JUDGMENT
S.S. Sodhi, J.
1. The assessee, Gandu Mal Dharam Arth Trust, claims to be a charitable trust and thus entitled to exemption under Section 11 of the Income-tax Act, 1961.
2. The record shows that the assessee-trust is said to have been originally founded by one Giano Devi, wife of Gandu Mal, in 1944. As the trust deed was not forthcoming, another trust deed was drawn up and executed on December 12, 1960. Smt Giano Devi, donated Rs. 30,000 to the trust. The objects of the trust, as set. forth in the trust deed, briefly stated, ‘are the following :
(i) to run dispensaries, hospitals or maternity homes for helping human beings and animals and to provide meals and clothing to the patients ;
(ii) To dig wells to provide water to men and animals and also install chhabil of drinking water and arrange for bathing arrangements and provide food and accommodation for travellers ;
(iii) To render financial aid to male and female students and to give scholarships, loans and alms to the poor and deserving students ;
(iv) To give loans to the helpless and the poor including orphans and widows, to open reading rooms and library and arrange for supply of books and newspapers ; and
(v) To spend money on all round welfare of the human race, particularly sufferers on account of earthquakes, floods, etc.
2. The trust deed further provided that it would be the duty of the trustees
to invest the trust funds wholly or in part in some business. It was in pursuance of this clause that the trustees came to acquire the business known
as Amrit Ice and General Mills, Rohtak, and this business thereafter was
being run by the trustees. It is in respect of the income derived by the
trust from this business that exemption was claimed under Section 11 of
the Act.
3. It is the finding of the Tribunal that no part of the income of the trust was ever actually utilised for any charitable purpose except a sum of Rs. 2,002 shown to have been paid as a donation to some school the name of which was not disclosed and that except for acquiring business and investing therein, no charitable purpose was sought to be pursued.
4. While dealing with this matter, it would also be relevant to advert to Clauses (iii) to (vii) of the trust deed, the English translation of which reads as under :
“(iii) Smt. Giano Devi donates Rs. 30,000 at present which will be considered as trust property and has, in fact, been dedicated for this purpose ;
(iv) The cash amount of the trust will remain in the custody of the legal representatives of L. Gandu Mal who are also the trustees of the trust and they will be responsible for paying interest at 6 per cent, per annum on the amount with them to the trust fund ;
(v) It shall be the duty of the trustees by the opinion of the majority to invest a part of the trust fund in some business ;
(vi) The trust shall not have the authority to spend the cash capital. The capital shall remain in the custody of the trustees who would spend by majority opinion to the extent of its interest or income according as the circumstances require for spending for the purpose of the trust;
(vii) If the income of the trust funds cannot be spent in a particular year, it may be spent in the next year along with the income of the said next year in part or in full. And, if the trustees deem it proper, they may add the unspent income to the trust capital fund or reserve it to be taken over to the next year”.
5. Particular note deserves to be made of Clause (iv) in terms of which the trustees have been made liable for paying interest on the trust amount at the rate of 6 per cent, per annum and not at the market rate as is prevalent from time to time.
6. It is, taking these aspects of the matter into account, that the Tribunal declined to grant exemption under Section 11 of the Act as claimed by the assessee and this is what has now led to the following question being referred for the opinion of this court:
“Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the income of the assessee-trust was not exempt under Section 11 of the Income-tax Act, 1961 ?”
7. No other answer except the one in favour of the Revenue and against the assessee is possible with regard to the question referred.
8. As is well known, in order to qualify for the exemption claimed, it was incumbent upon the assessee to show that the predominant object of the activity it was involved in was to subserve some charitable purpose and not to earn profit. Here, as shown earlier, though the trust deed was drawn up as far back as in 1960 and the trust thereafter acquired this business, the only amount shown to have been spent for some charitable purpose was the donation of Rs. 2,002 and that too to some unnamed school. There is no material on record that, other than this to indicate that any part of the income of the assessee-trust was utilised for any charitable purpose.
9. This reference is thus disposed of accordingly. In the circumstances,
however, there will be no order as to costs.