CHARITABLE AND RELIGIOUS TRUST Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE short question which arises for decision in this reference is whether cl. 9(2)(c) of a document of trust settled by a scheme sanctioned by this Court results in the trust not being "wholly for religious or charitable purposes within the meaning of sub-s. (3)(i) of s. 4 of the Indian IT Act thereby depriving the trust of the exemption granted under that sub- section.

(2.) TWO separate trusts were created by two ladies, who were sisters, Hirbai Rahim Aloo Paroo and Kesarbai Dharamsey Khakoo, on the 11th Feb., 1888, and 12th April, 1892, respectively, by their wills. Since both of them created trusts for the same purposes and objects, the trustees had applied for permission to amalgamate the two trusts and administer them as a single trust in Suit No. 1205 of 1944 in this Court, and by an order passed on the 15th Nov., 1944, the trusts were allowed to be amalgamated and a scheme framed. The scheme framed was entitled "consolidated scheme for the management of Bai Hirbai Rahim Aloo Paroo and Kesarbai Dharamsey Khakoo Charitable and Religious Trusts". That is the document which we are called upon to construe. After the amalgamation or consolidation of the two trusts they were throughout assessed as trusts till the year 1953 and had obtained the necessary certificate of exemption under s. 4(3), but it was only after 1953, that the tax authorities began to hold that these were not trusts "wholly for religious or charitable purposes" as required by s. 4(3)(i) and, therefore, the assessees were required to make returns. All the authorities who have dealt with the question, namely, the ITO, the AAC, "Q" Range, Bombay, and the Tribunal have held that the scheme settled did not create a trust which was wholly for religious or charitable purposes and as such its income was not entitled to exemption under the IT Act. We are concerned in the present reference with a common order of assessment for the asst. yrs. 1953-54 to 1958-59 both inclusive, corresponding to the "previous years" Samvat years 2008 to 2013 both inclusive.

(3.) THE Tribunal repelled this contention by holding that the giving of feasts though in remembrance of the anniversary of Imam Hussein Saheb but in the name of the husband of Kesarbai was not a religious object even under the personal law of Kesarbai. Though, no doubt, the celebration of the death anniversary of the settlor and/or the members of his family has been recognised as a religious purpose and as constituting a valid object of a wakf, it may be held that it was a religious purpose so far as the personal law of Kesarbai was concerned, but still it would not necessarily be entitled to exemption under the IT Act. THE Tribunal pointed out that the exemption was confined only to public religious trusts and did not extend to private religious trusts. In any case, this was not a trust of a religious nature at all, because nowhere is it mentioned in the will or in the scheme sanctioned by the High Court that any prayers had to be offered much less that the Fateha was to be recited. Moreover, the trustees were given absolute discretion by the impugned clause to spend as much as they liked in their discretion towards the object of cl. (c) and therefore there was no limit to the expenditure that could be incurred for that purpose. THE reasoning of the Tribunal was as follows: