H E H THE NIZAMS RELIGIOUS ENDOWMENT TRUST HYDERABAD Vs. COMMISSIONER OF INCOME TAX ANDHRA PRADESH HYDERABAD

JUDGEMENT

(1.) This is a case referred to the High Court under section 66 (1) of the Indian Income-tax Act (XI of 1922) The question formulated for decision is, " Whether the income arising from property settled upon trust under the deed of settlement, dated 14th September, 1950 or any part thereof is exempt from tax under section 4 (3) (/) of the Indian Income-tax Act, 1922?"

(2.) By an indenture made at Hyderabad on 14th September, 1950, HEH the Nizam of Hyderabad settled upon two trustees, Nawab Zain Yar Jung and Shavax Ardeshir Lal, certain securities of the value of Rs 40,00,000, more particularly described in the first schedule annexed thereto upon trust for applying the income thereof for religious purposes and objects, in the manner appearing in the instrument of trust and settlement In schedule 2 annexed to the indenture, the particulars of the sacred buildings which are directed to be maintained are set out The provisions of the indenture relevant for the present case are as follows :-

(3.) For the assessment years 1952-53 and 1953-54, the "H E H Nizam's Religious Trust Fund " claimed that the income arising from the properties settled upon trust in and by the indenture dated 14th September, 1950, was exempt from tax under section 4 (3) (1) of the Indian Income-tax Act That claim was rejected by the Assessing Officer, Appellate Assistant Commissioner and, eventually, by the Income- tax Appellate Tribunal (Hyderabad Bench) The question we have to decide in this reference is whether the income from the trust fund is entitled to exemption under section 4 (3) (1) of the Act The relevant portion of the section 4 (3) (1) of the Act reads as follows :-