Legislation for Non-Profit Organizations

Case Notes: South Asia

The International Journal
of Not-for-Profit Law

Volume 2, Issue 2, December 1999


Kirti Chand Tarawati Charitable Trust v. Director of Income Tax [1999] 105 TAXMAN 686

In the case of a trust that, although created for charitable purposes, was found to be engaged mainly in the construction of a religious temple in which no charitable activities were carried out, the High Court of Delhi has held that the tax authority can look beyond the ostensible purposes expressed in the governing instrument. Accordingly, the tax authority was entitled to deny renewal of recognition as a charity (for the purposes of receiving donations under section 80G Income Tax Act 1961) on the grounds that the trust was engaged in non-charitable activities.

Commissioner of Income Tax v. Palghat Shadi Mahal Trust [1999] 233 ITR 722

A trust established for the purpose of establishing institutions for the educational, social and economic advancement of Muslims and for religious and charitable objects recognized by Muslim law was held to be exempt from income tax as a charitable trust by the Kerala High Court. Rejecting the contention of the tax authority that the trust was established for the benefit of a particular religious community, the court found that the Muslim community in the state of Kerala is listed as a “backward class” and therefore the trust was entitled to exemption as being for the benefit of “Scheduled Castes, Scheduled Tribes or backward classes” even if only intended to benefit all the members in one of the listed castes.

National Health & Education Society v. Assistant Director of Income Tax [1999] 70 ITD 330 (MUM.)

A hospital and medical research center that levied charges, including service charges, on some patients according to their financial status while treating others for free or at concessional rates was held by the Income Tax Appeal Tribunal in Mumbai to exist solely for philanthropic purposes and not for profit, and thus was entitled to exemption from income tax on income from the hospital and the research center under Sections 10 (21) and 10 (22A) of the Income Tax Act 1961. However, income from bank interest and a gift shop fell outside the scope of the exemption.