THIAGESAR DHARMA VANIKAM Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question referred under Section 66 of the Indian Income-tax Act is-

(2.) THE assessee is a religious and charitable trust called "Thiagasar Dharma Vanikam". It was founded by one Karumuthu Thiagaraja Chettiar under a deed of trust, dated 13-5-1948. THE founder furnished the trust with, a sum of Rs.. 61,000, as a nucleus fund to be augmented and utilised for the purpose of the trust set out in the deed. A business in cotton yarn and cloth was started by the Board of trustees or the managing trustees of the said trust with the help of this sum of Rs. 61000. Even during the first year of business, a net profit of Rs. 5,94,493 was earned, and this was added to the capital account. In the next year, 1949-50, a profit of Rs. 85,105 accrued, and this was also capitalised. During the year ended 30th June 1951, the previous year for the assessment year 1952-53, the trust acquired a printing press and carried on business as printers. For the years ended 30th June 1951 to 30th June 1954, the previous years for the assessment years 1952-53 to 1955-56 respectively, the assessee submitted returns to the department showing nil income. THE income from the business carried on by the trust was not returned as the assessee claimed exemption under Section 4(3)(i) of the Act. THE Income-tax Officer, however, held that the business income of the trust was not exempt from taxation, as claimed by the assessee, and passed orders of assessment as per particulars given below:

(3.) THE Legislature amended the Act in 1939 and of Clause (1)(a) was nserted. That clause is in the following terms:-