maintain, support, subsidise, grant aids and make donations to schools, colleges, Pathshalas, boarding houses, reading clubs, libraries, art, music or literary societies and other institutions, educational or otherwise, associations, printing presses, journals, newspapers, periodicals, and other publications for imparting or developing religious, commercial , industrial, legal, medical, engineering scientific or other knowledge or training.

(ii) To give stipends, scholarships, travelling expenses, allowances and monetary aids to students and scholars in India and abroad, engaged in any of the pursuits referred to in sub-clause (i).

(iii) To found, construct, maintain, support, assist or grant aids or subscriptions 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.

(v) To open, found, establish, equip, finance, assist, maintain or contribute to religious, commercial technical, industrial or commercial concerns, institutions, associations or bodies imparting any type of training or providing employment to persons.

(vi) To give donations, subscriptions or contributions to any other Charitable Trust in Jaipur State or outside.

7. There are other objects to help widows, orphans, lunatics, indigent persons and to give relief to the poor and distressed, to build, equip, take over, conduct, maintain and grant aids to dispensaries, maternity homes, hospitals, lunatic asylums; to construct, erect and maintain bridges, bathing ghats, to give relief by subscription or otherwise during famines, flood, earthquake, pestilence; to help or maintain institutions for the cultural social or economic advancement of any country or countries.

8. For the purpose of carrying our the trust the trustees are empowered in clause 5 (b), inter alia, (a) to purchase or otherwise acquire any property, rights, leases, concession; (b) to purchase or acquire, start, establish, equip or close any business undertaking or industry; (c) purchase, acquire or undertake the whole or any part of property and liabilities of any person, firm or company.

9. The property of the Trust is vested in the trustees. Clause (9) of the Trust Deed provides that the Trustees shall carry out the aforesaid objects from out of the net income of the Trust left after meeting the expenses of management and all charges and outgoings so far as such income shall permit, and shall not utilize the income or any portion thereof for any other objects or purpose.

10. Section 4 (3) (i) of the Act is as follows:-

"Any income, profits or gains falling within the following classes shall not be included in the total income of the person