GANGA BAI CHARITIES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The question for our consideration in these appeals is whether Gangabai Charities, a trust operating in the city of Madras, is entitled to exemption under Section 11(1)(a) of the Income-tax Act, 1961 (the Act).

(2.) Gangabai executed a document dated September 13, 1958 which was described as a deed of trust. The trust was named as "Ganga Bai Charities". In the trust-deed Ganga Bai gave effect to her desire to construct and provide a building for the benefit of the public to be used for religious, charitable, cultural and social purposes. She contributed Rupees 34,000/- to the trust fund. With that fund a plot of land was purchased and the construction began. The fund was augmented by her son Seetha Rama Rao from his own contributions as well as from outside donations. The building was completed at the cost of about Rs. six lakhs. Ever since the construction of the building it is being let out as a marriage mandapam to be used by the members of the public as such. The income derived from letting out the Kalyana Mandapam came to Rupees 1,06,392.00 in the year ending March 31, 1963. For the subsequent years also the income was substantial. The trust was also running a printing press and sizable income was being earned from the press.

(3.) The income-tax officer took the view that the income earned by the trust was taxable. The contention of the trust that the income derived from the property was being held wholly for religious and charitable purposes and as such was exempt under S. 11 of the Act, was rejected. On appeal the Appellate Assistant Commissioner reversed the order of the income-tax officer and held that the Ganga Bai Charities was a charitable trust and its income was entitled to exemption under S. 11 of the Act. On further appeal by the department, the tribunal upheld the decision of the Commissioner but remitted the assessment to the income-tax officer to find out as to what extent in each year the trust income or accumulations were expended for charitable purposes. The Income-tax Appellate Tribunal referred the following question to the High Court under S. 256(1) of the Act:-