BEAUMONT, C.J. - This is a reference made by the Commissioner of Income-tax under Section 66(3) of the Indian Income-tax Act, this Court having directed the Commissioner to state the question of law. The question raised is : 'Whether that portion of the income of the trust which is allocated to the family charity fund is income which is exempt from taxation under the provisions of sub-section (3)(i) of Section 4 of the Act.'
The relevant provisions of Section 4(3) of the Income-tax Act provide for exemption in the case of any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purpose, the income applied or finally set apart for application, thereto; and then it is provided 'In this sub-section charitable purpose includes relief of the poor, education, medical relief, and the advancement of any object of general public utility.' That definition is wider than the legal acceptation of the term 'charity' under English case law, which does not include purposes of general public utility.
Now, the trust in this case was made in the year 1935 by certain Mahomedan gentlemen. And it recited that the settlors out of charitable motives and consideration and in order to make a permanent dedication for religious and charitable purposes in manner therein after appearing were desirous of settling and had agreed to settle as and by way of and in the nature of a Wakf the property therein described. Then the property is transfer to the trustees; the trustees ar to hold the property and pay expenses, and then it is provided : 'The trustees shall set apart 34 per cent. of the net income of the trust premises (hereinafter referred to as the Family Charity Fund) and shall utilise and spend the same for the maintenance, support or well-being of the poor, needy, destitute, distressed, disabled or unemployed members of the families of the said Abdul Karim Peermahomaed, his sons, grandsons and male lineal descendants from generation to generation, including payments in the shape of monthly or periodical doles or pensions or of lump sums on religious or ceremonial occasions.' Then it is provided that the trustees are to set aside 33 per cent. of the net income of the fund, which is referred to as 'the Education Fund' and apply the same for education purposes; and they are to set aside another 33 per cent. of the net income of the fund, which is referred to as 'the Charitable and Religious Fund', and utilise the same, amongst other things, for the amelioration, relief or well being of poor, needy, destitute, distressed or disable members of the Mahomedan community.
The Income-tax Officer has allowed a deduction in respect of the 'Education Fund' and 'Charitable and Religious Fund' but in his view, which has been upheld by the Assistant Commissioner, and with which the Commissioner agrees, the 'Family Charity Fund' is not, within the meaning of Section 4(3), held wholly for religious or charitable purposes.
The main difficulty in the way of holding that the object of this Fund are charitable is the reference to 'unemployed members of the families', and the power to apply the income in lump sums on ceremonial occasions. It is argued that the Court should read 'unemployed members of the families' ejusdem generis with the words which have gone before, namely, 'poor, needy, destitute, distressed, disabled.' But it is difficult to assign any meaning to unemployed members' unless the word 'unemployed' goes beyond people who are poor, needy, destitute, distressed, or disabled. And it is pertinent to observe that in the case of the trust for members of the Mahomedan community in general, the 'Charitable and Religious Fund', the words used are exactly the same, except for the omission of the words 'or unemployed.' So that, the settlors evidently intended that whereas in the case of the 'Family Charity Fund' unemployed members of the settlors families were to be entitled to benefit, in the case of the trust for Mahomedans generally 'unemployment' was not to be a ground qualifying for relief. It is rightly contended for the Commissioner that unless one gives some restricted meaning to the word 'unemployed' people in that category do not fall within the concept of charity. Many persons are unemployed, not because they are poor, but because they are wealthy enough not to need employment, if the class of unemployed is confined to those who are poor or needy, the class I superfluous because the poor and needy are included in the earlier words. And if 'unemployed members of the families' is held to include only persons who are anxious to be employed, but cannot get employment, one is reading into the clause something which is not there were (sic) such a gift shall be regarded as charitable. There is a further difficulty in that the income of this fund may be spent on ceremonial occasions, for example on marriage ceremonies of persons who happen to be unemployed. It is difficult to see how marriage ceremonies can be regarded as charitable.
On these grounds, I think the view of the Income-tax Officer and of the Commissioner that this Fund is not held solely for charitable or religious purposes is correct, and we must answer the question raised in the negative. The assessee to pay costs.
CHAGLA. J. - I agree. Reference answered in the negative.