Indian Kanoon - Search engine for Indian Law

What were the steps taken to carry it out ? The first was that a trust was set up, a trust for educational purposes only, and, therefore, a charitable trust, but as its name implies, it was to be tied to Daviess the name of the business. The object of the charitable trust was to take over the business from Daviess. The second step in this was the covenant which Tutors entered into the day after its formation, which was a covenant for seven years to pay 80 per cent. of its profits to the trust. The third step was that the trust was to use the money to pay for the business. I care not at all, like my Lord, whether this was a legally binding transaction or merely one that was morally binding on everybody. After all, all the participators in this scheme were on one side of the table. They were the corporators in this business. They were the people who were making a living out of it and who were hoping to get a good price for it. There is nothing wrong with that. But it makes a formal agreement quite unnecessary because it was to everybodys interest and it was everybodys intention to carry it out in this way of it would get back Tutors income tax. The fourth step was that the trust, being a charity, was to apply to get back the income tax payable by the vendors and return it to the vendors directly it was got back and so hasten the payment of the purchase price.

That is enough in my opinion to deal with this appeal. I follow the judge until he reaches this point precisely; but his further reasoning I cannot follow, and so far as I can follow it, I do not accept it; but it makes no difference.

As to the second point, that the payments were applied for charitable purposes only, being payment made to buy an educational business, when looked at it is essentially the same point at a different stage. The payments to be made by the covenantor are not in my opinion for charitable purposes only because they are paid in pursuance of the understanding that they shall be devoted to the purchase of the business. Therefore it does not matter that the business is an educational business and therefore within the object of the charitable trust because the objects of the charitable trust because the objects of the charitable trust are not wholly charitable in this case putt to pay for a business, of which they themselves are the controllers.