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Zenith TIn Works Charitable Trust Vs. Commissioner of Income Tax, Bombay City-i - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIncome-tax Reference No. 5 of 1965
Judge
Reported in[1976]102ITR119(Bom)
ActsIncome Tax Act, 1952 - Sections 4(3); Income Tax Act, 1961 - Sections 31 and 66(1)
AppellantZenith TIn Works Charitable Trust
RespondentCommissioner of Income Tax, Bombay City-i
Appellant AdvocateV.H. Patil, Adv.
Respondent AdvocateR.J. Joshi, Adv.
Excerpt:
direct taxation - exemption - section 4 (3) of income tax act, 1952 and sections 31 and 66 (1) of income tax act, 1961 - whether income received by trustees by way of license fees was exempt under provision of section 4 (3) - according to section 4 (3) income from trust property would only be exempted if all objects of trust are of religious or charitable nature - trustees spend entire income on non-charitable object - held, trustees not entitled to exemption. - maharashtra scheduled castes, scheduled tribes, de-notified tribes (vimukta jatis), nomadic tribes, other backward classes and special backward category (regulation of issuance and verification of) caste certificate act (23 of 2001), sections 6 & 10: [s.b. mhase, a.p. deshpande & p.b. varale, jj] caste certificate petitioner.....tulzapurkar, j.1. at the instance of the assessee the following question of law have been referred to us by the tribunal for our opinion : '(1) whether, on the facts and in the circumstances of the case, income received by the trustees by way of licence fees in the assessment year 1960-61 was exempt under the provision of section 4 (3) (i) of the indian income-tax act, 1922 (2) if the answer to the 1st question is in the negative, whether on the facts and in the circumstances of the case, the appellate assistant commissioner of income-tax and the tribunal were competent to reject the claim of the assessee on the ground that income was not received by the assessee under trust or other legal obligation wholly for religious or charitable purposes as required under section 4 (3) (i) of the.....
Judgment:

Tulzapurkar, J.

1. At the instance of the assessee the following question of law have been referred to us by the Tribunal for our opinion :

'(1) Whether, on the facts and in the circumstances of the case, income received by the trustees by way of licence fees in the assessment year 1960-61 was exempt under the provision of section 4 (3) (i) of the Indian Income-tax Act, 1922

(2) If the answer to the 1st question is in the negative, whether on the facts and in the circumstances of the case, the Appellate Assistant Commissioner of Income-tax and the Tribunal were competent to reject the claim of the assessee on the ground that income was not received by the assessee under trust or other legal obligation wholly for religious or charitable purposes as required under section 4 (3) (i) of the Act, when the Income-tax Officer had rejected the claim on the mere ground that property, whose income was sought to be exempted, was not held under a trust ?'

The short facts giving rise to question No. 1 may be stated :

Two Muslim gentlemen, Mahomedhusein Shaikhalli Barodawalla and Sultanalli Shaikhalli Barodawalla, settled a sum of Rs. 5,000 upon trust for certain objects by an indenture dated June 12, 1959. The trustees were to hold and stand possessed of the trust property, inter alia, upon the following trusts :

'4. (1) (i) To establish, help, conduct and maintain institutions, which have for their objects the carrying out of public purposes of a charitable nature relating to the people of India :

(ii) For the education of the people of India by conducting and/or aiding the conduct of schools, colleges libraries, hostels, research institutions or any other educational institutions and/or publishing and/or aiding the publications of books, booklets, newspaper, magazines in any other manner;

(iii) Helping societies and institutions which have similar objects by way of grants, donations or otherwise;

(iv) To provide for welfare of the employees of the trust or any institutions conducted by the trust;

(v) To give scholarships or other aid or assistance to any students prosecuting studies either primary, secondary, college or post-graduate;

(vi) To donate income from the trust property or any part thereof for any institution which is likely to promote education or any other objects of public general utility;

(vii) If the income from the trust property in any particular year is not fully utilised for any of the aforesaid objects the trustees shall be entitled to carry forward the unexpended income to the next year.'

Under clause 4 (2) it was provided that :

'The trustees shall be at liberty to utilise the corpus of the trust property or any part thereof for any one or more of the objects aforesaid and in such proportion as they may in their absolute discretion think fit.'

2. It will appear clear that one of the objects of the trust as mentioned in clause 4 (1) (iv) was to provide for welfare of the employees of the trust or any institutions conducted by the trust and obviously that object could not be regarded as an object of any public charitable trust, and under the provisions of clause 4 (2) the trustees could if they thought fit in their absolute discretion spend not merely the entire income but even the entire corpus of the trust over any particular object of the trust.

3. It appears that the settlors were also interested in a private limited company called Zenith Tin Works Pvt. Ltd. (hereinafter referred to as 'the company'). The company was in occupation of certain premises, being a godown and 4 shops bearing Nos. 16, 17, 18, and 19 in Mahomedali Market, Plot No. 8, Lalbaug. The company had given the premises on leave and licence basis to M/s. Tata Fison Private Ltd. for a period of 11 months by an agreement dated May, 13, 1958. The licence fee was fixed at Rs. 2,700 per month. Subsequently, by another agreement dated July 1, 1959, the company allowed the trustees to occupy a portion of the shed situate at Lalbaug, Mohamedali Market, for a period of ten years and the portion allowed to be so utilised by the trustees admeasured 9,000 sq. ft. on payment to the company compensation at the rate of Re. 1 p. m. It appears that on November 9, 1959, there was a tripartite agreement entered into between the company, the trustees and Tata Fison Pvt. Ltd. under which the premises were given to Tata Fison Pvt. Ltd. on leave and licence for a fee of Rs. 2,700 per month payable by the licensees to the trustees. In other words, by reason of these two agreements-one dated July 1, 1959, and the other tripartite agreement dated November 9, 1959 - the trustees became entitled to receive licence fees from Messrs. Tata Fison Pvt. Ltd. in respect of the premises given on leave and licence basis to the latter. The assessee with whom we are concerned in this reference are the trustees of Zenith Tin Works Charitable Trust formed under an indenture dated June 12, 1959, and the assessment year in question is the year 1960-61, and the corresponding previous year is the year ended 31st March, 1960. During this previous year the trustees had recovered and realised the sum of Rs. 24,291 as a licence fee in respect whereof the trustees claimed exemption from tax under section 4 (3) (i) of the Income-tax Act as being the income from property held under trust of legal obligation for charitable purposes. The Income-tax Officer took the view that the source of this income, namely, right to receive licence fees under the agreements dated July, 1, 1959, and November 9, 1959, was not held by the assessee under a trust or other legal obligation and, therefore, the income that was received by the assessee was not saved from taxation under section 4 (3) (i) of the Act. He accordingly brought the said amount to tax. In the appeal that was preferred by the assessee to the Appellate Assistant Commissioner, the latter officer accepted the claim of the assessee that the property from which the income had been derived was held under trust or legal obligation, but further took the view that in view of certain provision which were contained in the objects clause read with clause 4 (2) of the indenture dated June 12, 1959, the trust could not be regarded as having been created wholly for charitable purposes. In this view of the matter he rejected the claim of the assessee to exemption sought under section 4 (3) (i) in respect of that income earned by the assessee and confirmed the Income-tax Officer's order. The assessee appealed to the Tribunal and two contentions were urged on behalf of the assessee before the Tribunal. In the first place, it was contended that during the year of account the trust had no employees and it was not conducting any institution and, therefore, there was no question of carrying out the particular object mentioned in clause 4(1)(iv) and there was no question of the trustees having exercised the power that was conferred upon them to spend the income or the corpus of the trust property for the object under clause 4 (2) of the indenture. It was also urged that the object mentioned in clause 4 (1) (iv) of the deed was an incidental one and the dominant objects of the trust were those mentioned in the other clauses of clause 4 (1) and that, therefore, the assessee was entitled to claim the exemption under section 4 (3) (i) of the Act. Secondly, it was contended that the Appellate Assistant Commissioner had travelled beyond the record and taken up a fresh ground not initially taken by the Income-tax Officer while disposing of the claim of the assessee, inasmuch as the Income-tax Officer had merely rejected the claim to exemption preferred on behalf of the assessee only on the ground that the source of income or the property from which the income had been derived was not held on trust by the assessee which ground did not appeal to the Appellate Assistant Commissioner but the Appellate Assistant Commissioner rejected the claim to exemption on the ground that having regard to certain clauses contained in the deed the trust could not be regarded as a trust wholly for charitable purposes. It was urged that it was not open to the Appellate Assistant Commissioner to shift the ground under section 31 of the Act. Both these contentions were negative by the Tribunal and the Tribunal confirmed the Appellate Assistant Commissioner's order and that is how the two questions were framed by the Tribunal on an application made by the assessee before it under section 66 (1) of the Indian Income-tax Act, 1922. However, Mr. Patil has not pressed the reference so far as question No. 2 is concerned and the only question for our consideration in this reference is whether on the facts and in the circumstances of the case the licence fees received in the assessment year 1960-61 was exempt under section 4 (3) (i) of the Income-tax Act

4. We have already set out above the objects clause, viz., clause 4 (1) of the deed of indenture dated June 12, 1959. It is true that the objects mentioned in sub-clauses (i), (ii), (iii), (v) and (vi) of clause 4 (1) would be objects of a public charitable trust. But even Mr. Patil did not dispute before us that the object mentioned in sub-clause (iv) of clause 4 (1) could not be regarded as an object of a public charitable trust. The other material provision in the deed is to be found in clause 4 (2), which runs as follows :

'The trustees shall be at liberty to utilise the corpus of the trust property or any part thereof for any one or more of the objects aforesaid and in such proportion an they may in their absolute discretion think fit.'

5. It will thus be clear from the aforesaid provision contained in clause 4 (2) of the deed that the trustees have been given absolute discretion to utilise not merely the income but also the corpus of the trust property or any part thereof for any one or more of the object mentioned in clause 4(1). In to the words, it is clear that even if the trustees were to spend the entire income or the entire corpus on non-charitable object mentioned in clause 4 (1) (iv), they would not be committing any breach of the terms and conditions of the trust and such expenditure on their part would be perfectly valid and proper. In view of this position which obtains very clearly under the indenture dated June 12, 1959, it seems very clear that the trust cannot be regarded as a trust having been created wholly for charitable purposes. This position has been clarified by the Privy Council in the case of Mohammed Ibrahim Riza Malak v. Commissioner of Income-tax, where the Privy Council has held that where the property is vested in the head of a community under deeds of trust, but the trust property is applicable to purposes, many of which are neither religious nor charitable, and it is not suggested that any part of the property is set aside for any charitable or religious purposes, so that it can be identified as appropriated exclusively for such purposes, then the income of the whole of the property is assessable to income-tax. In the instant case the objects mentioned in clause 4 (1) of the deed must be regarded as being independent objects in which even each one of such objects must be charitable before exemption under section 4 (3) (i) of the Act could be claimed. Admittedly, the object mentioned in sub-clause (iv) of clause 4 (1) is non-charitable object and under clause 4 (2) absolute discretion is conferred upon the trustees to spend either the entire income or the entire corpus on such non-charitable object and that being the position, it will not be possible to say that the trust is one which is created wholly for charitable purposes.

6. Mr. Patil for the assessee raised a two-fold contention before us. In the first place, he has contended that having regard to the provisions contained in the indenture read as whole the dominant intention of the settlors to do public charity becomes apparent and sub-clause (iv) of clause 4 (1) should not be regarded as providing for an object of the trust at all and, according to him, simply because sub-clause (iv) found place in clause 4 (1), it cannot mean that it is one of the objects of the trust. Alternatively, he contended that if at all what it provided in sub-clause (iv) is to be regarded as an object of the trust, it should be held to be an incidental or ancillary object not vitiating the dominant charitable purpose of the deed and, therefore, the assessee should be held to be entitled to the exemption under section 4 (3) (i) of the Act. In support of his first contention he invited our attention to sub-clause (vii) of clause (1), which provides as follows :

If the income from the trust property in any particular year is not fully utilised for any of the aforesaid objects the trustees shall be entitled to carry forward the unexpended income to the next year.'

7. What was urged by him was that the aforesaid provision could by no stretch of imagination be regarded as any object of the trust and even so such a provision was to be found in clause 4 (1) which dealt with the objects of the trust and by parity of reasoning he wanted to urge that sub-clause (iv) should be similarly read. It is not possible to accept this contention of Mr. Patil for the simple reason that though sub-clause (vii) finds a place in the objects clause 4 (1) of the deed, by the very terms thereof a provision is indicated as to what should happen if the whole of the income of the trust is not fully utilised or spent on the objects mentioned in a particular year, namely, that unexpended income should be carried forward to the next year and should be held by the trustees for the objects mentioned in the earlier part of clause 4 (1). Sub-clause (iv) could in no way be compared with such a clause, viz., sub-clause (vii), and the argument must be rejected.

8. Mr. Patil also contended that after all sub-clause (iv) of clause 4 (1) merely provided that the trustees should out of the income of the trust property provide for welfare of the employees of the trust or any institutions conducted by the trust. That is to say, the clause provided for normal obligation which the trustees would be required to carry out, namely, for making a provision for the employees of the trust or employees of any institution conducted by the trust and even without sub-clause (iv) it would have been obligatory upon the trustees to maintain staff of the trust or the staff of any institution conducted by the trust and to incur expenditure for their welfare and looked at from this angle the said sub-clause should be regarded as incidental or ancillary. Moreover, according to Mr. Patil, under clause 1 of the deed, it was provided that 'the settlors in pursuance of the said desire and for the purpose of carrying out charitable objects hereinafter mentioned and diverse other good causes and considerations moving unto them do hereby declare that they have before the execution of these presents transfer and delivered unto the trustees of the said sum of Rs. 5,000 (rupees five thousand) and all their right, title and interest therein', and object clause 4 follows clause 1 of the deed. In other words, according to Mr. Patil, the dominant intention of the settlors in executing this indenture was obviously to carry out charitable objects mentioned in the deed and such charitable objects were specified in detail in clause 4 (1) of the deed and amongst the charitable objects under sub-clause (iv) thereof it was provided that the trustees shall out of the income of the trust property provide for welfare of the employees of the trust or any institutions conducted by the trust. In other words, according to Mr. Patil, this sub-clause (iv) should be regarded, if at all, as incidental or ancillary object and since the main or dominant object of the deed was to do charity and since several other sub-clauses of clause 4 indicate what those charitable objects were, it should be held that notwithstanding sub-clause (iv) of clause 4 (1) the trust should be regarded as one having been created wholly for charitable purposes. It is not possible to accept this submission of Mr. Patil either. In the first place, there is nothing to indicate in clause 4 (1) of the deed that the object mentioned in sub-clause (iv) thereof is incidental or ancillary to other objects mentioned in the other sub-clause of clause 4 (1). Secondly, clause 4 (2) in terms elevates the object mentioned in sub-clause (iv) to the same level as the other objects mentioned in sub-clauses of clause 4 (1), for, under sub-clause (2) of clause 4, the trustees have been given liberty to utilise the corpus of the trust property or any part thereof for any one or more of the objects mentioned earlier and in such proportion as they may in their absolute discretion think fit. At least while conferring such power upon the trustees some indication could have been given by the settlors if they wanted to regard sub-clause (iv) as incidental or ancillary, but nothing of the kind has been done. In other words, sub-clause (2) of clause 4 has conferred absolute discretion upon the trustees to spend the entire corpus of the trust property or any part thereof upon any one or more of the objects mentioned in sub-clause (1) of clause 4. Further, it is not possible to accept Mr. Patil's contention that sub-clause (iv) of clause 4 (1) provides for management expenses, such as remuneration payable to the employees of the trust and that normally the trustees would have incurred such expenditure on the employees during the course of management of the trust. In fact, clause 4 (1) separately provides for expenses for management and maintenance of the trust property. In terms, clause 4 (1) provides that the trustees shall pay out of the rents, profits, interest, dividends and income all outgoings payable in respect of the trust property including all ground rent, rates, taxes and costs of repairs of any immovable property forming part of the trust property, premium for insurance or any other costs, charges, expenses and outgoings of and execution of the trusts therein contained including the wages and salaries of employees and it is after payment of such outgoings and other expenses that the trustees have been directed to spend the income of the trust property over the objects which have been specified in sub-clause (i) to (vi) of clause 4 (1). In a way this independent provision for meeting the expenses of the management and maintenance of the trust property including wages and salaries of the employees on the contrary suggests that the settlors had in mind while incorporating sub-clause (iv) in clause 4 (1) that it was an independent object of the trust for which the trustees were given liberty to spend the income of the trust property. Having regard to the above position which obtains very clearly on reading of the deed of trust as a whole, it is difficult to accept Mr. Patil's contention that sub-clause (iv) of clause 4 (1) should either be regarded as not providing any object at all or as providing for an incidental or ancillary object. It is clear to us that the object mentioned in sub-clause (iv) is also one of the independent objects on which the trustees have been given power to spend the income of the property or even the entire corpus of the trust property by virtue of clause 4 (2) of the deed and if that be so, it is clear that the trust in question cannot be regarded as being one created wholly for the purpose of the charitable objects.

9. During the course of his argument Mr. Patil referred to a number of reported decisions, but we do not think it necessary to refer to all the cases relied upon by him; reference to a couple of decisions would be sufficient. He principally relied upon a decision of this court in Commissioner of Income-tax v. Breach Candy Swimming Bath Trust. In that case under a trust deed executed in 1876 between the Government of India and the Bombay Municipal Corporation a trust was created with the object of constructing and maintaining a salt water swimming bath at a certain place for the use and benefit of the European public of Bombay. The trust was being administered by the Corporation and the bath was erected and maintained by it. Subsequently by a scheme of the High Court the trust was administered by certain named trustees instead of by the Corporation. Power was also given to the trustees to make provision for the supply of refreshments including alcoholic liquors to those resorting to the bath at the bar and restaurant which was already in existence. The question was whether the income from the sale of tickets for admission to the bath and from the bar and restaurant was exempt from tax on the ground that the trust was a charitable trust and this court took the view that the object of the trust was the maintenance of a swimming bath for the benefit of the European public at Bombay and it was an object of general public utility, that as no private gain was made out of the income of the trust, the mere fact that profits were made by it by charging admission fees, etc., did not prevent it from being a charitable trust and that, therefore, the income was derived from property which was held in trust wholly for a charitable purpose and it was exempt from tax under section 4 (3) (i) of the Act. One of the contentions urged before the court was that the income derived from the activity of supplying refreshments including alcoholic liquors to persons re sorting to the bath was not an activity connected with the purposes of the trust and that if one of the objects of the trust was to supply refreshments to persons who went to swimming bath, such an object could not be regarded as a charitable object. The court, however, observed that a clear distinction must be drawn between the object of the trust and the powers conferred upon the trustees of the trust which powers were incidental to the carrying out of the object of the trust. In that case the only object of the trust, which was very clear both from the original indenture of trust and the scheme framed by the High Court, was the maintenance and construction of a salt water swimming bath at Breach Candy and the provision with regard to the supply of refreshments was power conferred upon the trustees to exercise it or not according to their discretion in the carrying out of the object of the trust. The facts in the instant case before us are quite simple. In view of the discussion which we have already made, it is clear that sub-clause (iv) of clause 4 (1) of the deed must be regarded as one of the independent objects of the trust and it was under clause 4 (2) of the deed that power has been conferred upon the trustees to utilise the income or corpus of the trust property or any part thereof for any one or more of the objects mentioned in clause 4 (1). The decision relied upon by Mr. Patil, therefore, does not assist him.

10. The next decision on which Mr. Patil relied was the case of Bai Hirbai Rahim Aloo Paroo v. Commissioner of Income-tax. In that case certain properties were settled by two sisters belonging to the Khoja community on trustees by their will with the intention of creating a charitable and religious endowment. The trusts were consolidated and a scheme of management was sanctioned by the High Court of Bombay. Though it was clear from the general tenor and the several clauses of the will and the scheme that the dominant intention of the settlors was to create trust for charitable and religious purposes, the departmental authorities held that the trust was not a trust wholly for religious or charitable purposes within the meaning of section 4 (3) (i) of the Income-tax Act and was not entitled to exemption under that provision, on account of clause 9 (2) (c) of the scheme which contained a provision enjoining the trustees 'to hold an annual majlis or a meeting of the whole of the relations and acquaintances of Kesarbai (the settlor), widow of Dharamsey Khakoo, and feast them in Bombay in remembrance of the anniversary of Imam Hussein Saheb in the name of her husband Dharamsey Khakoo and incur and pay such expenses in connection therewith as the trustees may think proper'. The view taken by the taxing authorities and the Tribunal was negatived by this court and with reference to clause 9 (2) (c) this is what this court observed :

'Now, turning to clause 9 (2) (c) which is the only clause on the basis of which it has been held that the document does not create a trust which is wholly for religious or charitable purposes. The clause no doubt provides for a feast to be given to the whole of the relations and acquaintances of Kesarbai, widow of Dharamsey Khakoo, but if ti were the true intention merely to provide for a feast for them, we cannot see how that clause would occur in the context in which it occurs, because the clause begins by saying 'hold an annual majlis or a meeting of the whole of the relations and acquaintances of Kesarbai' and then comes the provision 'feast them'. What is more, the day on which the feast is to be given, it is clear, is fixed. It is only one day in each year (that is clear from the expression 'annual majlis'). Again, the feast is to be 'in remembrance of the anniversary of Imam Hussein Sahib'. Thus, it must be on a fixed day. Imam Hussein Saheb is held in the greatest reverence by the Shias, to which sect the Khojas belong and to which the two sisters belonged. He was done away with on the 10th day of the month of Moharam and, therefore, when the provision states that the feast is to be in remembrance of the anniversary of Imam Hussein Saheb, it is clear that it should be on the exact day on which the anniversary of the death of the Imam Saheb falls.......

Now, no doubt, in connection with the purpose, namely, the remembrance of the anniversary of the Imam Hussein Saheb it is also mentioned, in the clause 'in the name of her husband Dharamsey Khakoo'. Relying on these words, it was urged by Mr. Joshi, on behalf of the department, that these words which we have just quoted indicate that it was private object, namely, the commemoration of her husband's name, and that conclusion is also supported by the provision for feeding the relations and acquaintances of the settlors. We do not think we can construe sub-clause (c) of clause 9 (2) in this manner. The dominant intention of that clause is, as we have shown, to hold an annual majlis or a meeting in remembrance of the anniversary of Imam Hussein Saheb, who is the subject of the highest veneration by the Khojas to which sect Kesarbai belonged. The provision that the celebrations should be associated with the name of her husband does not, in our opinion, take away from the main provision of the sub-clause. We may also emphasise here that the words used are 'majlis' and, as we shall show, a majlis is essentially a religious meeting in the context in which it is used here. No doubt, today the word 'majlis' also implies any educational or cultural purpose, but in the context in which it is used, namely, 'remembrance of the anniversary of the Imam Hussein Saheb', it can only mean that it is a religious meeting.'

11. It will thus appear from the passage quoted above from the judgment that though in clause 9 (2) (c) the commemoration of one of the settlor's husband's name was also indicated, on a proper construction of the clause this court came to the conclusion that the dominant intention of that clause being to hold an annual majlis (or a meeting) in remembrance of the anniversary of Imam Hussein Saheb, who was regarded with the highest veneration by the Khojas, the provision that the celebrations should be associated with the name of her husband did not change the nature of the main provision of the sub-clause, and that, therefore, the objects of the trust could be regarded as religious object. We do not think that Mr. Patil can derive any assistance from the aforesaid decision in support of his contention. For, after all, the decision turned on the proper interpretation or construction to be placed on the relevant clause 9 (2) (c) contained in the deed. There is one more decision to which we can usefully refer which, in our view, clarifies the position very succinctly and that is the decision of the Delhi High Court in Commissioner of Income-tax v. Jaipur Charitable Trust, where the words 'wholly for religious or charitable purpose' occurring in section 4 (3) (i) of the Income-tax Act came up for consideration and the Delhi High Court has observed thus :

'The words 'wholly for religious or charitable purposes' in section 4 (3) (i) show that the income from the trust property would only be exempt if all the objects of the trust are of a religious or charitable nature. In case a trust has ten distinct and separate objects and nine of them are of a religious or charitable nature, but the tenth is not of a religious or charitable nature and there is nothing to prevent the trustees from applying the property of the trust in carrying out any of the objects of the trust including the object which is not of a religious or charitable nature, the income derived from the property of the trust would not be exempt from taxation under section 4 (3) (i). The reason for that is that the trustees in such an event can apply the property of the trust exclusively for that object of the trust which is not of a religious or charitable nature. ...... The only relaxation which has been permitted, in such cases, is that if all the primary objects of the trust are of a religious or charitable nature, the existence of an ancillary or secondary object which is not of a religious or charitable nature but which is intended to subserve the religious and charitable objects would not prevent the grant of such an exemption.'

12. In the only instant case, as we have already discussed above, we are not inclined to accept Mr. Patil's contention that the object occurring in sub-clause (iv) of clause 4(1) of the deed is either incidental or ancillary to the other objects mentioned in clause 4. In our view, it is one of the independent objects on which the trustees in exercise of their power conferred on them under clause 4 (2) could spend even the entire income or the corpus of the trust property during the course of administration of the trust. In other words, it is clear to us that even if the trustees under the indenture dated June 12, 1959, were to spend the entire income over non-charitable object as mentioned in sub-clause (iv) of clause 4 (1), they would not be committing any breach of any of the terms or conditions of the trust. In such a situation, it is clear to us that the trust cannot be regarded as one created wholly for charitable purposes.

13. In this view of the matter, the first question referred to us will have to be answered in the negative and against the assessee. the assessee will pay the costs of the reference to the department.


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