M/S. THIAGARAJAR CHARITIES, MADURAI versus THE ADDITIONAL COMMISSIONER OF INCOME-TAX AND ANR.

M/S. THIAGARAJAR CHARITIES, MADURAI versus THE ADDITIONAL COMMISSIONER OF INCOME-TAX AND ANR.

The trust deed's objects are charitable in nature (education, medical relief, poor relief), and profits from business held as corpus were spent on charity. The business is merely a means to achieve charitable purposes, not pursued with profit motive. Therefore, income derived from the business is exempt under Section 11 of the Income Tax Act, 1961.

Parties
Appellant: MIS. THIAGARAJAR CHARITIES, MADURAI; Respondents: THE ADDITIONAL COMMISSIONER OF INCOME-TAX AND ANR.
Jurisdiction
India
Judgment Date
24 April 1997
Procedural Posture
Civil Appeal / Final Judgment on Appeal From Madras High Court
Outcome
Appeal allowed
Legal Topics
Section 11 Exemption, Charitable Purpose Definition, Business Income Under Trust
Income Tax Charitable Trusts Section 11 Exemption Charitable Purpose Definition Business Income Under Trust

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Parties

MIS. THIAGARAJAR CHARITIES, MADURAI

Appellant

THE ADDITIONAL COMMISSIONER OF INCOME-TAX AND ANR.

Respondents

Procedural Posture

Civil Appeal / Final Judgment on Appeal From Madras High Court

Legal Issues

  1. 1 Whether the objects of the Trust are charitable within Section 2(15) and therefore eligible for Section 11 exemption
  2. 2 Whether business carried on by the Trust constitutes an activity for profit and hence excludes exemption

Ratio Decidendi

The trust deed's objects are charitable in nature (education, medical relief, poor relief), and profits from business held as corpus were spent on charity. The business is merely a means to achieve charitable purposes, not pursued with profit motive. Therefore, income derived from the business is exempt under Section 11 of the Income Tax Act, 1961.

Court Disposition

Appeal allowed

Orders

  • Income derived from business held under trust is exempt under Section 11 of the Income-tax Act, 1961.
  • Common judgment of Madras High Court dated 23.12.1977 in T.C. Nos. 182 and 252 of 1974 is set aside.