D V ARUR Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) This is a reference under Section 66(1) of the Indian Income-tax Act, 1922. The assessment year is the year 1939-40 in respect of the accounting year, which in this case is the year ending May 31, 1938.

(2.) The asseasee is a trustee, and the amount in dispute is the sum of Rs. 1,263, which is the income for the accounting year of a trust fund created by a settlement dated February 10, 1924. The questions referred to us are as follows: (1) Whether the income of the trust fund called Shri Kailaje Umamaheshwar Vidya Nidhi is income derived from property held under trust or other legal obligation wholly for charitable purposes within the meaning of Section 4(3)(i) of the Indian Income-tax Act? (2) Whether the income of the trust is taxable at the maximum rate under the first proviso to Section 41(1) of the Act?

(3.) The answer to the first question must depend solely on whether the trusts or the settlement are wholly for charitable purposes within the meaning of Section 4(3)(i) of the Indian Income-tax Act. That sub-section is as follows: (3)Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them: (i) Any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes, the income applied, or finally set apart for application, thereto. At the end of all the clauses of Sub-section 4(3) there is the following definition of "charitable purpose": In this sub-section charitable purpose includes relief of the poor, education, medical. relief and the advancement of any other object of general public utility, but nothing contained in Clause (i), Clause (ia) or Clause (ii) shall operate to exempt from the provisions of this Act that part of the income of a private religious trust which does not enure for the benefit of the public. It is to be observed that this definition is not an exclusive or exhaustive one Such as is to be found in many of the definitions contained in Section 2 of the Act where the word "means" is used instead of the word "includes".