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4.4 He also relied on the decision of Honble Madras High Court in the case of South Indian Athletic Association Ltd. v. CIT , in which it was, inter alia, pointed out that mere entertainment cannot be called to be charitable purpose. It was further pointed out that promotion of intercourse amongst members of an organization also cannot be considered to be a charitable purpose.

Thus, where some of the objects of the trust were charitable and some non charitable, and the trustees in their discretion could apply any amount of income to any object, then, the trust must fail for the purpose of claiming exemption under Section 4(3)(1) of 1922 Act. The case of the learned Departmental Representative was that the assessee has pursued only one object and, therefore, the case of the assessee must fail for exemption under Section 11. We may state here that the decision of the Honble court in that case was quite different from its exposition made by the learned Departmental Representative. The decision of the Honble court is that in case of a partly charitable trust, in a situation where the trustees have discretion to apply the income to any object, the assessee will not be entitled to exemption under Section 11. Reason is quite obvious that the assessee could apply the whole of the income for a non-charitable purpose. In such a situation, the assessee will not be entitled to get exemption under Section 11. It may also be mentioned here that the concept of partly charitable trust does not exist any longer under the new provision applicable to the assessment year at hand, as Section 11(1)(a) speaks of exemption only if income is derived from property held under trust wholly for charitable or religious purposes. Section 11(l)(b), regarding partly charitable trust, is applicable to such trusts only which had been created before the commencement of this Act. Such is not the case before us. Further, it has also to be examined whether all objects are charitable or not in the case at hand.

4.9 The learned Departmental Representative pointed out that most of the expenditure was incurred in payment of salaries etc., which cannot be said to be the application of income to the charitable purpose. He also referred to the decision of Honble Supreme Court of India in the case of Gangabai Charities v. CIT . The Honble court had pointed out that it was not possible to cull out in clear terms any specific charitable or religious object from the trust deed and, therefore, it cannot be said that the trust was set up wholly for religious or charitable purposes. There was no mention in the trust deed as to how the income derived from the trust property was to be utilized. Therefore, it was not entitled to exemption under Section 11(1)(a).

7.1 The first issue to be decided in this case is whether the objects of the assessee-society are wholly charitable in nature or not. The case of the learned Departmental Representative was that the assessee did not pursue object Nos. 1 to 4, but pursued the object of running a school with nursery and kindergarten classes. From the profits, classes I to XII were added. The school has been run in a manner a commercial enterprise is run. The school has earned profit from year to year. Even in subsidiary activities, when there was a loss, the same was recouped from the "Children Welfare Fund". Therefore, object No. 5 was not charitable in nature. There was no guideline laid down in the trust deed for allocation of funds to various activities and, therefore, the management could divert any amount of money towards this object, which was non-charitable. Therefore, his case was that the instant society has mixed objects with no specific allocation of funds. In view thereof, it cannot be said to pursue charitable purpose wholly and exclusively. We have already seen the cases quoted by the learned Departmental Representative, which lead to a definite conclusion that a partly charitable trust must fail in getting exemption and that exemption exists only under Section 11(1)(b), in respect of a trust created before the commencement of this Act. As against the aforesaid, the learned Counsel pointed out that imparting of education through a school is an activity of education, which is per se a charitable activity.

8. There were also minor issues raised by the learned Departmental Representative regarding expulsion of the earlier members, which according to him, showed the real intent and purpose of the present members of the society. We are unable to persuade ourselves to agree with the learned Departmental Representative for the reason that the question to be seen is whether the objects are charitable and the income is applied for charitable purposes. The exemption under Section 11 does not depend upon the fact whether the trust was run by one set of people or the other set of people. What is to be seen is whether the objects are charitable in nature and the income is applied for the objects of the trust. This view finds support from the decision of Honble jurisdictional High Court in the case of All India Hindu Mahasabha (supra).