The International Journal
of Not-for-Profit Law

Volume 1, Issue 3, March 1999

The High Court of Madras has held that, where a trust was established to impart knowledge and education primarily in a particular language (in this case Gujarati), exemption from income tax cannot be denied under section 13 (1) (b) Income Tax Act 1961 on the grounds that the trust is established to promote the interest of a particular religion or caste. (CIT v Sri Gujarathi Mandal, [1998] 101 Taxman 647 (Mad.))

CIT v Nagi Reddi Charity

Another case heard by the High Court of Madras concerned a trust established to provide medical relief and education to the poor and which received by way of gift an assignment of copyright in several films for which distribution arrangements had already been made, subject to the condition that amounts realised from the exploitation of the copyrights were to be held as part of the corpus of the trust until such time as they were utilised in constructing a hospital. The court held that the amounts received by the trust from the exploitation of the copyrights did not represent income derived from the carrying on of a business by the trust (for which exemption from income tax is denied under section 13 (1) (bb) Income Tax Act 1961)). The income fell to be treated as contributions to the corpus of the trust and thus did not constitute taxable income. (CIT v Nagi Reddi Charity, [1998] 101 Taxman 356 (Mad.))