K A MOHIDEEN PITCHAI Vs. GIFT TAX OFFICER

JUDGEMENT

(1.) THE determination arrived at by the Commissioner of Gift-tax, Madurai, on appeal under section 24 of the Gift-tax Act, 1958, from the order dated March 17, 1979, passed by the IV Gift-tax Officer, Tirunelveli, has not discussed the contents of the deed in which the purpose for which the trust has been created can be available. When that portion of the gift deed is not extracted nor discussed so as to come to a decision the conclusion arrived at cannot be said to be correct and in accordance with law. While dealing with the provisions of section 5(1)(va)(ii) of the Gift-tax Act, 1958, both the IV Gift-tax Officer, Tirunelveli, as well as the Commissioner of Gift-tax, Madurai, have not taken into consideration the religious purpose for which the charity has been created. In the instant case, it is common ground that on the day of Ramzan, poor people have to be fed which is one of the objects. Unless the purpose is sectarian and communal, even though it may mention a particular auspicious day and though it was of a religious character, that does not take away the purpose for which it is created, viz., charitable purpose. THE mere fact that the existence of the festival named in a deed created a charitable endowment cannot also be a ground for coming to the conclusion that the said purpose is not a charitable purpose. Section 80G(5) of the Income-tax Act is the relevant section which runs as follows :

(2.) THIS section is a guiding factor in which mandatory relief is provided and which has to be followed when a dispute arises as to whether a trust is a public charitable trust or private charitable trust or a trust which can be exempted under the provisions of section 5(1)(v) of the Gift-tax Act. Learned counsel for the petitioner has brought to the notice of this court the provisions of section 5(1A) of the Gift-tax Act which had been introduced or inserted by Act 15 of 1965 by section 21 which came into effect on April 1, 1964, in the course of his arguments. It is also seen that the definition in sub-section (va) of section 2 of the Gift-tax Act, 1958, has undergone a vital amendment by way of omission by the Taxation Laws (Amendment) Act, 1984, of the last few words in the said sub-section (va), i.e., "not involving the carrying on of any activity for profit". Therefore, "charitable purpose" so far as the Gift-tax Act, 1958 (Central Act 18 of 1958), is concerned, which came on the statute book on April 1, 1958 includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility. Referring to this definition regarding " charitable purpose ", learned counsel for the petitioner submits that the contents of the trust deed ought to have been viewed and discussed by the authorities below which they have failed to do and as such, the order under writ petition is necessarily to be quashed.