Full Judgment Text
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PETITIONER:
J. K. TRUST, BOMBAY
Vs.
RESPONDENT:
THE COMMISSIONER OF INCOME-TAX/EXCESSPROFITS TAX, BOMBAY
DATE OF JUDGMENT:
22/05/1957
BENCH:
AIYYAR, T.L. VENKATARAMA
BENCH:
AIYYAR, T.L. VENKATARAMA
BHAGWATI, NATWARLAL H.
KAPUR, J.L.
CITATION:
1957 AIR 846 1958 SCR 65
ACT:
Income Tax-Trust-Exemption from taxation-Trustees conducting
business of Managing Agency for the Trust-Business, whether
"Property"-Income from Managing Agency, whether income
derived from Property held on trust-Indian Income-tax Act,
1922 (XI Of 1922), S. 4(3)(i) and (ia).
HEADNOTE:
A deed of trust whereby a sum of Rs. 1 lac was settled on
various charities specified therein provided for the
acquisition of the business of managing agency on behalf of
the trust and with the help of the trust fund. The trustees
of the said trust (appellant) became the managing agents of
a public company. The agreement for the agency provided,
inter alia, that the agency was for a period of twenty years
but that it was open to the trustees to give up the agency
on giving three months’ notice and that the managing agents
were to get a remuneration of 10 per cent.’ of the net
annual profits subject to a minimum of Rs. 50000 and an
office allowance of Rs. 1,000 per mensem. The appellant
claimed that the income derived from the managing agency was
income from property held under trust to be applied wholly
for charitable purposes, and was, in consequence, exempt
from taxation under S. 4(3)(i) of the Indian Income-tax Act,
1922. It was contended on behalf of the Income-tax
authorities (1) that the income in question was remuneration
for services rendered and was not derived from any property,
as a managing agency could -not be considered to be
property, and that, therefore, it did not fall within s.
4(3)(i) of the Act, (2) that on the terms of the deed of
trust the managing agency could not be property held on
trust, as no part of the sum of Rs. 1 lac was utilised in
the acquisition of the business so as to impress it with the
character of accretion, and (3) that even if the managing
agency business could be regarded as property within S.
4(3)(i), it was governed by the special provision contained
in S. 4(3)(ia), and as the conditions laid down therein had
not been satisfied, no exemption could be claimed.
Held: (1) A managing agency is business which would be
property within s. 4(3)(i) of the Act.
Lakshminarayan Ram Gopal and Son Ltd. v. The Government of
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Hyderabad, (1955) I.S.C.R. 393, followed.
All India Spinners’ Association v. Commissioner of Income-
tax,, Bombay [1944] 12 I.T.R. 482, relied on,
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(2)Though the office of managing agency carries with it
certain obligations, in law there can be no objection to
creating a trust over property burdened with obligations,
though, if it is onerous by reason of such obligations, the
trustee may be entitled to disclaim it.
(3)When trustees carry on business with the aid of trust
fund the position in law is the same as if they actually
employed it in the business, though, in fact, it be not
actually invested therein and, taking the provisions of the
deed of trust and the agreement of agency together, the
managing agency must be held to be property held on trust.
Rocke v. Hart, (1805) 32 E.R. 1009 and Moons v. De Bernales,
(1826) 38 E.R. 117, relied on.
The case was remanded to the High Court for a decision on
the question whether profits from business would be exempt
from taxation under S. 4(3)(i) of the Act when the
conditions laid down in S. 4(3)(ia) were not satisfied.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 246 of 1954.
Appeal by special leave from the judgment an order dated
October 6, 1952, of the Bombay High Court in Income-tax
Reference No. 1 of 1952.
N. A. Palkhivala, J. B. Dadachanji, S. N. Andley Rameshwar
Nath and P. L. Vohra, for the appellant.
O. N. Joshi and R. H. Dhebar, for the respondent.
1957. May 22. The Judgment of the Court was delivered by
VENKATARAMA AIYAR J.-’This is an appeal by special leave
against the judgment of the Bombay High Court passed in a
reference under s. 66(1) of the Indian Income-tax Act, 1922
(hereinafter referred to as the Act) and ss. 21 and 19 of
the Excess Profits Tax Act, 1940, and of the Business
Profits Tax Act, 1947, respectively read with s. 66(1) of
the Act. The dispute between the parties relates to the
assessment of income-tax for the assessment years 1946-47,
1947-48 and 1948-49 and of excess profits tax for the
chargeable accounting periods, September 3, 1945, to March
31, 1946, April 1, 1946, to March 31, 1947 and April 1,
1947, to March 31, 1948, and it arises out of the same facts
and involves the same points for determination,
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On June 15, 1945, three brothers Sir Padampat Singhania,
Lala Kailashpat Singhania and Lala Lakshmipat Singhania who
were carrying on business under the name of Juggilal
Kamlapat, executed a deed of trust, Ex. A, whereby they
settled a sum of Rs. 1,00,000 on various charities specified
therein and called the J. K. Trust, Bombay, and appointed
themselves and two other persons Lala Ramdeo Podar and Sir
Chunnilal Mehta as its trustees. The trust deed provided
inter alia that "the trustees may with the help of the trust
fund, for and on behalf of and for the benefit of the trust,
carry on such business including the taking up and
conducting the managing agency or selling agency of any
company in such name or names as they in their absolute
discretion may think fit and proper and may close and re-
start such business and utilise the profits for all or any
of the objects aforesaid.". Large powers were conferred on
them in the conduct of the business, and they were also
authorised to "raise or borrow money required for the
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purpose of the trust".
At this time, Messrs. E. D. Sassoon and Co., Ltd. were the
managing agents of a public Company called the Raymond
Woollen Mills Ltd. The firm of Juggilal Kamlapat of which
the three Singhania brothers were the partners, acquired a
controlling interest in the said Mills by purchase of the
shares of Messrs. E. D. Sassoon and Co. therein; and
following on this, the shareholders passed a special
resolution on September 3, 1945, appointing the trustees of
the J. K. Trust as managing agents of the Company in the
place of Messrs. E. D. Sassoon and Co’, Lid., who resigned.
On September 10, 1945, a memorandum of agreement, Ex. B, was
duly executed by the Company constituting the trustees of
the J. K. Trust, Bombay, as its managing agents on the terms
and conditions set out therein. It is to be noted that the
five persons named as trustees under Ex. A were appointed
as managing agents in their character as trustees, and it is
expressly provided therein that the expression ’managing
agents’, "unless excluded by or repugnant to the context
shall include the Trustees for the time being of the said
Trust or
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any other Trust with which the same may be amalgamated".
The agency was to be for a period of 20 years; but it was
open to the trustees to throw it up on giving three months’
notice. The managing agents were to get a remuneration of
10 per cent. of the net annual profits subject to a minimum
of Rs. 50,000 and an office allowance of Rs. 1,000 per
mensem. Clause 7 of the agreement provided that,
" During the continuance of this agreement, the Managing
Agents shall maintain with the Company a deposit of Rs.
1,00,000 (Rupees one lack only) in cash by way of security
for due fulfilment of their obligations as specified therein
and shall be entitled to charge interest at 3 1/2 per cent.
per annum on the amount of such deposit in addition to their
remuneration."
Clause 8 laid an obligation on the managing agents "to
arrange loans and advances to the Company as and when
required up to and not exceeding Rs. 10 lacs at any time and
if necessary to guarantee such loans or advances from time
to time". Under el. 14,
"Notwithstanding anything herein contained, all the terms
and conditions of this Agreement including the period of
appointment of the Managing Agents may be varied or
abrogated by mutual agreement."
The trustees entered on their duties as managing agents
under this agreement, and by an agreement dated May 14,
1946, they appointed one Tej Narain Khaitan, son-in-law of
one of the three Singhania brothers as their representative
to carry on the managing agency work on a remuneration of 30
per cent. of the annual income which would be payable to
them under Ex. B. Before the Income-tax authorities, the
appellant claimed that the income derived from the managing
agency was income derived from property held under trust to
be applied wholly for charitable purposes, and was, in
consequence, exempt from taxation under s. 4 (3) (i) of the
Act. The Income-tax authorities held that the income in
question was remuneration for services rendered, and was not
derived from any property, and that, therefore, it did not
fall within s. 4 (3) (i) of the Act. They further held
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that even if the managing agency business could be regarded
as property within s. 4 (3) (i), it was governed by the
special provision contained in s. 4 (3) (ia), and as the
conditions laid down therein had not been satisfied, no
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exemption could be claimed. In this view, they allowed a
sum of Rs. 30,000 per annum for remuneration of Mr. Khaitan
as a deduction under s. 10 (2) (x) of the Act, and held that
the balance of the income, Rs. 23,287 in 1946-47, Rs. 36,786
in 1947-48 and Rs. 2,16,460 in 1948-49 was liable to be
taxed under the provisions of the taxing statutes.
On applications made by the assessee under a. 66(1) of the
Act and the corresponding provisions in the Excess Profits
Tax Act and the Business Profits Tax Act, the Tribunal
referred the following questions for the decision of the
High Court of Bombay:
1. " Whether on the facts of the case the commission
earned by the managing agents for managing. the Raymond
Woollen Mills was income earned by the managing agents for
services rendered and not income derived from property held
under trust or for other legal obligations and therefore not
exempt under s. 4
(3) (i) of the Income-tax Act?
2. Whether on the facts of the case the business carried
on by the Trustees falls to be considered under s. 4 (3) (i)
or s. 4 (3) (ia) of the Income-tax Act?"
The reference was heard by Chagla, C.J., and Tendolkar, J.,
who held that no part of the sum of Rs. 1,00,000 which was
the only property settled on trust under Ex. A was actually
invested in the managing agency business, which could not,
therefore, be regarded as trust property, and that the
income received from that business was ’not within the
exemption enacted in s. 4 (3) (i). They accordingly
answered the first question against the appellant. As
regards the second question, the learned Judges held that it
was unnecessary to express any opinion thereon, as it was
common ground that even if s. 4 (3) (ia) applied, neither of
the conditions laid down in sub-cl. (a) or (b) had been
fulfilled, and that accordingly no relief could be granted
thereunder.
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The points that arise for determination in this appeal are
(1) whether the income received by the trustees of J.K.
Trust, Bombay, as managing agents of Raymond Woollen Mills,
Ltd., is income derived from property held on trust or on an
obligation in the nature of trust; and (2) whether the claim
for exemption in respect of such income is to be determined
under s. 4 (3) (i) or s. 4 (3) (ia).
With reference to the first question, the contention of Mr.
Palkhivala is that managing agency is business and therefore
it is property, and that it is property held on trust
because it is conducted by the trustees on behalf of the
trust with the help of trust properties and in accordance
with the directions contained in the trust deed. He also
contends that even if the business is not held on trust, it
is at least held, on the principle laid down in s. 88 of the
Trusts Act, on an obligation in the nature of trust, and
that s. 4 (3) (ii) is, in consequence, attracted. For the
respondent, Mr. Joshi does not dispute that managing agency
is to be regarded as business, but he contends that there
can be no trust of such agency, because it really involves
rendering of services and cannot be said to be property in
respect of which alone trust can be created, and further
because managing agency is an office, and that again is not
property. He also contends that, in any event, ,the
managing agency created under Ex. B could not be held to be
trust property, because it could be terminated at any time,
if the trustees so desired, on three months’ notice and that
there could be no trust of’ such a precarious, ephemeral or
evanescent kind of property, if indeed it could be held to
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be property. He also contends that s. 88 was inapplicable,
as there was no property which was held on an obligation in
the nature of a trust.
Whether a managing agency could be regarded as business was
considered by this Court in Lakshminarayan Ram Gopal and Son
Ltd. v. The Government of Hyderabad (1), where the question
arose with reference to assessment of excess profits tax on
the remuneration received by managing agents, tax being
leviable under
(1) [1955] 11 S.C.R. 393.
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that Act only on business income and it was held that it was
business, and that the profits therefrom were rightly
assessed to tax under the Act. The law must therefore be
taken to be settled beyond controversy that managing agency
is itself business.
Then the question is whether that business can be held to be
property within s. 4(3)(i) of the Act. Now ’property’ is a
term of the widest import, and subject to any limitation or
qualification which the context might require, it signifies
every possible interest which a person can acquire, hold and
enjoy. Business would undoubtedly be property, unless there
is something to the contrary in the enactment. Section
4(3)(i) of the Act under which exemption is claimed runs as
follows:
"4. (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
purpose, and in the case of property so held in part only
for such purposes, the income applied, or finally set apart
for application thereto."
Now, confining ourselves solely to the language of s. 4
(3)(i), there is nothing- in it which restricts in any
manner the normal and accepted meaning of the word
property’, and excludes business from its connotation.
There is also authority in support of the view that business
is property within the intendment of s. 4(3)(i). In In re
The Tribune (1), the question was whether a trust created
over the Tribune press and newspaper was for a charitable
purpose as defined in s. 4 (3) (i) of the Act. The majoritv
of the learned Judges of the High Court took,the view that
the object of the trust was not wholly religious or
charitable, and that accordingly the exemption under that
section could not be claimed. This decision was taken in
appeal to the Privy Council, which held reversing the
judgment of the High Court that the object of the trust was
in its entirety charitable and that it came within the
exemption enacted in s. 4 (3) (i). Vide In re The Trustees
of the Tribune (2). That is a question with
(1) [ 1035] 3 I.T. R. 246. (2) [1939] 7 I.T.R. 415; L.R. 66
I.A.
72
which we are not concerned in this appeal, and the actual
decision of the Privy Council does not bear on the present
controversy. What is relevant to our purposes is that
before the High Court, a contention was raised that the word
’property’ must bear the same meaning both in ss. 9 and 4
(3) (i), that in s. 9 it was used in contradistinction to
business which was dealt with under s. 10, and that
therefore ’property’ in s. 4 (3)(i) could not include
business. This contention was repelled by the High Court,
which held that the meaning of the word ’property’ in s. 4
(3) (i) could not be controlled by the connotation of that
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word in s. 9. Vide In re The Tribune (1). Before the Privy
Council, however, the question whether business of the
Tribune press and newspaper was property was not raised, the
Board merely observing that in the letter of reference there
was "no suggestion that the income under assessment is not
derived from property held under trust declared in the 20th
and 21st paragraphs of the will".
The point, however, arose directly for decision in All India
Spinners’ Association v. Commissioner of Income-tax, Bombay
(2). There, the assessee was an unregistered association
called the All India Spinners’ Association, and it was
formed for the purpose of development of the village
industries of handspinning and handweaving. -The Association
collected subscriptions from its members and also donations
and invested them in the purchase of raw cotton which was
supplied to poor labourers for being spun into yarn, the
yarn being. then supplied to them for being woven into
cloth, which was then sold and the sale proceeds
appropriated to the funds of the Association for the
purposes aforesaid. The assessee claimed exemption under s.
4(3) (i) on the ground that its income was derived from
property held under trust. The High Court was of the
opinion that the yarn and the cloth the sale of which
yielded the income, could not be regarded as property held
in trust, and that, in consequence, s. 4(3) (i) did not
apply. In reversing this judgment, the Privy Council held
that "the property consisted of the Organisation and the
undertaking as well as in the
(1) [1935] 3 I.T.R. 246.
(2) [1944] 12 I.T.R. 482; L.R. 71 I.A. 159,
73
fluctuating stock of yarn and cloth", and that the exemption
in s. 4(3)(i) applied. This is direct authority in support
of the contention of the appellant.
As against these authorities, the respondent relied on the
decision in Eggar v. Commissioner of Incometax (1). There,
a certain professor agreed to hand over the remuneration
which would be payable to him by the University for lectures
to be delivered by him, for certain charitable purposes,
but, in fact, no deed of trust was executed. The question
was whether the amounts actually paid to him by the
University were exempt from taxation, and it was held that
they were not, and that the income in question was at the
time of the receipt the private property of the assessee
being remuneration for services rendered by him. There
could be no question in this case of any source of income
being dedicated to trust, and the decision accordingly has
no bearing on the point, which falls to ’be decided here.
The weight of authority is therefore clearly in favour of
the view that business would be ’property’ for purposes of
s. 4(3)(i) of the Act.
It is next contended for the respondent that even if
business could in general be held to be property within s.
4(3) (i), managing agency cannot be so regarded, because
having regard to ss. 2(9A), 87A and 87B of the Indian
Companies Act, it is merely an office which consists in the
performance of services and discharge of certain
obligations, and that that could not be regarded as
property, which could be the subject-matter of trust. We
are unable to accede to this contention. In Angurbala
Mullick v. Debabrata Mullick (2), and The Commissioner,
Hindu Religious Endowments, Madras v. Sri Lakshmindra
Thirtha Swamiar of Sri Shirur MUtt (3), even an office of
trusteeship was held to be property especially when
emoluments were attached to it, and that must a fortiori be
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the position in the case of office of managing agency, which
is clearly one of profit and even alienable under certain
circumstances. The office requires no doubt the performance
of services; but there is no antithesis between service
(1) (1926) 2 I.T.C. 286.
(2) [195I] S.C.R. 1125.
(3) [1954] S.C.R. 1005, 1019.
10
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and business, as there are several kinds of business, which
involve the performance of services, such as insurance and
commission agency. The true test is whether the services
are a regular source of income. And if managing agency is
business, as was held in Lakshminarayan Ram Gopal and Son
Ltd. v. The Government of Hyderabad (1), then there is no
reason why it should not be property for purposes of s.
4(3)(i) of the Act. Nor is it an accurate statement of the
true position to describe trust of the managing agency as a
trust of an obligation. It is in truth a trust of property,
which carries with it certain obligations, and in law, there
is no objection to creating a trust over property burdened
with obligations, though, if it is onerous by reason of such
obligations, the trustee may be entitled to disclaim it.
It is then contended that even if managing agency could be
the subject of trust, the managing agency created by Ex. B
must be held to be incapable of being held on trust because
it is of the essence of public, as distinguished from
private, charity that it must be permanent and incapable of
being revoked or put an end to at the option of the trustee,
whereas the managing agency created by Ex. B could be
terminated by the trustees by giving three months’ notice.
This is to confuse charity with properties devoted to
charity. It is true that a public charity is perpetual in
character, and that means that it is capable of enforcement,
so long as there is any property left which can be
appropriated for its objects. And even if some or all of
the objects become incapable of fulfilment, the trust
properties will be devoted to the performance of similar or
allied charitable purposes on the doctrine of cy pres. But
so far as the trust properties themselves are concerned,
they will be held only on the incidents to which they are
subject under the law. Thus, if the property is a leasehold
interest, it must cease on the termination of the lease.
Likewise, if trust property is alienated under circumstances
binding on the trust, it will go out of the trust. But that
does not operate
(1) [1955] I S.C.R. 393.
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as an extinction of the trust, unless there is no property
at all left, with which the trust could be carried out.
That is the principle enacted in s. 77(c) of the Indian
Trusts Act, 1882, which in terms, however, applies only to
private trusts. We must therefore hold that the fact that
the trustees have the option at any. time to throw up the
managing agency is no legal’ impediment to its being
property which could be held on trust.
Lastly, it is contended that on the terms of Ex. A, the
properties which the trustees are " to hold and stand
possessed of " are " the sum of Rupees One Lao and any
donations or contributions received by the Trustees and all
accretions thereto and thereof and the investments in
securities for the time being and from time to time
representing the same ", that on the terms aforesaid, the
managing agency cannot be held to be property held in trust,
as no part of the sum of Rs. 1,00,000 was utilised in the
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acquisition of the business so as to impress it with the
character of accretion. It is argued that though the sum of
Rs. 1,00,000 was given as security by the trustees under Ex.
B, that was only for the due performance of their
obligations as managing agents, and that the amount itself
was not actually thrown into the business. But it is to be
observed that cl. 3 of the trust deed expressly provides for
the acquisition of the business of managing agency on behalf
of the trust and " with the help of the trust fund", and
that precisely is what has happened and indeed, reading
together Exs. A and B, it is impossible to resist the
conclusion that both the documents formed part of an
integral scheme, and that what the settlors had in view in
cl. 3 of Ex. A is the very managing agency, which was
acquired under Ex. B. There is considerable authority in
England that when trustees carry on business with the aid of
trust fund, the position in law is the same as if they
actually employed it in the business, though, in fact, it be
not actually invested therein. Thus, in Rocke v. Hart (1),
Sir William Grant observed:
(1) (1805) 11 Ves. Jun, 58 ; 32 E.R. 1009, 1010.
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a trader lodges money at his banker’s, he has in effect a
benefit from that. As he must generally keep a balance in
his banker’s, it answers the purpose of his credit; as if it
was his own money; and I should hold that to be employment
in his trade."
There are similar observations by Lord Gifford, in Moons v.
De Bernales (1).
In the result, we are of opinion that the word I property’
in s. 4(3)(i) of the Act is of sufficient amplitude to
comprehend ’business’, and if the question fell to be
decided solely on the terms of that sub-section, the
managing agency constituted under Ex. B must be treated as
property held on trust within s. 4(3)(i) of the Act.
This conclusion, however, is not sufficient to dispose of
the appeal in favour of the appellant, because there is
still the question raised by the respondent that even if
under the general law, the word I property’ is wide enough
in its significance to include business, in its context in
s. 4(3)(i) read along with s. 4(3)(ia) it bears a more
restricted sense as meaning only property other than
business. And it is this contention that forms the subject-
matter of the second question under reference. In order to
understand this question, it is necessary to state that in
the Act as originally passed, the only provision for
exemption from taxation of income derived from property
dedicated to religious or, charitable trust was contained in
s. 4(3)(i). On this section, the question arose whether
when a business was carried on for and on behalf of a trust,
the profits derived therefrom were exempt from taxation. It
was held in Commissioner of Income-tax, Madras v.
Arunachalam Chettiar (2), following a decision of the House
of Lords in Coman v. Governors of the Rotunda Hospital,
Dublin(3), that they were not. That was also the view taken
by the Allahabad High Court in Lachhman Das Narain Das, In
re (4). Then came the decision in In re The Tribune (5)
already referred to, wherein the Lahore High Court held that
’property’ in s. 4(3)(i) was
(1) (1826) 1 Russ. 301 ; 38 E.R. 117. (3) [1021] A.C. 1.
(2) I.L.R. (1926) 49 Mad. 833. (4) I.L.R. (1925) 47 All.
68.
(5) [1935] 3 I.T.R. 246.
77
sufficiently comprehensive to include business, and that
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profits from business carried on by trustees would be exempt
from taxation. As already stated, though the matter was
taken in appeal to the Privy Council this question was not
raised. It was in this state of the law that the
Legislature intervened, and enacted a new provision, s.
4(3)(ia), which is as follows:
" 4(3) Any income, profits or gains falling within the
following classes shall not be included in the total income
of the person receiving them:
(ia) Any income derived from business carried on on behalf
of a religious or charitable institution when the income is
applied solely to the purposes of the institution and-
(a) the business is carried on in the course of the
carrying out of a primary purpose of the institution, or
(b) the work in connection with the business is mainly
carried on by beneficiaries of the institution." Under this
provision, the profits of business would be exempt only if
the conditions laid down therein are satisfied. It is the
contention of the Department that as this is a special
provision dealing with the topic of exemption in respect of
business carried on for and on behalf of a trust, any claim
for exemption as regards profits derived from any such
business can be made only under that provision, and when the
conditions laid down therein are not satisfied, it is not
open to the assessee to fall back upon the general provision
contained in s. 4(3)(i) and claim exemption thereunder on
the ground that business is property. The basis of this
contention is the well-known maxim, Generalia specialibus
non derogant. In Charitable Gadodia Swadeshi Stores v.
Commissioner of Income-tax, Punjab(1), this question came up
for consideration before the Lahore High Court. It was held
by the learned Judges that the fact that the business failed
to satisfy the two conditions laid down in s. 4(3)(ia) was
no reason why it should not be exempt from taxation if it
fell within
1) [1944] 12 I.T. R. 385.
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s. 4(3) (i), and the main ground of the decision was that
the two categories mentioned in s. 4(3) (i) and s. 4(3)
(i)(a) having been enacted as two different clauses, it must
be taken that the one did not exclude the other.
It was this decision that was relied upon by the appellant
before the Tribunal, which, however, considered it
distinguishable. A reading of its order, however, shows
that it was not really satisfied about its correctness.
Accordingly, when the appellant applied for reference under-
s. 66 (1) of the Act, the Tribunal referred the second
question also for the decision of the High Court. But in
the view which the learned Judges of the Bombay High Court
took that business was not property within s. 4(3)(i), it
became unnecessary for them to express an opinion on that
question. Now that we have held that the word property in
s. 4 (3) (i), standing by itself, is susceptible of a wider
connotation so as to include business, it becomes necessary
to consider the second question under reference. Learned
counsel on both sides agree that it would be more
satisfactory that this question should be remitted to the
High Court for determination.
In the result, we remand the case to the High Court of
Bombay for a fresh disposal of the reference on a
consideration of the second question. As for costs, we
direct that the respondent do pay the appellant the costs of
this appeal as also the costs of the hearing before the High
Court. The costs of the further hearing which we have
directed will be dealt with by the High Court on remand.
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Appeal allowed. Case remanded.
79