- (1.) C. A. Nos. 4294-4303/2000 These appeals by the Revenue arise upon a certificate of fitness given by the High Court of Kerala. The High Court answered in the affirmative and in favour of the assessee-Trust the following question : "Whether, on the facts and in the circumstances of the case, the assessee is charitable institution whose income is exempt under Section 11 of the Income-tax Act, 1961 -
(2.) The assessee-Trust is a public charitable Trust. It was constituted under a Trust Deed dated 14th April, 1975. The settlors of the Trust were certain Muslim residents of Kerala. They constituted the Trust "for the purpose of constructing and establishing at Palghat a Shadi Mahal and other institutions for the educational, social and economic advancement of the Muslims and for religious and charitable objects recognised by Muslim Law..." Within a few days of the creation of the Trust, i.e., on 20th April, 1975, a special General Body Meeting of the Trust was held and it was resolved thus: "It was decided to further clarify the clause in the Trust Deed regarding the purpose of the Trust as mentioned in page-5 of the Trust Deed as :- The income of the Trust as well as the Shadi Mahal Building proposed to be erected shall be made available to all communities irrespective of religion, caste or creed." Upon this basis, the Trust made a claim for exemption from tax under Section 11 of the Income-tax Act, 1961. The matter went up to the High Court which restored the appeal to the Income-tax Appellate Tribunal with certain directions. Thereafter, the Tribunal came to the conclusion that the Trust was entitled to the exemption by virtue of the provisions of the Second Explanation to Section 13 of the Act. The High Court, in the judgment and order under challenge, has upheld this finding.
(3.) Section 11 deals with income from property held for charitable and religious purposes and sets out which income shall not be included in the total income of a Trust. It does not apply when the provisions of Section 13 are attracted. Section 13(1)(b) is relevant here, and reads thus : "13(1) Nothing contained in Section 11 or Section 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof- (a) ................................... (b) in the case of a trust for charitable purposes or a charitable institution created or established after the commencement of this Act, any income thereof if the trust or institution is created or established for the benefit of any particular religious community or caste." The Second Explanation to Section 13 reads thus : "Explanation 2.- A trust or institution created or established for the benefit of Scheduled Castes, Backward Classes, Scheduled Tribes or women and children shall not be deemed to be a trust or institution created or established for the benefit of a religious community or caste within the meaning of clause (b) of sub-section (1).";