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High Court Of Delhi
COMMISSIONER OF INCOME TAX - Appellant
Versus
JAIPUR CHARITABLE TRUST - Respondent
I.T.R. 40 of 1965
Decided On : 05/26/1970
INCOME TAX - Exemption - Religious and charitable purposes - Property held under trust - Whether income derived from property held under trust wholly for religious or charitable purposes - Section 4 (3) (i) of the Indian Income-tax Act, 1922.
Fact of the Case:
The assessee-trusts were created by Seth Ramkrishna Dalmia. The income of the trusts was spent on religious and charitable purposes within the taxable territories.
Finding of the Court:
The property held by the assessee-trust was not "wholly for religious or charitable purposes" and as such the assessee is not entitled to the exemption under section 4 (3) (i) of the Act.
Issues: Whether the property held by the assessee-trust was "wholly for religious or charitable purposes" within the meaning of Section 4 (3) (i) of the Indian Income-tax Act, 1922.
Ratio Decidendi: The objects of the trust have been reproduced above and though a good many of them are of a religious or charitable nature, some of them are not a religious or charitable nature.
Final Decision: The question, REFERRED TO this Court in the six cases, is answered in the negative.
( 1 ) THIS judgment would dispose of the following six Income-tax References made under Section 66 (1) of the Indian Income-tax Act, 1922 (hereinafter REFERRED TO as the Act):-
(1) Income-tax Reference No. 40 of 1965. The Commissioner of income-tax v. Jaipur Charitable Trust, Delhi.
(2) Income-tax Refernece Nc. 25 of 1965. The Commissoner of Income-tax v. Yogiraj Charity Trust Delhi.
(3) Income-tax Reference No. 42 of 1965. The Commissioner of Income-tax v. Dalmia Jain (Jind State) Charity Trust, Delhi.
(4) Income-tax Reference No. 43 of 1965. The Commissioner of Income-tax v. Bhriguraj Charity Trust, Delhi.
(5) Income-tax Reference No. 37 of 1965. The Commissioner of Income-tax v. Dalmia Jain Charity Trust, Delhi.
(6) Income-tax Reference No. 38 of 1965. The Commissioner of Income-tax v. Dalmia Jain Charity Trust, New Delhi.
( 2 ) THE respondent-trusts were created by Seth Ramkrishna Dalmia. The first four trusts were created as per trust-deeds dated April 12, 1948, March 7, 1949, June 14, 1948 and March 9, 1949 respectively. The Trust which is the subject matter of 5th and 6th References, was created as per trust-deed dated June 1, 1946.
THE following question has been REFERRED TO this Court in all the six cases :-
"whether on the facts and in the circumstances of the case the income of the trust which was spent on religious and charitable purposes within the taxable territories was exempt under Section 4 (3) (i) of the Indian Income-tax Act, 1922. "
( 3 ) REFERENCE No. 40 of 1965 relates to assessment years 1954- 1955, 1955-56, 1956-57, 1957-58, 1958-59, 1959-60 and 1960-61. The assessment years covered by Reference No. 25 of 1965 are 1953-54, 1954-55, 1955-56, 1956-57, 1957-58 and 1958-59. Reference No. 42 of 1965 pertains to assessment years 1956-57, 1957-58 and 1958-59, while Reference No. 43 of 1965 is in respect of assessment years 1953-54, 1954-55, 1955-56, 1956-57, 1957-58 and 1958-59. Reference No. 38 of 1965 relates to assessment years 1948-49 and 1949-50, while Reference No. 37 of 1965 relates, in respect of the same Trust, to the assessment years 1953-54, 1954-55, 1955-56, 1956-57. 1957 58 and 1958-59.
( 4 ) ARGUMENTS have been addressed in Reference No. 40 of 1965 relating to Jaipur Charitable Trust; According to Mr. Kirpal on behalf of the Commissioner of Income-tax and Mr. Sharma on behalf of the assessee-Trust the terms of the Trusts in all the cases are similar and the pattern of financial dealings of the various Trusts is also the same. It has been further stated by the learned counsel for the parties that the decision in the case of Jaipur Charitable Trust would also govern the other cases. In the circumstances it would be necessary to give the facts leading to Reference No. 40 of 1965.
( 5 ) JAIPUR Charitable Trust, as stated earlier, was created by Seth Ramkrishan Damia as per deed of Trust dated April 12, 1948. The preamble of the Trust reads as under :-
"whereas the founder, who originally belongs to Jaipur State, has always been desirous of creating a religious and charitable trust in Jaipur State for the benefits of the public in general and for the people of Jaipur State in particular.
"and WHEREAS the Founder has now decided to create such a Trust to be called the Jaipur Charitable Trust (hereinafter REFERRED TO as the TRUST) and has dedicated therefor and endowed the same with Rupees Ten Thousand and has handed over the said sum of Rupees Ten Thousand to the Trust, subject to and on the terms and conditions set out herein : AND WHEREAS with a view to secure the proper and permanent administration of the Trust, it is considered desirable to execute a formal Deed of Trust. "
( 6 ) CLAUSE I of the trust deeds with the name of the Trust, while Clause 2 provides that the sum of Rs. 10,000. 00 shall be the property of the Trust. According to Clause 3 of the Trust Property would include the sum of Rs. 10,000. 00 and all additions and acquisition therewith. Clause 4 pertains to the location
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