Income-tax----

----Charitable purposes---Charitable trust ---Exemption---Business---Finding that objects of trust were charitable---Trustees empowered to carry on business---Not relevant---Trustentitled to exemption---Indian Income-tax Act, 1961, Ss. 2(15) & 11.

Where the Tribunal had found as a fact that the real objects of the appellant-trust were charitable, that items 6 and 7 in the trust deed which enabled the trust to carry on business, were meant merely to enable the trust to carry on its charitable objects in a more effective manner and that items 6 and 7 were not really objects but more in the nature of powers for better carrying out of the objects:

Held, reversing the decision of the High Court, that in view of this finding and also in view of the decision in Dharmadeepti v. C.I.T. (1978) ! 14 I.T.R. 454 (SC), the appellant was a trust wholly for charitable purposes within the meaning of section 2(15) of the Income Tax Act, 1961.

Dharmadeepti v. C.I.T. (1978) 114 ITR 454- (SC) fol. . .

Dharmaposhana Co. v. C.I.T. (1975) 100 ITR 351; KLT 585 (FB) and Kuries and Trades Ltd. v. C.I.T. (1975) KLT 480 (Ker.) ref.

Mathai M. Paikeday, Senior Advocate (Shaju Francis and C.N. Sreekumar, Advocate with him) for Appellant.

S.Rajappa and S.N. Terdol, Advocates for Respondent.

JUDGMENT

This is an appeal against the decision of the Kerala High Court. The following two questions were referred to it under section 256 of the Income -tax Act, 1961:

"(1) In the facts and circumstances of the case whether the Tribunal was justified in finding that the object of the assessee-trust is the advancement of an object of general public utility involving the carrying on of an activity for profit and hence the object of the trust is for a charitable purpose within the meaning of section 2(15) of the Income-tax Act, 1961?

(2) In the facts and circumstances of the case whether the Tribunal was justified in holding that the assessee is a trust wholly for charitable purposes?"

The Tribunal has found as a fact that the real objects of the trust are charitable and that items 6 and 7 which enable the trust to carry on business, are meant merely to enable the trust to carry on its charitable objects in. a more effective manner. It is also stated that items 6 and 7 are not really objects but more in the nature of powers for better carrying out of the objects. In view of this finding and also in view of the decision of this court in Dharmadeepti v. C.I.T. (1978) 114 I.T.R. 454, we are of the opinion that these appeals are entitled to succeed. We may also mention that the objects concerned in Dharmadeepti's case (1978) 114 I.T.R. 454 (SC) and the objects concerned herein are in pari materia. Be that as it may, in view of the aforesaid finding of the Tribunal it is not possible to hold that the main object of the trust is to carry on the business.

It is necessary to mention that so far as the judgment of the High Court is concerned it does not assign any specific reason for departing from the above finding recorded by the Tribunal. After setting out the objects of the trust concerned herein, it merely says that in view of the earlier decisions of the Kerala High Court in Dharmaposhana Co. v. C.I.T. (1975) 100 I.T.R. 351 (FB) and Kuries and Trades Ltd- v. C.I.T. (1975) KLT 480, the questions referred are answered in favour of the Department and against the assessee.

For the reasons given above, these appeals are allowed, the judgment of the High Court is set aside and the aforesaid two questions are answered in favour of the assessee and against the Revenue.

M.B.A./1453/FC Appeals allowed.