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Mr. Bhargava, learned counsel for the assessee, adopts the line of reasoning that prevailed with the Appellate Assistant Commissioner and contends that where the charitable object and the so-called non-charitable object co-exist in a deed of trust then the dominant intention of the settlor has to be found put and where the dominant intention is one of charity, in general, the trust will still be held to be wholly charitable in character and will qualify for exemption. He placed reliance on Commr. of Income-tax, Bombay City II v. Walchand Diamond Jubilee Trust, (1958) 34 I T R 228 : (A I R 1959 Bom 148); (1959) 36 I T R 513: (AIR 1959 S C 1060); Commr of Income-tax, West Bengal v. Sardar Bahadur Sardar Indra Singh-Trust, (S) AIR 1956 Cal 164; Commr.of Income-tax, Kerala and Coimbatore v. P. Krishna Warriar, AIR 1965 S C 59, Commissioner of Income-tax, Madras v. Andhra Chamber of Commerce, Madras, AIR 1965 S C 1281 and Re Khetteen (deceased), Westminster Bank, Ltd. v. Family Welfare Association, Trustees, Ltd., 1954-1 All E R 581.

16. Mr. Bhargava then drew our attention to 1958-34 ITR 228 : (AIR 1959 Bom 148). The recitals in the trust deed that fell for consideration in this case was that the settlor was anxious to strengthen the hands of the organisation which controlled the companies in which he had an interest and considered it necessary to maintain a uniform control over one of the companies by centralising the voting. power in the company in the hands of a certain definite body instead of having it spread over individuals or small groups. The trust fund was to be invested in the purchase of shares of a particular company and for 18 years the income was to be invested in the shares of that company. After the expiry of 18 years the income from investment was to be utilised for certain charitable objects like giving scholarships to deserving students, medical relief, monetary help to the poor and the needy and for relief of the poor and distressed in times of famine, cyclone, floods, earthquakes, etc. The question that fell for consideration was whether in the circumstances exemption under Section 4 (3)(i) was permissible It was held that the anxiety of the settlor to control the voting power of the company was not relevant for seeing whether Section 4 (3) (i) of the Act applied. It was also held that the purpose of the trust was charitable, though for 18 years there was to be accumulation of income. It was contended that as the object of the trust was to benefit the employees of a particular concern or their children, it was not a charitable trust within the meaning of Section 4 (3) (i). The learned Judges did clearly observe that, if the object of the trust was to benefit the employees of a particular concern or their children only, the trust would not be a charitable trust within the meaning of Section 4 (3) (i). But, as in that case there was no obligation cast upon the trustees to prefer the employees of the company and they were not bound to select such employees, the trust was one which fell within the ambit of Section 4 (3) (i).

18. Mr. Bhargava also placed reliance on (S) AIR 1956 Cal 164 and argued that a trust for charitable purpose does not become invalid, if the choice of the specific charitable objects to be benefited is left to the trustees. This case, to our mind, is wholly inapplicable. We are not considering the validity of the trust. The trustees may certainly be entitled to spend on any of the objects set out in the trust. The point here is whether the exemption under Section 4 (3) (i) will be admissible when charitable and non-charitable objects are mixed up without clear demarcation. He also referred to 1954 1 All E R 581. There was no question of exemption being granted from income-tax in that case. The learned Judge had to consider the question whether the trust can be said to be of public nature. A fund was created by the settlor for promotion and furtherance of commercial education and prescribed rules for the administration of the funds where the prescribed persons eligible as beneficiaries were British born subjects of either sex and it was laid down that in selecting beneficiaries the trustees shall give preference to any employees of a particular company or members of their families. It was laid down by the learned Judge that this was a public trust inasmuch as the primary class of persons eligible to the benefit was sufficiently wide though in making the selection the trustees had to give some priorities. Present is not a case of this type.

20. Mr. Lodha, however, called our attention to the case reported as (1962) 46 I T R 1066 (Mad), which contains observations which are pertinent. It was a case where charitable and non-charitable objects set out in a trust deed were mixed up and the trustees had unfettered discretion to utilise the income of the trust to any of the objects. In that connection the learned Judges reached the following conclusion about the applicability of Section 4 (3) (i) :

"Where a trust is created for charitable and non-charitable objects and gives an unfettered discretion to the trustees to utilise the whole of the income of the trust to objects which are non-charitable, the property in respect of which the trust is created cannot be deemed to be held in trust wholly for charitable or religious purposes, and the trust would not be eligible to the exemption contemplated by Section 4 (3) (i) of the Income-tax Act, 1922. It would also follow that any donation made to such a trust is not entitled to exemption from tax under Section 15B of the Act." We find ourselves in agreement with this view.