- (1.) The assessee is a public charitable trust created by the late Nizam by an indenture dated 14/06/1954, and is called "H. E. H. The Nizams Charitable Trust". The objects of the Trust are charitable in nature and the Trust is a public charitable trust.
(2.) The procedure adopted in making disbursements to several donees is as follows : The trustees pass resolutions sanctioning payments to various donees. As soon as the resolutions are passed, the money is earmarked specifically for a particular purpose and for a particular donee. But it often happens that it takes some time before the actual disbursements are made and though the resolutions are passed during the accounting year, the amount is disbursed after the accounting year (which is the financial year) and as soon as the resolutions are passed, they are debited to the income and expenditure account and credited to the outstanding payment account which contains the amounts due to the various donees as per the resolutions passed by the board. The amounts debited to the income and expenditure account but which are not actually disbursed, are shown as liabilities in the balance-sheet. At the time when the payment is made, the outstanding payment account is debited.
(3.) Under s. 11(1)(a) of the I.T. Act (hereinafter called "the Act"), the income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India, shall not be included in the total income of the previous year of the person in receipt of the income. Where any such income is accumulated for application to such purposes in India, to the extent to which the income so accumulated is not in excess of twenty-five per cent. of the income from the property or rupees ten thousand, whichever is higher, shall also not be included in the total income of the person in receipt of the income.;