Harries, C.J. - (1.) This is a reference under Section 66 (i), Income-tax Act, at the instance of the assessee in which the following questions are propounded for the opinion of the Court: (1) Whether the legal obligation created by the deed was rightly construed by the Tribunal as a private religious trust? If so, (2) Whether the last paragraph of Section 4 (3) (xii) enumerated above governs both the words "trust" and; "other legal obligations" as mentioned in Section 4 (3) (i) or only "trusts"?
(2.) The income sought to be assessed in this case was income from property which admittedly was devoted to religious purposes. The only difference between the parties was whether these properties which produced the income, which were admittedly debutter properties, were properties held in trust for deities or properties dedicated to the deities. The question arose upon the true construction to be given to the phrase "held under trust or other legal obligation wholly for religious or charitable purposes" appearing in Section 4 (3) (i), Income-tax Act. To this sub section there is appended an Explanation which is in these terms : "In this sub-section, 'charitable purpose' includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility but nothing contained in Clause (i), Clause (ia) or Clause (ii) shall operate to exempt from the provisions of this Act that part of the income of a private religious trust which does not enure for the benefit of the public."
(3.) It will be seen that although under Section 4 (3) (i) income derived from property held under trusts or other legal obligation wholly for religious or charitable purposes is exempt from taxation, the Explanation makes it clear that only that part of an income of a private religious trust is exempted which enures for the benefit of the public and that part which does not enure for the benefit of the public is not exempt from taxation.;