| Case ID |
e3148871-8a58-4a83-80e5-fd85410ebae4 |
| Body |
View case body. Login to View |
| Case Number |
IT REFERENCE No. 763 OF 1979 |
| Decision Date |
Feb 17, 1986 |
| Hearing Date |
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| Decision |
The court held that the Mullick Somnath Charitable Trust was not entitled to claim exemption under section 11 of the Income-tax Act, 1961. The trust deed allowed the trustees to spend the entire income on the support and maintenance of the settlor's relations, which did not qualify as a public charitable object. The predominant object of the trust was deemed to be the benefit of the settlor's relations rather than the public, disqualifying it from the income tax exemption. The court emphasized that if a trust has both charitable and non-charitable objects, and the trustees have discretion over the income distribution, the trust cannot claim tax exemption. |
| Summary |
The case of Mullick Somnath Charitable Trust versus Commissioner of Income Tax revolves around the interpretation of section 11 of the Income-tax Act, 1961, which deals with the tax exemption for charitable trusts. The Calcutta High Court examined the trust deed, which stipulated that half of the net income was to be used at the trustees' discretion for public benefits, while the other half could be used for the poor and indigent relations of the settlor. The court ruled that the trust's primary objective was not public charity, but rather the support of the settlor's relatives. This finding is significant for trusts aiming for tax exemptions under similar provisions, emphasizing that the intent behind the trust's creation must align with public charitable purposes to qualify for such exemptions. The judgment highlights the importance of clearly defined charitable objectives within trust deeds to avoid tax liabilities and ensure compliance with the law. |
| Court |
Calcutta High Court
|
| Entities Involved |
Not available
|
| Judges |
Dipak Kumar Sen,
Ajit Kumar Sen Gupta
|
| Lawyers |
Not available
|
| Petitioners |
Mullick Somnath Charitable Trust
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1986 SLD 2512 = (1986) 160 ITR 3
|
| Other Citations |
Trustees of the Charity Fund v. CIT [1959] 36 ITR 513 (SC),
CIT v. Trustees of Seth Meghji Mathuradas Charity Trust [1959] 37 ITR 419 (Bom.),
CIT v. Moosa Haji Ahmed [1964] 52 ITR 147 (Guj.),
CWT v. Trustees of the J.P. Pardiwala Charity Trust [1965] 58 ITR 46 (Bom.),
CIT v. Board of Mutwallis to the Wakf Estate, Ebrahim Solaiman Saleji [1968] 69 ITR 758 (Cal.),
Trustees of Gordhandas Govindram Family Charity Trust v. CIT [1973] 88 ITR 47 (SC),
Addl. CIT v. Sural Art Silk Cloth Manufacturers Association [1980] 121 ITR 1 (SC),
Abdul Sattar Haji Moosa Sait Dharmastapanam v. CAIT [1973] 91 ITR 5 (SC),
Yogiraj Charity Trust v. CIT [1976] 103 ITR 777 (SC),
Dharmadeepti v. CIT [1978] 114 ITR 454 (SC),
East India Industries (Madras) (P.) Ltd. v. CIT [1967] 65 ITR 611 (SC),
Shervani Charitable Trust v. CIT [1968] 69 ITR 750 (All.),
CIT v. Jaipur Charitable Trust [1971] 81 ITR 1 (Delhi),
Lakshmi Narain Nath Trust v. CIT [1969] 73 ITR 402 (Raj.)
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| Laws Involved |
Income-tax Act, 1961
|
| Sections |
11
|