- (1.) THE relevant facts of the case as found by the Tribunal are as under ;
(2.) THE assessee-trust, viz., "Laxminarain Lath Trust", was created by a deed of indenture by one Shri Laxmi Narain Lath on August 25, 1948. It was to be administered by four trustees, two of whom were the sons of the settlor. THE property settled was an amount of Rs. 5,000. THE same was transferred, assigned and assured unto the trustees for perpetuating the objects enumerated in Clause 92 therein. THEy were 15 in number and, inter alia, provided for advancement of education amongst the Hindus, puja of Shiva, looking after cattle, establishment of temples, dharamsalas, hospitals, orphanages for Hindus, maintenance of tubewells and paths, providing help to victims of natural calamities, etc., etc. Another of these objects was mentioned in Clause 2(vi) in the following terms ; "To render aid to any persons belonging to the family of Laths and to grant monthly and other periodical aids to them." The trustees were empowered by Clause (5) to decide the particular object or objects to which the income or corpus of the trust properties for the time being available were to be applied. Earlier Clause 93 entitled the trustees to carry on such business as they might think fit from time to time provided all such businesses were carried on to utilise all such profits for the objects of the trust. When the matter relating to the assessment of the income of the trust came up for consideration before the Income-tax Officer for the assessment years 1954-55 to 1957-58, he did not treat its objects as being wholly for religious and charitable purposes. According to him, the income of the trust could also be utilised for any persons belonging to the Lath family. In his opinion, therefore, the trust did not qualify itself for exemption under the Act. This conclusion, was arrived at notwithstanding a finding that as a fact the income had not been utilised for any non-charitable purposes. This decision of the Income-tax Officer was. reversed by the Appellate Assistant Commissioner as he felt that the dominant intention of the trust was charitable. On Clause 2(vi), he observed that, it did not detract from the charitable nature of the dominant intention of the settlor. In second appeals, the Tribunal restored the, decision of the Income-tax Officer and held that the. trust was not entitled to exemption under Section 4(3)(i) of the Indian Income-tax Act, 1922. This decision of the Tribunal was upheld by the Rajasthan High Court when the assessee sought reference against the same. The decision is reported as Laxminarain Lath Trust v. CIT [1969] 75 ITR 402 (Raj). The assessee later moved the Supreme Court against that decision but without success. Meanwhile by an indenture dated May 21, 1958, executed between Shri Laxmi Narain Lath, the settlor on the one hand, and the four trustees, on the other hand, it was stated that the settlor by the original deed of settlement had intended to create a public charitable trust for the benefit of any particular family or community. It was added that unfortunately though by inadvertence the words "Hindus" and "belonging to the family of Laths" had crept in Clause 2(1)(vii), (xv), (vi). It was further added that the trustees had all along treated the trust as a public trust and applied the income of the trust solely for the furtherance of the objects for the benefit of the public in general and had never applied any portion of the corpus or income of the trust for the benefit of a person belonging to the family of Laths or for the benefit of a particular Hindu community. These accidental slips in the objects clause having been brought to the notice of the settlor and the trustees, it was next stated that the factual mistakes appearing in the original deed were rectified so as to delete the word "Hindus" wherever it occurred and in its place substitute the words "in distress" were inserted. It was also clarified in this deed that these rectifications should be treated to have been originally incorporated in the first deed of settlement.
(3.) THIS deed was referred to during the course of assessments for the assessment years 1954-55 to 1957-58, about which reference has already been made above. The Income-tax Officer declined to lay any significance on this deed observing that it could not have retrospective operation. Similar was the view taken by the Tribunal and the Rajasthan High Court. In the assessments, which followed for the assessment years 1959-60 to 1966-67, the income-tax authorities allowed exemption to the assessee treating it as trust wholly for charitable and religious purposes within the meaning of Section 4(3)(i) of the 1922 Act and Section 11 of the 1961 Act. The settlor died in the year 1960, ;