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1. Yogiraj Charity Trust (the applicant in I.T.R. 147/76) and Jagdemba Charity Trust (the applicant in I.T.R. 183/77) Which was formerly known as Dalmia Jain (Jind Estate) Charity Trust, were denied the exemption from income-tax claimed by them on the ground that they were not trusts for religious or charitable purposes. This was confirmed by the judgment of this court in CIT v. Jaipur Charitable Trust (1971) 81 ITR 1, which was also affirmed by the Supreme Court in the case Yogiraj Charity Trust v. CIT (1976) 103 ITR 777. Shortly put, the refusal of exemption was for the reason that, though many of the objects of the trust were religious or charitable in nature, at least one of them was not and since the objects were distinct and distributive and there was nothing to preclude the trustees from utilising the entire income on the non-charitable object(s), the assessed would not be entitled to the exemption envisaged in s. 4(3)(i) of the I.T. Act, 1961. In a recent decision rendered on April 14, 1980, in Jaipur Charitable Trust v. CIT (I.T.R. No. 55/72) (1981) 127 ITR 620 (Delhi), where the trust deeds were couched in similar words, a Bench of this court (consisting of one of us) has held that the above objections would continue to stand in the way of availability of the corresponding exemption under s. 11(1) read with s. 2(15) of the I.T. Act 1961. in the two cases presently under consideration, which relate to the assessment years 1966-67 and 1967-68, respectively, the assessed claimed that the original "objectionable" trust deed had since been got "rectified" with retrospective effect, by deletion of the offending clauses in appropriate proceedings and that, therefore, there was no longer any justification to reject the assessed's claim for examption. This argument did not find favor with the AAC and the Appellate Tribunal. At the instance of the assessed, however, the Tribunal has referred the following question for our opinion in each of the two cases :

Mr. G. C. Sharma, learned counsel for the assessed, contended that a perusal of the original trust deed dated March, 7, 1949, would clearly show that the dominant intention of the author of the trust was to create a religious and charitable trust for the benefit of the public. It was so stated in the preamble to the trust deed dated March 7, 1949, and it was also quite clear from the various clauses as well as the objects set out in clause 5 that it was the intention of the author to create a religious and charitable trust. Though there was a reference to commercial concerns in sub-clause (iii) of clause 5 and there was a clause empowering the trustees, if necessary, to carry on business, it was not the intention of the author of the trust that the trust should carry on any activity of profit. The context in which the reference to commercial concerns occurs in sub-clause (iii) of clause 5 would itself make this position clear. Under the 1922 Act it had been held in a series of decisions that there was no prohibition against a trust carrying on business and in fact even under the 1961 Act a trust entitled to exemption under s. 11 may derive income from a business held by it. The provisions of the trust deed was not to device any private profit out of the activities of the trust and though a casual reference was a made to commercial activities also, the intention of the author was only to create a religious and charitable trust. But due to some infelicitous words in the trust deed, counsel said, the court held, when the matter cam up for their consideration, that the clauses were widely worded and that on a proper construction of the clauses there was nothing to prevent the trustees from carrying on business and making profits and that this could not be said to be a charitable purpose. It was not the intention of the author, as already stated, that any business should be carried on. In fact also, Mr. Sharma stated, no business was in fact carried on and the trustees also understood the document only as creating a purely charitable trust. It was unfortunate that on account of some superfluous words used in drafting the deed, the clauses in the trust deed did not bring out the true intention of the author. In these circumstances, counsel said, the only remedy left to the author of the trust to make his meaning clear and unambiguous was to have resort to the provisions of s. 26 of the Specific Relief Act and have the trust deed amended properly. In the very nature of things, since the rectification was sought for on the ground that the document as drafted did not bring out the true intention of the parties, once this was recognised, any rectification that was ordered had to be retrospective. It was in these circumstances that an order of rectification was obtained after due notice to the trustees and Mr. Sharma contended that the I.T. Dept. was not justified in ignoring the order of rectification and in proceeding as if the original trust deed continued to be in force.

7. The question that next arises is whether, on the terms of the amendment trust deed, the assessed is entitled to exemption under s. 11 and s. 12 of the I.T. Act, 1961. Previously, exemption was denied to the assessed only on the basis of certain clauses and these clauses now stand deleted or modified. Since the objectionable clauses have been removed and since none of the authorities have pointed out that the trust deed is defective in some respects vis-a-vis the claim for exemption even after amendment there should be no further objection to the recognition of the trust as a public charitable trust and the grant of exemption to the assessed. However, we think that our answer to the question referred, in the negative and in the favor of the assessed, should be subject to one important reservation. Under the Provisions of the 1961 the Act the exemption for purposes for income-tax depends not merely on the objects of the trust deed but also on the actual application of the income to religious and charitable purposes. In the present case some of the objects of the original trust did had been held to be non-charitable. During the accounting years relevant for the assessment years 1966-67 and 1967-68 the original trust deed was factually in operation and the trustees might have acted in accordance with the clauses of the original trust deed which included the power to start and run a business. Mr. Sharma, learned counsel, states that no business was ever carried on by the trustees. He may be correct. On the other hand, it could be that between the original date of trust deed, namely, March, 1949, and June 1972, when the order of amendment was passed by the sub-court and trustees might have acted on the footing of the original trust deed and might have embarked on certain activities under the clauses which had been held to be non-charitable by the High Court and the Supreme Court. If that were so the mere fact that the trust deed had been retrospectively amended would not save the trust from the denial of exemption. In other words, despite the amendment made to the trust deed, if, as a matter of fact, it is found that during the relevant accounting years some of the clauses of the original trust deed which were previously held objectionable were acted upon, then the income of the assessed may not be exempt merely on the basis of the amended trust deed, particularly in view of the embargo contained in s. 2(15) of the 1961 Act, again the exemption of any trust having for its objects any object involving the carrying on of an activity for profit. This aspect requires to be looked into by the authorities before the assessed's claim for exemption can succeed. We, therefore, leave this aspect of the matter completely open for re-determination by the Tribunal either by the itself or by remand to the lower authorities.