COMMISSIONER OF WEALTH TAX Vs. GANGABAI CHARITIES

JUDGEMENT

(1.) AT the instance of the Revenue, the following question of law has been referred for our decision :

(2.) THE property in question is a building known as "Dharmaprakash" situated in Purasawalkam in the city of Madras. That building has been described in the judgment of this court in the case of Addl. CIT v. Gan-gabai Chanties [1983] 142 ITR 718. THE building as stated therein consists of a mandapam and other portions. THE building's are sought for celebrating weddings and reception for which, they are let out on rent. THE building was constructed with a nucleus of a trust fund provided by Smt. Gan-gabai who was at that time in her 90's. THE fund was administered by her son, Seetharama Ruo, the owner of a hotel of the same name Dharma-prakash. Though Gangabai's funds amounted to Rs. 34,000 the funds which went into the completion of the building amounted to Rs. 6 lakhs. THEse facts are not in dispute.

(3.) THE Supreme Court in the case of Addl. CIT v. Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1, while considering the claim for exemption of the income of the trust under the Income-tax Act, observed (at page 11) "the law is well settled that if there are several objects of a trust or institution, some of which are charitable and some non-charitable and the trustees or the managers in their discretion are to apply the income or property to any of those objects, the trust or institution would not be liable to be regarded as charitable and no part of its income would be exempt from tax. In other words, where the main or primary objects are distributive, each and every one of the objects must be charitable in order that the trust or institution might be upheld as a valid charity : Vide Mohd. Ibrahim v. CIT [1930] 57 IA 260 and East India Industries (Madras) P. Ltd. v. CIT . But if the primary or dominant purpose of a trust or institution is charitable, another object which by itself may not be charitable but which is merely ancillary or incidental to the primary or dominant purpose would not prevent the trust or institution from being a valid charity : vide CIT v. Andhra Chamber of Commerce ." THE test which has, therefore, to be applied is whether the object which is non-charitable is an independent principal object of the trust or institution or is only ancillary or incidental to the dominant or primary charitable object.