1. This is a case stated by the Income Tax Commissioner on a question of principle raised by a firm carrying on business in Cawnpore in these provinces. The business carried on by the firm is that of an oil mill, which includes buildings and other premises and machinery, and is, of course, carried on by them for profit. It is an ordinary trading business as defined in Section 2(4) of the Income Tax Act: 'Business includes any trade, commerce or manufacture, or any adventure or concern in the nature, of trade, commerce or manufacture.' The firm is a registered firm under the Income Tax Act. For reasons, which it is not necessary to specify, the Income Tax Act of 1922 enables a firm to register its business. A registered firm as provided by Section 2(14), 'means a firm constituted under an instrument of partnership specifying the individual shares of the partners of which the prescribed particulars have been registered with the Income Tax Officer in the prescribed manner.' Certain advantages accrue to the members of a firm so registered, upon which we need not now dwell. This firm was registered on the 9th of January 1923, and the shares of the respective partners if it is right to describe each of them as a member of the firm were divided in the following way Madan Gopal, the head of the firm, had seven annas in the rupee, Benarsi Das had three annas, Kunji Lal had three annas, and a charitable or religious object under the name of Radhe Ballabh a temple in Muttra had three annas. In substance, of course, that was merely a dedication by the three active members of the firm of 3/16ths of the profits of their business to charitable purposes. As a matter of fact, the 3/16ths is derived from the profits made in carrying on the business. There is no reason in the world why a firm should not divide 15/16ths of its profits to charitable or other public purposes, receiving 1/16th only for its own personal enjoyment. The result would be the same. The proportion so allotted would still be a proportion of the profits made by the business. That is not seriously denied. The objection taken by the firm is that the 3/16ths of their profits, which have been thus allocated to charity in their partnership deed is not liable to taxation on the ground that it is exempt as being devoted to religious or charitable purposes. Upon that point the Income Tax Commissioner, who decided against them, has stated a case to this Court. The Income Tax Commissioner has given reasons for his decision against the trading firm, which we do not think it necessary to discuss. It may on another occasion be necessary to decide whether all or any of his reasons are sound, and we think it better that we should not, without further argument, express any opinion upon the views so expressed. In our view the contention of the applicants raised a broader and more important question. The question is, whether the class of income of which 3/16ths in this case is undoubtedly devoted to charity, is within the exemption, or can, by any stretch of language, be brought within the exemption at all. The exemption relied upon by the applicant is contained in Section 4(3). It runs as follows: 'This Act shall not apply to the following classes of income:
(i) 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 purposes, the income applied, or finally set apart for application thereto.
2. In our view income derived from profits made by a trading concern in business, is not income derived from property held under trust. The provision in the deed in question is merely an allocation of the proportionate part of the profits to religious purposes. The exemption deals with a totally different subject matter. In most countries, in a manner with which we in India are familiar, Government has within certain limits exempted from the ordinary liabilities to contribute to public revenue, endowed property set apart by pious people, or held under pious trusts for purposes which are wholly religious or charitable, or in the case of properties which are only partly so held that part alone which is applied by the trust or the instrument creating it to religious or charitable purposes is granted an exemption, and the language used in Section 4(3)(i) is, in our opinion, appropriate to an exemption of that kind and to no other. It is impossible to hold, having regard to the terminology used in this Act, that the profits of a trading concern, are in any sense derived from property held under a trust or a legal obligation for religious purposes. That view is strengthened by a persual of Sections 9 and 10, in which the Legislature has demacrated the boundary line between property strictly so called, and a business, and has laid down the circumstances under which income-tax is payable upon property and payable upon profits derived from a business. In our view it is sufficient for the purposes of this case without deciding any question raised in the Income Tax Commissioner's decision that we should hold, as we do that the profits for which it is sought to claim exemption in this case, do not come within the exemption clause.
3. Therefore the case must be decided against the applicants who will pay the appropriate costs in such a case to the Income Tax Commissioner. The applicants must pay the amount certified being the same as that paid to their own Barrister.