Report No. 12

12. Income from property held for religious or charitable purposes and income of religious or charitable institution.-

(1) Subject to the provisions of sections 63 to 66, [16(1)(c)), the following income shall not be included in the total income of the previous year of the person in receipt of the income-

(i)(a) so much of the income derived from property held under trust wholly for charitable or religious purposes as is applied or accumulated for application to such purposes in India; and

(b) in the case of property so held in part only for such purposes, so much of the income derived from the property as is applied or finally set apart for application to such purposes in India:

[Section 4(3)(i), main para.]

Provided that so much of any income referred to in sub-clause (a) or (b) of this clause as is applied to purposes other than charitable or religious purposes as aforesaid, or ceases to be accumulated or set apart for application there to, shall be deemed to be the income of such person of the previous year in which it is so applied or ceases to be so accumulated or set apart;

[Section 4(3)(i), proviso (a), opening line and proviso (c)]

(ii) (a) income from property held under trust...., created on or after the 1st day of April, 1952, for charitable purposes which tend to promote international welfare in which India is interested, applied to such purposes outside India, and

[Section 4(3)(i), Proviso (a)(ii)]

(b) income from property held under trust for charitable or religious purposes created before the 1st day of April, 1952, applied to such purposes outside India,

if the Central Board of Revenue by general or special order directs in either case that it shall not be included in the total income of the person in receipt of such income.

Explanation.-In this sub-section, "property" does not include business.

[Section 4(3)(i), Proviso (a)(i)]

(2) Subject to the provisions of sections 63 to 66 (16(1)(c)1, any income derived from business carried on by or on behalf of a trust p/ charitable or religious purposes shall not be included in the total income of the previous year of the trustees, if. the conditions specified in sub-section (4) are satisfied.

[Section 4(3)(i), proviso (b) part]

(3) Any income derived from business carried on by or on behalf of a religious or charitable institution shall not be included in the total income of the previous year of the institution, if the conditions specified in sub-section (4) are satisfied.

[Section 4(3)(i), proviso (b) part]

(4) The provisions of sub-section (2) or sub-section (3) shall apply only if the following conditions are satisfied-

(a) the income is applied wholly for the purposes of the trust or institution, as the case may be; and

(b) either the business is carried on in the course of the actual carrying out of a primary purpose of the trust or institution, or the work in connection with the business is mainly carried on by beneficiaries of the trust or institution.

[Section 4(3)(i), proviso (b) part]

(5) Any income of a trust for charitable or religious purposes or a religious or charitable institution, derived from voluntary contributions and applicable solely to charitable or religious purposes shall not be included in the total income of a previous year of the trustees or the institution, as the case may be.

[Section 4(3)(ii)]

(6) Nothing contained in this section shall operate to exempt from the provisions of this Act that part of the income from property held under a trust for private religious purposes, which does not ensure for the benefit of the public.

[Section 4(3), last para. part]

Explanation.-In this section,-

(a) "charitable purpose" includes relief of the poor, education, medical relief and advancement of any other object of general public utility;

[Section 4(3), last para. part]

(b) "trust" includes any other legal obligation.

[New] [Cf. section 4(3)(i), main para.]

[section 4(3)(i), proviso (a)(i) & , section 4(3), last para.]