P L D 1980 Supreme Court 84 (PLP)

ANWARUL HAQ, C. J.-This appeal, by special leave, has come before us on an equal division of opinion between four learned Judges of this Court as to the scope and application of clause (3) (1) of section 4 of the Income-tax Act, 1922, and the proviso thereto. The facts giving rise to this appeal may briefly be stated. Hakim Muhammad Said, who was the sole proprietor of a business known as Hamdard Dawakhana, engaged in the manufacture of Unani medicines and a sharbat known as "Sharbat-e-Rooh Afza", created a trust to be known as the Hamdard Dawakhana Trust, by means of a trust deed dated the 26th of September 1953, stipulating that with effect from the 1st of April 1953, the running business. under the name and style of Hamdard Dawakhana Karachi shall stand transferred to the Trust; that 3/4th of the apportionable net profit of the Trust' shall be spent on "the development of the arts and sciences pertaining to Tibb and on other philanthropic and cha:.table works", and that the remaining 1/4h of the apportionable net profit of the Trust :!as to be made over to the donor Hakim Muhammad Said during his life-time and after his death to his legal heirs and the heirs of his successors, generation after generation. The total income of the Trust for the year 1954-55 was assessed to Income-tax, and the claim of the assessee for exemption under section 4(3) (1) of the Income-tax Act was rejected on the following grounds (i) That the income of the Trust was not to be spent exclusively for charitable purposes, as with was reserved for the maintenance of the author of the Trust and his heirs; (ii) That some of the purposes enumerated in the trust deed were not charitable at ail, as for example clauses 6(a), 6(b) (3) and 6(b) (4) relating to the establishment and running of commercial and industrial concerns and sale depots for medicines in order to develop the efficiency, belief and popularity of the herbs and medicines under the Islamic and Unani systems of medicines to aid all kinds of movements or gatherings which concern the advancement of the country and maintenance of law and order; and to assist and help orphans and other deserving people of the country, preference being given to the deserving kinsmen and the relations of the creator of the Trust; and (iii) The business was not carried on in the course of carrying out the charitable objects. Against this decision of the Income-tax Officer, the assessee went up in appeal to the Income-tax Appellate Tribunal, which was allowed on the 6th of January 1961. The Tribunal held (i) That the only .clause of the Trust Deed which could be objected to as not being charitable was clause 6(b) (3), but the same had been deleted by a supplementary Deed executed on the 8th of January 1954. (u) That all other objects mentioned in the Deed were either religious or charitable in nature and the. commercial undertakings of the trust were primarily meant for furthering these objects. (iii) That the Department's contention that unless the entire income arising from the business held under trust is applied for charitable or religious purposes the trust business would not be entitled to the exemption, is not correct, as clause (i) of subsection (3) of section 4 of the Income-tax Act also applies to income from business held in part only for charitable or religious purposes, and the proviso to the said section has to be read along with the main provisions. (iv) That the business of the assessee was being carried on in the course of carrying out the charitable purposes of the institution: (v) That Ith of the income arising from the commercial undertaking of the appellant was exempt from tax. The Department accepted this decision and the exemption granted was made available to the assessee. In the course of assessments for the years 1955-56, 1956-57, 1957-58, the Income-tax Officer again subjected the whole income of the assessee to tax, without any exemption, on the same grounds as had been adopted in the case of the assessment for the year 1954-55. The assessee again went up in a direct appeal to the Tribunal, but this time -the appeal was only allowed partially by the order of the Tribunal dated the 2nd of December 1963. The Tribunal held: (1) That "Sharbat-e-Rooh Afza" was not manufactured in the course of carrying out a religious or charitable purpose, as this product was not a medicine pure and simple. The income from the sale of "Sharbat-e-Rooh Afza" was, therefore, not entitled to any exemption. (2) That the difference between the income returned by the assessee and the income determined by the Income-tax officer was also not entitled to exemption, as the same was not spent on charitable objects. In all other respects, the Tribunal agreed with its earlier findings in respect of the assessment year 1954-55 and held that Ith of the assessee s income other than that derived from the two items mentioned above was exempt from tax under section 4(3) (i) of the Income-tax Act, 1922. Both the Department and the assessee were dissatisfied with this decision. Hence the Department applied, under section 66(i) of the Income-tax Act, for reference of the following questions to the High Court: (1) Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the rule of res judicata was applicable in Income-tax proceedings? (2) Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the income of the assessee was exempt from tax in view of the provisions as contained in section 4(3) (i) of the Income-tax Act and whether this finding was based on adequate material? The assessee prayed for the reference of the following questions to the High Court: (1) Whether on the facts and circumstances of the case the Tribunal was justified in holding that the income arising from the manufacture and sale of "Sharbat-e-Rooh Afza" was hit by the first part of the first proviso to section 4(3) (i) of the Income-tax Act and was therefore liable to tax? (2) Whether on the facts and circumstances of the case the Tribunal was justified in holding that the difference between the income disclosed by the Account Books and the income actually determined for purposes of Income-tax was not entitled to exemption on the ground that it was not expendable or actually applied for charitable purposes? (3) Whether the Tribunal for the assessment year 1954-55 having held that th of the income of the Trust was exempt from tax under section 4(3) (i) and the Department having accepted the decision, the Income-tax authorities and the Tribunal in accordance with the principles of natural justice were not estopped from re-opening the question ? All these applications were heard together by the Appellate Tribunal which, by its order of the 14th of June 1963, referred the following question only on behalf of the Department "Whether in the facts and circumstances of the case the Tribunal was justified in holding that the income of the assessee is exempt from tax in view of the provisions as contained in section 4(3) (i) of the income-tax Act?" . Out of the questions suggested by the assessee, the Tribunal referred only the following question : "Whether in the facts and circumstances of the case the Tribunal was justified in holding that income arising from manufacture and sale of "Sharabate-e-Rooh Afza" is hit by the first part of the first proviso to S. 4(3) (i) of the Income-tax Act, 1922, and is liable to tax?" The Tribunal refused to refer the second question suggested by the assessee on the ground that this was a pure question of fact, and in respect of the third question suggested by the aseessee, it held: "That the assessee's first question if properly elaborated before the High Court would settle the issue raised in the third question and if answer to that question is held to be in the negative then automatically 'Rooh Afza" will not be hit." Against the Tribunal's refusal to refer the assessee's second question, the assessee filed three applications under subsection (2) of section 66 of the Act praying that the Tribunal should be directed to state a case and refer the said question also for the decision of the High Court, as the same was a question of law. These applications were registered as I. T. C. Cases Nos. 33, 34 and 42 of 1966 and the reference made by the Tribunal was registered as Civil Reference Case No. 5 of 1966. They were all heard together by the High Court, which, by its judgment of the 2nd of November 1970 answered the question referred at the instance of the Department in the negative. The High Court has held that although the main object of the Hamdard Dawakhana Trust was the promotion of Unani medicine, which was undoubtedly an object of general public utility within the meaning of the explanation appended to subsection (3) of section 4 of the Act, and that the word `property' mentioned in clause (1) includes business, but the proviso appended to the said clause applies in all cases where the exemption is claimed for income arising out of business. The High Court has further held that the exemption being available only if both the conditions laid down in the proviso are satisfied, namely, that the business is carried on behalf of a religious or charitable institution, and that the income is applied solely for a charitable purpose, the assessee in this case did not qualify for exemption as th of the income of the business was reserved for the author of the Trust. In this view of the matter, the High Court held that the question referred at the instance of the assessee did not arise and hence it was answered in the affirmative. In view of this the other question sought to be referred at the instance of the assessee in Applications Nos. I. T. Cs. 33, 34 and 42 of 1966 was also considered to be redundant and the applications were dismissed. The assessee thereafter obtained leave from this Court on the 4th of March 1971, to consider the question as to "whether the income of the business of Hamdard Dawakhana Trust is exempt from tax under clause (i) section 4(3) or whether it is a case of income derived from business carried on behalf of the Trust within the proviso to clause (i) above". This appeal came up for hearing on the 14th and 15th of February 1974, before a Bench of four Judges of this Court comprising Hamoodur Rahman, C. J., Muhammad Yaqub Ali., J. Salahuddin Ahmad, J. and Anwarul Haq, J. Hamoodur Rahman, C. J., with whom Salahuddin Ahmad, J. concurred, took the view, following the previous decision of the Court in the case of Commissioner of Income-tax East Pakistan v. Muhammad Abdur Rauf Khan (P L D 1963 S C 209), that the word `property', as used in the enacting clause (i) of subsection (3) of section 4 of the Act, includes business, yet the proviso to the said clause says that if the property is business then the two further conditions laid down in the proviso must be satisfied before the exemption will become available; that a business which is the subject of a trust will also be a business which is carried on behalf of a religious or charitable institution; and to avail of the exemption it must also be shown that the income. of such business is applied solely for a religious or charitable purpose; and that if the income is applied only partially for such a religious or charitable purpose, then the exemption will not be available. His Lordship further observed that he was unable to accept the contention that by treating the proviso as an exception we would be really recalling the substantive provision, as the substantive provision would still apply to all other kinds of property whether held solely or in part; and the proviso would apply only if the property held in trust is a business. He, accordingly, concluded that the High Court had rightly answered the questions referred to it. In their separate judgments, Muhammad Yaqub Ali, J. and Anwarul Haq, J. took a contrary view, holding that there was a clear distinction between business as property held under trust wholly or partly for religious or charitable purpose, and business carried on behalf of religious or charitable institutions; that the proviso in question was attracted only when the business itself was not held under trust; and the proviso ought not to be interpreted in such a manner so as to destroy the exemption given by the substantive clause to income derived from business held under trust. On this view of the matter, they held that th of the income of the Hamdard Dawakhana would be exempt from tax under clause (i) of subsection (3) of section 4 of the Act. As the decision of the case turns on the interpretation to be placed on the provisions contained in subsection (3) of section 4 of the Act, the same may be reproduced here with advantage: "(3)-Subject to the provisions of this Act, any income, profits or gains falling within the following classes shall not to such extent as may be specified in this subsection or prescribed in this behalf, be included in the total income of the person receiving them : (i) Any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes, the income applied, or finally set apart for application, thereto: Provided that in the case of income derived from business this clause shall not apply unless the business is carried on behalf of a religious or charitable institution and the income is applied solely for a religious or charitable purpose of the institution, and either (i) the business is carried on in the course of the carrying out of a religious or charitable purpose of the institution; or (ii) the work in connection with the business is mainly carried on by the beneficiaries of the institution Provided further that nothing in this clause shall apply to so much of the income, profits and gains as is not expended during the previous year or set apart for being expended within Pakistan. Provided further that if any sum out of the amount so set apart is expended outside Pakistan, it shall be included in the total income of the previous year in which it was set apart, whichever is the greater, and the provisions of subsection (2) of section 34 shall not apply to any assessment or re-assessment, as the case may be, made or to be made in pursuance of this proviso. (ii) Any income of a religious or charitable institution derived from voluntary contributions and applicable solely to religious or charitable purposes : Provided that nothing contained in clause (i) or clause (ii) shall operate to exempt from the provisions of this Act that part of the total income of a private religious trust which does not enure for the benefit of the public. Explanation.-The expression "charitable purpose" as used in clauses (i) and (ii) includes relief of the poor, education, medical relief and the advancement of any other object of general public utility. The first proviso to clause (i) was inserted in replacement of clause (tat) of section 4(3) by an amendment made in 1931. The said clause (ia), which was itself introduced in 1939 by Act VII of that year, was in the following terms :- "(ia).-Any income derived from business carried on on behalf of a religious or charitable institution when the income is applied solely to the purposes of the institution and- (a) the business is carried on in the course of the carrying out of a primary purpose of the institution, or (b) the work in connection with the business is mainly carried on by beneficiaries of the institution." It has been generally presumed that the replacement of clause (ia) by the first proviso in 1951 was made in the light of the observations of the Lahore High Court in Charitable Gadodia Swadeshi Stores v. Commissioner of Income-tax, Punjab (A I R 1944 Lah. 465). While delivering the judgment of the Court, Din Muhammad, J. stated as follows : "Viewed in its proper perspective therefore, clause (i-a) can be taken to apply only to such business as is carried on on behalf of religious or charitable institutions which were not held under trust, and not to such business as was itself held under trust, or was conducted by or on behalf of such charitable or religious institutions as were held under trust. If it was intended to narrow down the scope of clause (i) so as to destroy the exemption enjoyed by a business held in trust or conducted by or on behalf of a religious or charitable trust, the new clause should have b en added as a proviso to the old clause." This view of the Lahore High Court was followed by the High Courts of Allahabad and Bombay in cases reported as Commissioner of Income-tax v. Radhaswami Satsang Sabha (A I R 1954 All. 291) and J. K. Trust, Bombay v. Commissioner of Income-tax (A I R 1948 Bom. 191). In 1953, the Indian Legislature also amended subsection (3) of section 4 of the Act. The scheme adopted in India was, however, slightly different as would be seen from the following reproduction of the amended subsection "3(1).-Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them: (i) Subject to the provisions of clause (c) of subsection (1) of section 16. any income derived from, property held under trust or other legal obligation wholly for religious or charitable purposes, in so far as such income is applied or accumulated for application such religious or charitable purposes as relate to anything done within the taxable territories, and in the case of property so held in part only for such purposes the income applied or finally set apart for application thereto Provided that such income shall be included in the total income (a) .. (b) in the case of income derived from business .carried on on behalf of a religious or charitable institution, unless the income is applied wholly for the purposes of the institution and. either (i) the business is carried on in the course of the actual carrying out of a primary purpose of the institution, or (ii) the work in connection with the business is mainly carried on by the beneficiaries of the institution . . . . ." Mr. A. K. Brohi, appearing in support of . this appeal, contends that the High Court has misinterpreted the provisions . of subsection (3) of section 4 of the Income-tax Act by holding that the first proviso to clause (i) was iii the nature of an exception to the 'substantive provisions of clause (i); that it should have held that the proviso was itself a substantive provision. He contends that as the proviso speaks only of income derived from business and not from property as provided in clause (i), therefore, it is clear that the proviso does not cover the whole subject-matter dealt with in the main clause. He submits that the assumption made by this Court while deciding the case of Abdul Rauf Khan, coming before it from Fast Pakistan, regarding the genesis of the amendment by which the proviso was inserted, is not well-founded, as there is no evidence in that behalf; and that the Court was unduly influenced by this assumption in taking the view that the proviso necessarily limited the scope of the exemption granted by clause (i) if the property held under trust was business. Mr. Brohi next submits that if the proviso is to be treated as a true proviso, then it should be construed strictly as it takes away something from the main clause; and that regarded in this manner, it means that when the proviso completes that the income derived from business should be applied solely for a religious or charitable purpose of the institution, this requirement has reference only to that portion of the income which is subject matter of the trust under the second part of the main clause, with the result that in this particular case it would only mean that the entire Ith income of the Hamdard Dawakhana should be applied solely-for religious or charitable purposes, and this condition is amply fulfilled by the assessee. Mr. Brohi further submits that, in fact, the .'proviso in question is not a true proviso, and it is in substance a separate and substantive clause, as it deals with income derived. from business simpliciter ,and not from business held under trust; that there is a clear distinction between business held under trust and a business carried on on behalf of a trust, and the law rightly imposes certain restrictions on income derived from business not held under trust before i: can qualify for exemption owing to its exclusive application for charitable or religious purposes. Mr. Brohi submits that while, in a manner of speaking, it may be said in common parlance that even a business under trust has to be carried on by the trustees, but in effect it is not a business carried on on behalf of a trust, but a business carried on by the trust, as the trustees act and speak in the name of the trust. It appears to the learned counsel that it is not correct to say that every business carried on on behalf of a trust will be a business held under trust so as to fall within the ambit of the substantive clause. In other words, Mr. Brohi submits that the distinction between the two categories of business, as brought out in several cases from the Indian jurisdiction is a real and substantial distinction and applies equally under our law, as it does under the corresponding provisions of the Indian statute. Mr. Iqbal Qazi, appearing for the Income-tax Department, contends that while the term `property', as used in the substantive clause has been held, in some later cases as distinct from decisions of the Indian High Courts in 1925 and 1926, to include business, yet there is. a distinction between income derived from property and income derived from business, as would appear from various sections of the Income-tax Act itself, namely, sections 24, 69, 10 and 41, which make it clear that while income can be derived from property, yet business has to be carried on on behalf of trust before any income can be derived therefrom. He submits that it has been rightly held by this Court in the case of Muhammad Abdur Rauf Khan that a religious or charitable trust is an institution, and it follows, therefore, that any business carried on on behalf of such an institution would fall within the ambit of the proviso, even if the business itself was being held under trust. Mr. Qazi next contends that there is a real distinction between the Indian and Pakistani provisions on the subject we are discussing here, and for that reason the view taken in the Indian cases is not applicable, and was rightly not followed by this Court in the precedent case of Muhammad Abdur Rauf Khan. In his view the purpose of the proviso is clearly to exclude from the substantive clause all income derived from business, whether held under trust or not, and to bring it within the ambit of the proviso for the reason that in either case it will be business carried on on behalf of the trust. He seeks support for this submission from the opening words of the proviso, which state that, "provided that in the case of income derived from business this clause shall not apply unless . . . . ". He draws our attention to the fact that the position of the appellant has throughout been that the business of the Dawakhana was being carried 'on on behalf of the Trust, and, accordingly, the assessee cannot now be permitted to say that this was not the position. Finally, Mr. Iqbal Qazi, submits that the maintenance of -the Waqif or the author of the Trust is not a charitable purpose within the meaning of the definition embodied in the explanation to subsection (3) of section (4) of the Income-tax Act, and' for that reason the case of the Hamdard Dawakhana would not at all fall under the substantive provisions contained in clause (i), with the result that even if the proviso is treated to be in the nature of a separate and substantive clause, the case of the present assessee would be governed only by the proviso, and all its requirements will have to be satisfied before claiming exemption from tax. It seems to me that the first question which arises for consideration in the present case is regarding the true nature and scope of the substantive provision as embodied in clause (i). There is consensus of judicial opinion that the term `property', as used in clause (i), is a term of the widest import and subject to any limitation or qualification which the context might require, it signifies every possible interest, which a person can acquire, hold and enjoy. It is comprehensive enough so as to cover even business, cash deposits, securities and other such things. There is nothing in the language of the clause in question to restrict in any manner the normal and accepted meaning of the word `property' so as to exclude business from its connotation. Although a restricted view of the term property was taken in the cases reported as, In re: Lachman Dass Narainda (l) and Commissioner of Income-tax v. Thevara Patasala (2), in which it was observed that income derived from profits in trade or business, even though the income be dedicated to an idol or for other charitable purposes, was not income derived from trust property, yet this view was not approved in subsequent cases; and the matter was set at rest by their Lordships of the Judicial Committee in Trustees of Tribune Press, Lahore v. Commissioner of Income-tax (3) and All India Spinner's Association of Mirzapur v. Commissioner of Income-tax (4), by holding that even the stock and goodwill of a business as well as its organisation and undertaking besides the fluctuating stock in trade, were covered by the term property'. This view has since been consistently followed in Charitable Gododia Swadeshi Stores v. Commissioner of Income-tax (5), Commissioner of Incometax v. Radhaswami Satsang Sabha (6), J. K. Trust v. Commissioner of Incometax (7), J. K. Trust, Bombay v. Commissioner of Income-tax (8), Thiagesar Dharma Vanikam v. Commissioner of Income-tax (9) and Commissioner of Income-tax v. P. Krishna Warriar (10). (1) A I R 1925 All. 115 (2) A I R 1926 Mad. 949 (3) A I R 1939 P C 208 (4) A I R 1944 P C 88 (5) A I R 1944 Lah. 465 (6) A I R 1954 All. 291 (7) A I R 1957 S C 846 (8) A I R 1958 Born. 191 (9) A I R 1964 Mad. 483 (10) A I R 1965 S C 59 The same view was taken in the case of Muhammad Abdur Rauf Khan, on which reliance has been placed by the High Court in the judgment under appeal, and it was reiterated that the term property as used in clause (i) included business. And, finally, even in the separate judgments proposed to be delivered in this very appeal on the previous occasion, which have given rise to the present rehearing, there was no difference of opinion as to the connotation of the word property as including business. It seems to me, therefore, that it is now too late in the day to urge that the term property as used in clause (i) should be construed as excluding business from its purview. It follows, therefore, that clause (i) exempts from taxation any income derived from business held, as property, under trust or other legal obligation wholly for religious or charitable purposes, and if the business is so held in part only for such purposes, the exemption would apply only to the income applied or finally. set apart for application to such purposes. In other words, the clause deals with income accruing from property, including using the trust either wholly or partly. It is clear that dedicated or donated to the extent of dedication the income must be devoted to the purposes of the trust, and any diversion to other purposes would be in breach of the trust. It is for this reason that the Legislature allows complete exemption, without stipulating any further conditions, to the income of such property which is permanently tied up for application to religious or charitable purposes. The clause, as it stands, does not contain any reference to business or property which is not itself the subject-matter of dedication. The second part of clause (i) deals with property held under trust in part only for religious or charitable purposes, and in this behalf the condition laid down is that the income from the part of the property held under trust is applied or finally set apart for application to charitable or religious purposes; As observed by Muhammad Yaqub Ali, J., in his proposed opinion, it was necessary to impose this condition as income from the other part of the property is not to be applied for religious or charitable purposes; and this condition is not imposed in cases covered by the first part of clause (i) as the whole of the property is held under trust for religious or charitable purposes, which implies that income from it is to be applied to one or the other purpose. We may now turn to the proviso added in 1951 in replacement of clause (i-a), so as to Examine what exactly is the nature of the subject matter dealt with by it. On its face the proviso does not purport to deal with business held under trust for religious or charitable purposes, but with business carried on on behalf of a religious or charitable institution. The question, therefore, is whether there is any distinction between these two categories of business or, as contended by the learned counsel for the Department, even a business held under trust has to be a business carried on on behalf of the trust. In all the cases from the Indian jurisdiction, which were cited at the Bar, a clear distinction has been drawn between business as property held under trust wholly or partly for religious and charitable purposes, and business carried on on behalf of a religious or charitable institution. Reference may be made in this behalf to Commissioner of Income-tax v. Radhaswami Satsang Sabha, J. K. Trust, Bombay v. Commissioner of Income-tax, Dharma Vijaya Agency, Bombay v. Commissioner of Income-tax (1), Commissioner of Income-tax v. Krishna Variar (2), Thiagesar Dharma Vanikam v. Commissioner of Income-tax and Commissioner of Income-tax v. P. Krishna Warriar. As observed by the learned Judges of the Madras High Court in the case of Thiagesar Dharma, a trust is an institution which has no corporate personality, and it is not a legal person; bus the word 'trust' is a convenient and a compendious description of the trustees, the beneficiaries and the subject matter of the trust. Sometimes the expression `trust' is used to denote the trustees; for example, when the trustees carry on a business, we generally say that the trust is doing so. The trustees of a trust have no title to the trust properties, the properties only vest in them for administration and management. They occupy a representative position representing the trust, and they are not strangers to the trust. When the trustees act, (1) A I R 1960 Born. 380 (2) (1962) 44 1 T R 828 it is only the trust that acts, as the trustees fully represent the trust. It follows, therefore, that a business carried on on behalf of a trust rather indicates a business which is not held under trust, than a business of the trust run by the trustees. This view was fully endorsed by the Indian Supreme Court in the case of Krishna Variar mentioned above, and it was reiterated that a business held in trust wholly or in part for religious or charitable purposes is not a business carried on on behalf of a religious or charitable institution, for the business itself is held in trust. It will be recalled that in the case of Charitable Gododia Swadeshf Stores, decided by the Lahore High Court in 1944, which contains the observations which have.been generally presumed, both in India and Pakistan, to have led to the amendment of the law, the distinction between the two categories of business, we are considering here, was fully brought out in the judgment delivered by Din Muhammad, J. Leaving aside for the time being the observation made by the learned Judge in regard to the conversion of clause (i-a) into a proviso for the purpose of limiting the scope of clause (i) the real point is that the High Court stated in no uncertain terms that there was clear distinction between business held under trust or other legal obligation wholly for religious or charitable purposes, and business conducted by a religious or charitable institution without any reference to trust whatever; and that if it was intended to include in clause (i-a) all such institutions as were contemplated in clause (i), it was not difficult to use the same language in both these clauses. Having drawn this distinction, the learned Judges have observed that clause (i-a) must be taken to apply only to such business as is carried on on behalf of religious or charitable institutions, which were not held under trust, and not to touch such business as was itself held under trust or was conducted by or on behalf of such charitable or religious institutions as were held under trust. Their further observation that: "if it was intended to narrow down the scope of clause (i) so as to withdraw the exemption enjoyed by a business held in trust or conducted by or on behalf of a religious or charitable trust, the new clause should have been. added as a proviso to the old clause", should therefore be read in the context of the other observation to the effect that if it was intended to include in clause (i-a) all such institutions as were contemplated in clause (i), it was not difficult to use the same language in both these clauses. I consider, therefore, that in making these observations the learned Judges of the High Court were thinking more of the legal effect of a proviso as a drafting device rather than of the exact language in which it should have been couched for the purpose of taking away the exemption granted by the main clause, as they had already come to the conclusion that the language used in clause (i-a) did not embrace the subject-matter of clause (i). In this background, even if the presumption generally made as to the genesis of the introduction of the proviso is accepted as correct, in the absence of the relevant record of the Parliamentary debate preceding the enactment of the proviso by the Finance Act of 1951 (Act I of 1951), it is not possible to say what exactly was in the mind of the legislators when they chose to replace clause (i-a) by the proviso; and it certainly cannot be predicated with certainty as to how far they were prepared to destroy the exemption given by clause (i) to income derived from business held under trust for religious or charitable purposes, specially when the learned Judges making the suggestion had themselves drawn a clear distinction between the two categories of business then covered by clauses (i) and (i-a respectively. The historical background of a statute may nerve as a useful guide in ascertaining the intention of the Legislature, but only if the word used are capable of more than one interpretation; but it has never been held that Courts may depart from the plain meanings of the words employed in a statute because of its historical background. The Court remains under an obligation to adhere to the plain meaning of the words employed in it. In view of the preponderance of Judicial opinion as to there being a real distinction between business as property held under trust wholly or partly for religious or charitable purposes, and business carried on behalf of a religious or charitable institution, it does not appear to necessary to pursue the matter any. further. However, it must be stated that if, indeed, the intention of the Legislature was to include business held under trust in the phraseology used in the proviso, then it would have been redundant to provide that its income should be applied solely for a religious or a charitable purpose, as in the case of business held under trust it is a requirement of law that income derived therefrom must be applied to the purposes of the trust. Similarly it appears that in the case of business which itself is the subject-matter of dedication, and whose income is permanently tied to the purposes of the trust, it would hardly be necessary to prescribe that the business should be one "carried on in the course of the carrying out of the religious or charitable purposes of the institution"; or that "the work in connection with the business is mainly carried on by beneficiaries of the institution". These conditions clearly have reference to a business which is not itself the subject-matter of the trust, as in such a case it would be necessary to provide safeguards before exemption from tax could be granted. . It is also to be noted that if the proviso is interpreted in the manner canvassed on behalf of the Income-tax Department. then an invidious distinction would arise between income derived from business and income derived from property other than business, even though both are held under trust wholly or in. part for religious or charitable purposes, and would ordinarily be covered by clause (f). In the absence of any compelling reasons, discernible from the language of the statute, I would be reluctant to arrive at such an interpretation, as it would lack any rational basis. It is true that ordinarily the function of the proviso is to except out of a previous enacting part of a statute something which, but for the proviso, would have been within the enacting part, but it is not an inflexible rule of construction that a proviso in a statute should always be read as a limitation upon the effect of the main enactment. Generally, the natural, presumption is that but for the proviso the enacting part of the section would have included the subject-matter of the proviso; but the clear language of the substantive provision as well as the proviso may establish that the proviso is not a qualifying clause of the main provision, but is in itself a substantive provision. In any case, as observed by Lord Watson in The Guardian of Poor of the West Derby Union v. The Metropolitan Life Assurance Society and others (897 A C 647), it is clear that if the language of the enacting part of the statute does not contain the provisions which are said to occur in it, one cannot derive these provisions by implication from a proviso. A similar view was expressed by the Judicial Committee in Madras and Southern Mahratta Ry. Co. Ltd. v. Bezwada Municipality (A I R 1944 P C 71), namely, "the appropriate function of a proviso is to except and deal with a case which would otherwise fall within the general language of the main enactment, and its effect is confined to that case. Where the language of the main enactment is clear and unambiguous, a proviso can have no repercussion on the interpretation of the main enactment, so as to exclude from it by implication what clearly falls within its express terms". It is also well-settled that a proviso must be strictly construed. In the words of Maxwell "the true principle is that the sound view of the enacting clause, the saving clause and the proviso taken and construed together is td prevail". Mr. Iqbal Qazi referred us to Messrs East & West Steamship Company v. Pakistan (P L D 1958 S C (Pak.) 41), Pramatha Natha Chowdhury v. Mamir Monda (P L D 1965 S C 434) and Mian Rafi-ud-Din v. Chief Settlement and Rehabilitation Commissioner (P L D 1971 S C 252), regarding the true function of a proviso, but I find that these cases do not enunciate any principle different from the one stated in the cases noted in the preceding paragraph. The learned counsel for the Department stressed the fact that the opening part of the proviso is couched in general words, and, therefore, it was clearly intended to apply to income derived from every kind of business, whether held under trust or simply carried on on behalf of a religious or charitable institution. It is true that the opening words as the proviso do suggest that it is intended to apply to all cases of income derived from business, yet the words that follow qualify these opening words by stipulating that the business should be one "carried on on behalf of a religious or charitable institution". We have already seen that this category of business is clearly distinguishable from a business held under trust. If this distinction is kept in mind, the operative clauses of the proviso become meaningless in relation to a business which is itself held H under trust. Irrespective, therefore, of the generality of the opening words of the proviso, the only meaning which can legitimately be placed on the proviso is that deals with income derived from business carried on on, behalf of a religious or charitable institution as distinct from a business. held under trust. The conditions prescribed by the Legislature for granting exemption to the income of such a business have a rational basis in that they are all intended to ensure that religious or charitable institutions do not embark upon ordinary commercial ventures merely for the sake of profit-making. Such considerations are not relevant when a business itself has been donated or dedicated to a trust. I am, therefore', of the view that the proviso does not apply to a business which is itself held under trust or other legal obligation for a religious or charitable purpose. As the proviso stands, it has clearly failed to bring within its ambit income derived from business which is itself held under trust. I now turn to an examination of the views expressed by the learned Judges of this Court in case of Muhammad Abdur Rauf Khan in which the proviso in question came up for consideration before this Court for the first time. Each of the three learned Judges constituting the Bench, which decided this case, gave a somewhat different interpretation to the meaning of the proviso, although they agreed in the conclusion that the proviso was in the nature of an exception. A perusal of the elaborate judgments delivered by them leaves no doubt that they were, in a very large measure, influenced in their views by the presumption that the previous clause (I-a) had been converted into a proviso so as to specifically exclude income derived from business from the exemption granted by clause (f), as observed or recommended by the learned Judges of the Lahore High Court in the case of Charitable Gadodia Swadeshi Stores. For example, on page 217 of the report, Cornelius, C. J. has expressed himself thus: "It seems to me to be sufficiently clear that the proviso in the case has particular reference to institutions of religious or charitable nature, and to income from business carried on on behalf of such an institution, but I consider that to regard such business as being wholly outside the purview of the main exempting provision, fails to take sufficiently into account that the proviso is now attached as an exception to clause (i) and cannot be treated as if it were still in the shape of a separate clause (i-a) to be interpreted in the manner of the Gadodia's case aforesaid. Therefore, to apply the proviso only if the business is not itself the subject of the trust may be to defeat the very purpose of the amendment which was carried out in 1951 in consequence of the opinion expressed by the Lahore High Court in the Gadodia's case. On the wording of clause (i) and its proviso, regarded fairly, I consider that the proviso can be held without hesitation to apply to business which may itself be the subject of a trust, as in the present case." There is, however, nothing in his judgment to show that he was consciously dissenting from the view expressed by the learned Judges of the Lahore High Court .in the case of Charitable Gadodia Swadeshi Stores, as well as by the other High Courts in India and by the Indian Supreme Court, as to there being a real and substantial distinction between business held under trust, and business carried on on behalf of a religious or charitable institution. On the contrary, the impression I gain from his whole judgment is that the distinction was very much present to his mind, but he nevertheless extended the proviso to cover the subject-matter of the main clause as he thought that this was the real intention of the lawmaker. I further find that he was also influenced by the fact that "in the present case the assessee has left it in doubt whether the business is carried on exclusively by the trust or is being carried on on behalf of the trust, through the circumstance that the same person is the trustee and is also carrying on the larger business of which a part appertains to the trust. In the circumstances, I would hold that the assessee has failed to establish that it is entitled to the exemption which it claims". In the separate opinion delivered in the same case by S. A. Rehman, J., there is again nothing to indicate that his Lordship intended to lay down that there was no distinction between the two categories of business, although the learned Judge thought that the proviso would apply to all income derived from business irrespective of the fact whether the business was held under trust or it was being carried on on behalf of the trust. This position becomes clear Nom the following observations appearing on page 221 of the report: "The scheme of subsection (3) appears to be that complete exemption is granted to income derived from all property including business held under trust, wholly for religious or charitable purposes by clause (i). But if the property in question happens to be business or if trust funds are derived from any other business, then the proviso would come into play and restrict the exemption to such business only (i) as is carried on on behalf of a religious or a charitable institution and the income whereof is applied solely for a religious or charitable purpose of the institution; and (ii) either of the two further conditions enumerated as (i) and (ii) under the proviso be satisfied." Lastly, even in the opinion recorded by Kaikaus, J., there are no words or observations which would imply that there was no distinction between the two kinds of business we are considering here. His Lordship seems to have been. influenced mainly by his view that he could "see no rational ground for treating income from business dedicated on a different footing from business that is not dedicated, when- the income is in both cases ultimately to be used for a religious or a charitable purpose". Like Cornelius, C. J. he also expressed doubts as to whether, in the case before him, "a business had been dedicated". After a careful analysis of the three separate opinions, delivered by the learned Judges of this Court in the case of Muhammad Abdur Rauf Khan, I have no hesitation in concluding that. this case does not constitute a departure from the accepted view that he term `property' used in clause (i) of subsection (3) of section 4 of the Act includes business, and that a business held under trust is distinguishable from a business carried on on behalf of a trust. However, in coming to the conclusion that the proviso must nevertheless be regarded as an exception to the main enacting clause and, therefore, cover even income derived from business held under trust, the learned Judges were influenced by. the historical incidence that the previous clause (i-a) was converted into a proviso specifically for this purpose, as recommended by the Lahore High Court Unfortunately, the distinction drawn by the Judges of the Lahore High Court between the two categories of business, namely, one held under trust, and the other carried on behalf of a religious or charitable institution, was not kept in view, although it was on the basis of this distinction between the two categories that they had concluded that, the category of business mentioned in clause (i) was not covered by clause (i-a) nor was business mentioned in clause (i-a) covered by clause (i). I have already commented upon the fact that even though the opening words of the proviso appear to deal generally-with income derived from all kinds of business, yet these words stand qualified by the phrase "carried on on behalf of a religious or charitable institution", which destroys the generality of the opening words. On this view of the matter it would appear that there is, in fact, no real distinction between provisions contained in the proviso enacted. in Pakistan in .195! and the corresponding. provision introduced in India in 1953. Viewed in the light of these considerations and principles, I am of the opinion that it is not permissible, in the present case, to interpret the' proviso in such a manner as to import into the substantive clause (.i) a 1n additional category of income derived from business carried on on behalf of a religious or. charitable institution, 'arid then to apply the proviso so as to take away the exemption granted by the substantive clause even to, income derived from business held under trust. The two kinds of business being distinct from each other, the substantive clause (i) and the first proviso thereto must be read together, with the result that the proviso in question must be regarded as being not in the nature of an exception to clause (i), but as itself embodying a substantive clause regarding income derived from business carried on behalf of a trust. In such a case, the conditions contemplated in the proviso for the purpose of earning exemption from taxation would appear to be based on reason and necessity. On this view of the matter, I am unable to adopt the construction placed on the proviso by the learned Judges, who decided the case of Muhammad' Abdur Rauf Khan. A word might be said at this stage regarding the submission made by Mr. lqbal Kazi, learned counsel for the Income-tax Department, that the maintenance of the Waqif or the author of the trust is not a charitable purpose within the meaning of the definition embodied in the explanation to subsection (3) of section 4 of the Income-tax Act, and for that reason the case of the Hamdard Dawakhana would not at all fall under the substantive provisions contained in clause (i). It appears that this particular ground was not urged at any stage in proceedings before the Income-tax authorities, nor before the High Court, and for this reason it cannot be permitted to be raised at this late stage to challenge the nature of the institution, which is under discussion in this case. Even otherwise the contention is devoid of merit. The explanation relied upon by Mr. Iqbal Kazi is to the effect that: "the expression charitable purpose as used in clauses (i) and (ii) includes relief of the poor, education, medical relief and the advancement of any other object of general public utility." It will be noticed that the explanation is only illustrative in nature, and does not contain an exhaustive enumeration of purposes which may be regarded as charitable for earning exemption under the two clauses in question. Nor does the explanation define or illustrate purposes which would be regarded as religious purposes, although both the clauses refer not only to charitable purposes, but also x to religious purposes and institutions. It would appear, therefore, that the matter cannot be clinched by mere reference to the contents of the explanation, as purposes which are, indeed, charitable or religious purposes even though not included in the explanation, would still qualify for exemption under both the clauses. Now, in the present case, we are dealing with a Wakf created by a Hanafi Muslim. According to the definition in section 2 of the Mussalman Wakf Validating Act, 1913, `Wakf' means "the permanent dedication by a person professing the Mussalman faith of any property for any purpose recognized by the Mussalman law as religious, pious or charitable". Section 3 of the same Act provides that "it shall be lawful for any person professing the Mussalman faith to create a wakf which in all other respects is in accordance with the provisions of Mussalman law; for the following among other purposes (a) for the maintenance and support wholly or partially of his family children or descendants; and b) where the person. creating a wakf is H'anafi Mussalman, also for his own maintenance and support during his lifetime or for the payment of his debts out of the rents and profits of the property dedicated: Provided that the ultimate benefit is in such cases expressly or impliedly reserved for the poor or for any other purpose recognised by the Mussalman law as a religious, pious or charitable purpose of a permanent character." Section 4 of this Act further provides that "no such wakf shall be deemed to be invalid merely because the benefit reserved therein for the poor or other religious, pious or charitable purpose of a permanent nature is postponed until after the extinction of the family, children or descendants of the person creating the wakf". It is well known that this Act of 1913 was specially enacted to get over the dictum of the Privy Council in the case of Abdul Fateh Muhammad v. Russomony (22 I A76), decided in 1894, in which their Lordships had been of the view that the wakf was invalid for the reason that the income of the wakf property was to be applied, in the first instance, for the benefit of the settlor's descendants from generation to generation, and the trust in favour of charity was not to come into operation until after the extinction of the whole line of the settler s descendants, showing thereby that the gift to charity was illusory. The Muslim community in India did not accept this decision as being correct under the Hanafi law, and the Validating Act was enacted to remove the disability created by this decision. The maintenance of the Waqif and his family being a charitable or religious purpose under the Hanafi law, this attribute cannot be negatived or taken away by reference to an explanation which does not even attempt to illustrate the meaning of the expression "a religious purpose". I would, therefore, hold that the reservation of a percentage of the income of the Wakf for the maintenance of the Waqif and his family and descendants does not, in any manner, derogate from the religious and charitable nature of the institution created by the Waqif in this case. The position emerging from the foregoing discussion may be summed up by saying that the term `property' as used in clause (i) of subsection (3) of section 4 of the Income-tax Act includes business; that this clause deals with property, including business, held wholly or partly under trust for religious. or charitable purposes, and that income derived from such property or business is exempt from taxation to the extent of its dedication and application; that there is a clear distinction between business held under trust and business carried on on behalf of a religious or charitable institution, as where business itself is held under trust, it is the business of the trust, as the trustees represent and act for the trust, and it is not a business carried on on behalf of a religious or charitable institution, that notwithstanding the generality of its opening words, the proviso, on its true construction, applies only to income derived from business which is not itself held under trust, but is carried on on behalf of a religious .or charitable institution, and that it would not be correct to apply the proviso to income squarely falling under clause (i), simply because of a presumption that the proviso was enacted for this specific purpose on the recommendation of the Lahore High Court, as the proviso does not embrace the subject-matter of the clause; that even otherwise the requirements spelt out in the proviso for income derived from business to qualify for exemption from taxation are neither relevant nor necessary in the case of business which is itself held under trust, for to the extent of dedication income derived from such business must, as of legal necessity, be applied wholly (or partly) for the purposes of the trust. On this view of the matter, it appears that the proviso must be construed as being in the nature of a substantive clause applying to a category of business distinct from the one mentioned in clause (i); and it is only in this manner that an invidious distinction between income derived from business held under trust, and from property other than business similarly held, can be avoided. Finally, the maintenance of the Waqif and his family or descendants being a charitable or religious purpose under the Hanafi law, the explanation to subsection (3) of section 4 of the Income-tax Act, illustrating the meaning of the expression `charitable purpose', cannot negative or destroy the accepted nature of this particular purpose of a Muslim wakf. For these reasons, I am of the view that the case of the Hamdard Dawakhana Trust falls squarely within the ambit of clause (i) of subsection (3) of section 4 of the Act, as the business constituting the trust is property held in part for religious or charitable purposes, and, therefore, the income applied or finally set apart for application to such purposes, namely, 75 % of the total would be exempt from taxation under the second M part of the said clause. This income being from business held under trust, the first proviso to clause (i) has no application to this case. would, accordingly, accept this appeal and answer in the affirmative the question referred to the High Court at the instance of the Income-tax Department under section 66(i) of the Act. In view of the legal questions involved, I would leave the parties to bear their own costs. I may observe that in view of the construction that I have placed on the relevant provisions of law, the question referred to the High Court at the instance of the assessee, namely, "whether on the facts and circumstances of the case the Tribunal was justified in holding that income arising from manufacture and sale of 'Sharbate-e-Rooh Afza' is hit by the first part of the first proviso to section 4(3) (i) of the Income-tax Act, 1922, and is liable to tax", will~need to be answered by the High Court, and the case will, accordingly, go back to it for this purpose. G. SAFDAR SHAH, J.-I agree. KARAM ELAHEE CHAUHAN, J.-I agree MUHAMMAD AFZAL ZULLAH, J.-I agree with C. J. for the reasons given separately. NAstM HASAN SHAH, J.-I agree with Chief Justice. MUHAMMAD AFZAL ZULLAH, J.-I agree with the proposed order but with profound respect I am unable to agree that the case falls under clause (i) of subsection (3) of section 4 of the Act, as I do not find any compelling reason to change the law laid down by this Court in the case of Muhammad Abdur Rauf Khan. I agree with the view taken in that case that the proviso to clause (i) is not an independent clause and that it operates in true nature of the proviso in the ordinary ' normal sense. I also agree with the reasoning of Hamood-ur-Rehman (the then Chief Justice), for following the ruling in the case of Muhammad Abdur Rauf Khan (PLD1963SC209) in so far as first question regarding the role of the proviso as an exception to sub-clause (i) is concerned. The alternative point raised from the appellant's side was not dealt with. The argument was that if the proviso is to be treated in its ordinary sense then it should be strictly construed, as it takes away something from the main clause. According to him it should be applied to both the parts thereof and as the appellant's case falls under the 2nd part, therefore, the proviso, when read under the said part, would mean that the entire 3/4th income which is applied solely for the required purposes, would be exempt from tax. There is considerable force in the alternative argument of Mr. Brohi. It is true that business would be included in `property' as used in the main clause, but the key words used in the proviso which highlight its true role a a proviso, namely, "this clause shall not apply unless" would permit it application to first part of main clause and also to the 2nd part. The main clause when properly analysed would be found to have two self contained provisions, one, income derived from property which is held, wholly and solely for the specified purposes, would be exempt in its entirely ; two, income derived from the property which is held, partly for those purposes and part for others, would be exempt to the extent of that part thereof which is applied or set finally apart for application to those purposes. It appears, the rationale for the above division as stated by V. S. Sundaram in his "T. L. of Income-tax" (8th Edition, p. 282) was that where the property is under trust or other legal obligation wholly for religious, charitable purposes, the Income-tax Officer could not enquire into the actual application of the 'income. The trustee would take the consequences under the law for any breach of trust, but the Income-tax Officer could not refuse exemption on the ground that part of the income is not in fact being applied to the purpose of the trust. Under the second part of the clause when the property is held in part only for such purposes, it would be a question of fact whether the income derived therefrom is applied to the specified purposes or has been finally set apart for such application. The determination in either case, whether it is applied or only finally set apart, would be in regard to the entire income derived from the property which is held in part only for the specified purposes. The proviso which applies to income derived from business also deals with one type of "property" as used in the main clause, i. e. business regarding which an exception has been made, laying down certain conditions for income from it to qualify for exemption. The main clause, it is provided in the proviso, shall not apply to income derived from business, unless it is carried on, on behalf of a religious or charitable institution and further. that the income is applied solely for the religious or charitable purposes of the institution. Not only this, one of the two other conditions should also b satisfied i. e, either the business should be carried on in the course of carrying out of religious or charitable purposes of the institution, or in case this is not the position, the work in connection with the business is mainly carried on by beneficiaries of the institution. It was on account of the nature of the income derived from business as distinct from the property of other type that these conditions were imposed in the legislative wisdom. Some other underlying reasons for distinctive treatment in this behalf, were mentioned by this Court in the case of Muhammad Abdur Rauf Khan. Another reason mentioned by V. S. Sundaram in "The Law of Income-tax" (page 276) was that the section, as regards business carried on by or on behalf of a charitable or religious institution which is based on the English law gives the concession to business profits only under stringent conditions. However once the conditions are satisfied, then the proviso would have to be co-related with the main clause ; because the proviso itself provides that the said clause would apply if the conditions specified therein are satisfied. The only way to co-relate the proviso with the main clause is to read the second part of the main clause in the sense analysed above. If the property is held, in part only for religious and charitable purposes, then under the main clause the whole of the income falling in that part if applied or finally set apart, would be exempt. And while under the main clause it would be enough if either of the two initial conditions, namely the income (a) is applied or (b) finally set apart for application to specified purposes, is satisfied, under the proviso the assessee has not been given the choice of seeking exemption by only finally setting apart the said income for application to such purposes. This choice ha Q been withdrawn in case of the income derived from business. Under the proviso in order to seek exemption, the income must not only be finally set apart but also be applied for religious or charitable purposes of the institution. in cases relating to income derived from business, it would be a further question of fact for determination as to whether the income is in fact applied solely for the specified purposes or not ? Mere setting apart would not be enough in case of income derived from business though it would be enough in the case of income derived from other property. While giving some instances regarding property held, in part only for religious or charitable purposes, the authors of "T. L. and Practice of Income-tax" (by Kanga and Palkhivala at page 201, et seq.) the commentators visualized four situations one of which is `that the whole property may be dedicated to an idol or settled upon charitable trusts, subject to a portion of the income being given to the Shebait or to the grantor's heirs or other persons. The same concept is further elaborated that the property may be held upon trust to apply a specified part of the income to charitable purposes and the balance of the income to non-charitable purposes. For instance. where a Wakf is created with a direction to apply half of the income to charity and the other half for the benefit of the Wakif's descendants, the property is held in part only upon charitable trusts and half the income which is set apart for charity is exempt under this clause while the other half of the income is chargeable to tax. However, this type of cases where a specified part of the income is directed to be applied to charity should be distinguished from cases where a specified part of the corpus is held upon charitable trusts. Where a specified part of the income is set apart by the author of the trust for charitable purposes, the case falls within the second part of the present clause viz., property held in part only for charitable purposes. But where a definite specified part of the corpus itself is held upon charitable R trusts, the remainder of the corpus being settled upon non-charitable trusts, qua the portion of the corpus which is settled upon charitable trusts the case falls within the first part of the present clause since that portion of the property is held under trust wholly for charitable purposes'. In yet another commentary on the Income-tax Act by Mr. S. M. Raza Naqvi in his "T. L. and Practice of Income-tax in Pakistan" (4th Edition, page 193), the main clause and the proviso have been co-related thus. The proviso does not take income from business out of the category of income from property, it merely restricts the application of the section in case of income from business to certain stated circumstances. Given those conditions, the section Will apply as a whole to income from business. That being so, the section will apply to income from business held in part only for charitable or religious purpose. The Legislature could very conveniently have used the words "entire income" in the proviso to section 4(3) (i) or some such words had the idea really been that the whole of the income arising from property held under trust must go to charitable purposes and not only a portion of it. In the main section 4(3) (i) the word "any income" has been used which clearly indicates that income set apart, earmarked or carved out for religious or charitable object must be applied to those alone and none else. In this case, the Tribunal in its order dated 2nd of December 1963, which was brought under challenge through reference by both the parties before the High Court, held that any income of the trust would be exempt from tax subject, of course, to the other conditions being satisfied, "if the whole of that income which has been set apart for charitable purposes, is spent on those purposes and not as contended by the Department that the whole of trust's income should be expended on these purposes. The provision lays stress not on the whole of the trust's income, but on spending the whole of the income reserved for the charitable purposes on these purposes and this S is what happened in these cases; 3/4th of the income was, under the terms of the trust deed, earmarked for charitable purposes, and that 3/4th income has been expended as stipulated, is not disputed by the Department". Another Tribunal while dealing with this very case earlier, had also repelled the argument of the Income-tax Department that "unless the entire income of the property is applied to charitable purposes, the conditions laid down in this provision of law are not fulfilled" and had taken the same view as noted above. This interpretation of the proviso by putting it in juxtaposition to the second part of the main clause i. e. sub-clause (i) of subsection (3) of section 4, does not go against either the plain language used in the main clause (as analysed in the foregoing discussion) or any other accepted rule of interpretation. It finds support even from the view taken by the Supreme Court of India in the case of P. Krishna Warriar (A I R 1965 S C 59) with regard to the interpretation of the expressions "wholly" and "in part" used in the main clause. It was held that "the dichotomy between the two expressions `wholly' and `in part' is not based upon the dedication of the whole or a fractional part of the property but between the dedication of the said property wholly for religious or charitable purposes or in part for such purposes. If so understood, the two limbs of the substantive clause fall into a piece. The first limb deals with a property or a part of it held in trust wholly for religious or charitable purposes, and the second limb provides for such a property held in trust partly for religious or charitable purposes". Although on the other question with regard to the nature of the proviso I am unable to agree with the Indian interpretation and the reasons are fully stated in the case of Muhammad Ahdur Rauf Khan, but the foregoing exposition by the Supreme Court of India of the two expressions used in the main clause namely `wholly' and `in part', in the context of property and purposes for application of the income, is not only in accord with the intention underlying the provision but can also] be helpful in resolving the controversy about the true nature of the proviso-) in the manner visualised in the alternative argument advanced from they appellant's side in this case. Seen in this context, the proviso does not have the effect of taking away the exemption granted in the main clause and in this way no other contradiction as assumed in some other judgments would be encountered either. Although the question discussed above was raised before the High Court, the learned Judges did not give any cogent reason as to why the view taken by the Tribunal could not be upheld by applying the proviso to the second part of the main clause. After carefully considering this aspect of the matter, I do not find any reason to discard the contention raised from the appellant! side `that the High Court should have held that the requirement of income being applied solely for charitable purposes only means that the whole income of that part of business which is held in trust for charitable purposes should be applied solely for such purposes'. I would, therefore, answer the question) accordingly and allow this appeal, concurring in the conclusion and the order proposed by the Chief Justice though, with respect, on different reasoning. s. A H. Reference answered. Case remanded.