COMMISSIONER OF WEALTH TAX VS ATTUR THULUVA VELLALAR SANGAM
2001 P T D 1898
[243 I T R 774]
[Madras High Court (India)]
Jayasimha Babu and Mrs. A. Subbulakshmy, JJ
COMMISSIONER OF WEALTH TAX
Versus
TTUR THULUVA VELLALAR SANGAM
T.C. Nos. 133 to 141 of 1986 (References Nos.62 to 70 of 1986), decided on 17/11/1998.
Wealth tax‑‑‑
‑‑‑‑Exemption‑‑‑Charitable trust‑‑‑Trust need not be wholly and exclusively engaged in charitable activity‑‑‑Sufficient if primary object of trust is charitable‑‑‑Trust having as its main object imparting of education and other objects of general public utility‑‑‑Collection of chits and deposits from public one of activities of trust‑‑‑Finding by Tribunal that income of trust had at all times been applied for charitable purposes‑‑‑Trust entitled to exemption‑‑ Indian Wealth Tax Act, 1957, S. 5(1)(i).
The Wealth Tax Act, 1957, or the Income Tax Act, 1961, does not define "charitable activities" for the purposes of wealth tax. It is not essential that the trust claiming to be a charitable trust must be wholly and exclusively engaged in charitable activity. It is sufficient, if its primary or predominant object is charitable.
The assessee was a trust, whose objects were imparting education, running free library and advancement of general public utility. Conducting chits and collection of deposits from the public was also among its activities. The Wealth Tax Officer denied its exemption but the Tribunal held that the assessee was eligible for exemption. On a reference:
Held, that the Tribunal after a close scrutiny of the terms of the trust deed and the purpose for which the funds and income of the trust had been applied, had held that the object of the trust was predominantly charitable and the income from the trust at all times was applied for charitable purposes. The assessee was, therefore, entitled to exemption under section 5(1)(i) of the Wealth Tax Act, 1957.
Rajan for the Commissioner.
Janardhana Raja for the Assessee.
JUDGMENT
R. JAYASIMHA BABU, J.‑‑‑The question referred to us is as to whether the Tribunal is justified in law in holding that the assessee is entitled to exemption provided under section 5(1)(i) of the Wealth Tax Act, 1957, for the assessment years 1966‑67 to 1974‑75. It was submitted by counsel at the Bar that for the subsequent years, the Wealth. Tax Officer has not denied exemption provided for under section 5(1)(i) of the said Act to the assessee. The assessee is a trust whose objects are wide ranging including imparting of education, running free library, to remove differences among people, and to consolidate different sects and raise the status of humanity and also the advancement of general objects of public utility. That is what has been held by the Tribunal. The Tribunal also noticed the fact that one of the activities of the trust was to settle disputes and quarrels among members, but that activity was not its primary activity. It also noticed the fact that the conducting chits and collection of deposits from the public was also one of the activities and that again was not its predominant or primary object.
The Wealth Tax Act, or the Income‑tax Act does not define "charitable activities" for the purposes of wealth tax. It is not essential that the trust claiming to be a charitable trust must be wholly and exclusively engaged in charitable activity. It is sufficient, if its primary or predominant object is charitable. The Tribunal, after a close scrutiny of the terms of the trust deed and the purposes for which the funds and income of the trust has been applied, has held that the object of the trust was predominantly charitable and that all the income of the trust at all times was applied for charitable purposes.
We ‑see no reason to differ from that conclusion of the Tribunal, after having perused the terms of the trust deed. We, therefore, answer the question in favour of the assessee and against the Revenue.
M.B.A./454/FC Reference answered.