Indian Kanoon - Search engine for Indian Law

7. It may then be suggested that it is not a charitable trust because the object was not to give the facility of swimming to the public free without any charge but the object was to set up a commercial institution which would charge for the admission of every member of the public to the swimming pool and make profit out of running the institution. Now, on a casual consideration of the matter it may strike one that the most essential element of charity is to render service to the public without any charge or remuneration, but, as we shall presently point out, it is clear on the authorities that the eleemosynary element is not an essential element of charity.

And to the same effect are the observations of the Privy Council in -- 'All India Spinners' Association v. Commissioner of Income-tax (A)', where their Lordships point out that the words "object at general public utility" should exclude the object of private gain such as an undertaking for commercial profit though all the same it would subserve general public utility. As in this case it is not suggested that any private gain is made out of the income of the undertaking carried On by the trust, the mere fact that profits are made by the trust will not prevent the trust still being a trust having a charitable object.

Our object, therefore, should be to give an interpretation to Section 4(3)(ia) and Section 4(3)(i) which removes these difficulties and anomalies and which is an interpretation which reconciles Clauses (i) and (ia) and presents a fairly complete and coherent picture of this aspect of the Income-tax Act. Now, it seems to us that Section 4(3)(i) deals with property which is held under trust or other legal obligation from which an income is derived, and the property may be even business which may be settled on trust or which may be an integral part of the trust. If that is the position and if the trust is wholly for religious or charitable purposes, then no difficulty whatsoever would arise with regard to the income of any property whether it is business or other property. In this very case if the case were to fall under Section 4(3)(i), then admittedly the trust is wholly for religious or charitable purposes and whatever income is derived by this trust, whether it is from securities or from immoveable property or from business, would be income derived from property held under trust or other legal obligation wholly for religious or charitable purposes and therefore exempt from tax. There is no difficulty in taking the view that a business may be property held under trust for the purposes of this sub-section because the Privy Council in the Tribune's case (C) did hold that the business of running a newspaper Tribune was property held under trust for a charitable object.