COMMISSIONER OF WEALTH TAX Vs. GANGABAI CHARITIES

JUDGEMENT

(1.) M/s. Gangabai Charities is the trust created by late Smt. Gangabai, in the income-tax proceedings, it had been held that M/s. Gangabai charities is not a public charitable trust and hence it is not entitled to exemption under s. 11 of the IT Act, 1961 (for short'the Act'). (a) Though the Department's contention has been reversed by the appellate authorities, on a reference, this Court, however, held that the assessee-trust cannot be held to be a public charitable trust. (b) In the wealth-tax proceedings, the assessee, who had been contending that notwithstanding the decision of this Court in its case that it is not a charitable institution, nevertheless, it is not liable for wealth-tax in view of the fact that provisions of s. 5 (1) (i) would apply to it. In this view of the matter, the assessee filed a'nil'return. (c) The WTO rejected the assessee's contention. (d) On appeal, the CWT (A) following the decision of the tribunal in the assessee's own case for the asst. yr. 1975-76 (in W. T. A No. 714/mds/80, dt. 22nd March, 1983) held that the assessee was entitled to exemption under s. 5 (1) (i) of the WT Act, 1957. (e) The Department appealed to the Tribunal and relying on its earlier order relied upon by the CIT (A), the Tribunal confirmed the order of the CWT (A) and dismissed the Departmental appeal. On the above facts, the following question is referred to this Court under s. 27 (1) of the WT Act, 1957, for its opinion, "whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled to exemption under s. 5 (1) (i) of the WT Act, 1957 "" Arguments of Mrs. Chitra Venkataraman, learned junior standing counsel representing the Revenue and of Mr. K. Vaitheeswaran, learned counsel appearing for the respondent, were heardsec. 11 of the IT Act, 1961, deals with the income from property held for charitable or religious purposes so much of the portion of s. 11 (1) (a), as is relevant for our present purpose, is couched in the following terms, "11 (1) : Subject to the provisions of ss. 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income. (a) Income derived from property held under trust wholly for charitable or religious purposes. Sec. 5 of the WT Act, 1957, deals with exemptions in respect of certain assets. So much of the portion of s. 5 (1) (i), as is relevant for the present purpose, is couched in the following terms" 5 : Wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee - (i) any property held by him under trust or other legal obligation for any public purpose of a charitable or religious nature in India. Thus, s. 11 (1) (a) of the IT Act speaks of income derived from property held under trust wholly for charitable or religious purposes, while s. 5 (1) (i) of the WT Act, 1957, speaks of any property held by him under trust or other legal obligation for any public purpose of a charitable or religious nature in India. The phraseology employed both in s. 11 (1) (a) of the it Act and s. 5 (1) (i) of the WT Act, 1957, though different from the naked eye examination yet the pith and substance of the meaning of the words employed therein cannot at all be stated to be distinct and different from the other. In Addl. CIT vs. Gangabai Charities i. e. , to say assessee's own case, this Court held that the assessee's trust is not a charitable or religious trust under s. 11 of the IT Act. That decision of this court had been challenged before the apex Court and the apex Court in Gangabai charities vs. CIT & Anr. confirmed the decision of this Court. The rationale or reasonings projected by the apex Court reflected at pp. 420 and 421 are as below, "on a careful reading of the above-quoted paragraphs of the trust deed, it is not possible to cull out in clear terms a specific charitable/religious object to conclude that the trust was set up wholly for charitable or religious purposes. The "religious, charitable, cultural and social" purposes referred to in the deed are not avowed as the very objectives of the trust itself. What the founder of the trust intended to convey was that the building to be constructed out of the funds provided by her and supplemented from other sources must be held for the benefit of the public for being used by them for religious, charitable, cultural or social purposes. We cannot read the contents of the above-quoted paragraphs as the objects of the trust, these are only the objects of those who wish to put the trust property to use. On a careful consideration of the language of the trust deed, we are of the view that the intention of the founder was to provide a building for the benefit of the public to be used by them for religious, charitable and/or cultural and social purposes. It is nowhere stated in the trust deed that the trust itself has been created for the purpose of carrying out any of such objectives. The holding and conducting of religious discourses and the running of schools for the development of Sanskrit have also been mentioned from the point of view of the users of the trust property. These are some of the purposes for which the public can be permitted to use the property. The crux of the statutory exemption under s. 11 (1) (a) of the Act is not the income earned from property held under trust but the actual application of the said income for religious and charitable purposes. It is, therefore, necessary to indicate in the trust deed the broad objectives for which the income derived from the property is to be utilised. There is no mention in the trust deed as to how the income derived from the trust property is to be utilised. The public uses the building on payment of rent to the trustees. What is to be done with the money so collected has not been provided in the trust deed. There is no mandate in the trust deed that the income derived from the trust property is to be spent on religious or charitable purposeswe are satisfied that, on a proper construction of the trust deed, it does not meet the requirements of s. 11 (1) (a) of the Act. We find no'infirmity in the judgment of the High Court. We entirely agree with the reasoning and the conclusions reached therein. " On the face of the decision emerging from the apex Court we are of the view that the Tribunal was not right in holding that the assessee is entitled to exemption under s. 5 (1) (i) of the WT Act, 1957, and this question is answered against the assessee and in favour of the Revenue. This tax case is thus disposed of. There shall, however, be no order as to costs, on the facts and in the circumstances of the case. .