S.C. Agrawal, J. - (1.) IN this reference, which relates to the assessment year 1972-73, the INcome-tax Appellate Tribunal, Jaipur Bench, Jaipur (hereinafter referred to as " the Tribunal"), has referred the following questions for the opinion of this court: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that by the amended trust deed of 1958, the assessee-trust has not acquired the status of a trust wholly for charitable or religious purposes in order to entitle it to exemption under Section 11 of the INcome-tax Act, 1961 ?
(2.) WHETHER, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee-trust is not entitled to exemption under Section 11 of the Income-tax Act, 1961 ? " 2. Laxminarain Lath Trust (hereinafter referred to as " the assessee ") is a trust established by Shri Laxminarain Lath by a settlement deed (annexure D) dated August 25, 1948. By the said settlement deed, the settlor, Shri Laxmi Narain Lath, transferred to the trustees a sum of Rs. 5,000 and the investment for the time being representing the same and all other sums of property for the time being forming part of the trust estate to have and to hold the same unto the trustees for the objects mentioned in Clause 2 of the said settlement deed. In Sub-clauses (i) to (xv) of Clause 2 of the settlement deed, the objects of the trust were set out. The said objects were, inter alia, advancement of education amongst Hindus at Mandrella in the former Jaipur State or any other place in India, puja to Shiva, establishment of temples, dharamshalas, hospitals, orphanage homes, provision of medical aid and relief to suffering people by aiding, establishing and maintaining hospitals, dispensaries and nursing homes and providing help for victims of natural calamities, etc. One of the objects as mentioned in Sub-clause (vi) of Clause 2 was " to render aid to any persons belonging to the family of Laths and to grant monthly and other periodical aids to them ". Under the said settlement deed, there were four trustees, namely, Shri Laxmi Narain Lath, the settlor, Shri Narbada Prasad Lath, the son of the settlor, Shri Bissessurlal Lath and Shri Motilal Lath. On May 21, 1958, the settlor, Shri Laxminarain Lath, and the then trustees executed a supplementary (clarification) deed (annexure E) with a view to clarify and place on record the true intention of the settlor and of the trust. By this supplementary deed, amendments were made in Sub-clauses (i), (vi), (vii) and (xv) of Clause 2 of the settlement deed. In Sub-clauses (i), (vii) and (xv) of Clause 2, the word " Hindus " was deleted and in its place, the following words " the public in general " were inserted. In Sub-clause (vi) of Clause 2, the words " belonging to the family of Laths" were deleted and in their place the words "in distress" were inserted. In relation to the income-tax assessment for the assessment years 1954-55, 1955-56, 1956-57 and 1957-58, a question arose as to whether the income of the assessee was exempt from income-tax under Section 4(3)(i) of the Indian Income-tax Act, 1922 (hereinafter referred to as the " 1922 Act"). The said question was considered by this court in Lakshmi Narain Lath Trust v. CIT, 1969 73 ITR 402, on a reference made to it by the Tribunal and this court, after examining the terms of the settlement deed and more specially Sub-clause (vi) of Clause 2 of the said deed, held that the object mentioned in the said Sub-clause could not be regarded as a charitable purpose in terms of the other charitable purposes contained in Clause 2 and that under the settlement deed, the trustees had full discretion to spend the trust fund and in doing so they could spend their entire funds on one of the objects to the exclusion of the others and thus within the framework of the trust deed they would be able to spend the entire funds for the aid of the members of the settlor's family and that if they decided to spend for the particular object mentioned in Clause 2(vi) of the trust deed, then the trustees were under no obligation to spend it on persons other than the family of the settlor. This court, therefore, held that the exemption under Section 4(3)(i) of the 1922 Act was not available to the assessee. In that case, this court has noticed the amendments made in the settlement deed by the supplementary deed, but it did not deal with the said amendments for the reason that the said amendments could not be held to be retrospective in operation. It appears that subsequently in respect of the assessment years 1959-60 to 1966-67, the income-tax authorities allowed exemption to the assessee treating it as a trust wholly for charitable and religious purposes within the meaning of Section 4(3)(i) of the 1922 Act and Section 11 of the Income-tax Act, 1961 (hereinafter referred to as "the 1961 Act"). In relation to the assessment years 1967-68, 1968-69, 1969-70 and 1970-71, the Bombay Bench of the Tribunal, by its order dated September 30, 1975 (annexure H), after considering the amendments made in the settlement deed by the supplementary deed, has held that the amendments made in the settlement deed by the supplementary deed are not valid in law and that in spite of the supplementary deed, it could not be said that the assessee has acquired the status of a trust wholly for charitable and religious purposes so as to entitle it to exemption under Section 11 of the 1961 Act and the Tribunal, therefore, held that the assessee was not entitled to exemption under Section 11 of the 1961 Act. In relation to the assessment year 1972-73, the Income-tax Officer, Jhunjhunu, by order dated December 12, 1974 (annexure A), rejected the claim of the assessee for exemption of its income under Section 11 of the 1961 Act. On appeal, the Appellate Assistant Commissioner of Income-tax, Bikaner Range, Bikaner, by his order dated December 13, 1976 (annexure B), upheld the order of the Income-tax Officer. The Appellate Assistant Commissioner has placed reliance on the order of the Bombay Bench of the Tribunal dated September 30, 1975, in relation to the assessment years 1967-68 to 1970-71 which was also followed in respect of the assessment year 1971-72. On further appeal, the Tribunal, by its order dated October 30, 1977 (annexure C), has upheld the order of the Appellate Assistant Commissioner. The Tribunal has adopted the reasons given by the Bombay Bench of the Tribunal in its order dated September 30, 1975, in relation to the appeals for the assessment years 1967-68 to 1970-71. Thereupon, the questions mentioned above have been referred by the Tribunal for the opinion of this court at the instance of the assessee. We have heard Shri N.M. Ranka, learned counsel for the assessee, and Shri R.N. Surolia, learned counsel for the Revenue.
(3.) DURING the course of his arguments, Shri Ranka has urged that the earlier decision of this court in Lakshmi Narain Lath Trust v. CIT, 1969 73 ITR 402, given in relation to the assessment years 1954-55 to 1957-58 is no longer good law in view of the subsequent decisions of the Supreme Court and that even if the supplementary deed executed on May 21, 1958, is excluded from consideration, the income of the assessee is entitled to exemption under Section 11 of the 1961 Act. Shri Ranka has urged that in order to determine whether a trust is a trust for charitable purposes, the test to be applied is to ascertain the dominant or primary purpose of the trust, and that if the dominant or primary purpose of the trust is charitable in nature, then even if some of the purposes are not charitable in nature, it would not alter the nature of the trust. In support of his aforesaid submission, Shri Ranka has placed reliance on the decisions of the Supreme Court in Addl. CIT v. Surat Art Silk Cloth Manufacturers Association, 1980 121 ITR 1, CIT v. Bar Council of Maharashtra, 1981 130 ITR 28 and CIT v. Federation of Indian Chambers of Commerce & Industry, 1981 130 ITR 186. We have given our careful consideration to the aforesaid submission of Shri Ranka, but we are unable to accept the same. In Lakshmi Narain Lath Trust v. CIT, 1969 73 ITR 402, this court has taken note of the principle, on which reliance has been placed by Shri Ranka, that the dominant intention of the settlor must be found out and where the dominant intention is one of charity, in general, the trust will still be held to be wholly charitable in character and would qualify for exemption. This court has, however, held that the said principle could not be applied in the case of the assessee, because, under Clause 2(vi) of the settlement deed, the trustees were given full discretion to spend the trust fund and in doing so they could spend the entire fund on one of the objects to the exclusion of the others and it is permissible for the trustees to spend the entire fund for the object set out in Clause 2(vi), namely, for the aid of the members of the settlor's family and the said object could not be held to be a charitable purpose. The said view of this court has been approved by the Supreme Court in Yogiraj Charity Trust v. CIT, 1976 103 ITR 777, wherein the Supreme Court has observed as under (p. 784): " The test is that if one of the objects of the trust deed is not of a religious or charitable nature and the trust deed confers full discretion on the trustees to spend the trust funds for an object other than of a religious or charitable nature, the exemption under Section 4(3)(i) of the Act is not available to the assessee. " In view of the aforesaid decision of the Supreme Court, it is not possible to hold that the view taken by this court in Lakshmi Narain Lath Trust v. CIT, 1969 73 ITR 402 is not correct and that even under the settlement deed dated August 25, 1948, the assessee must be held to be a trust wholly for charitable purposes and its income exempt under Section 11 of the 1961 Act. ;