1

HINDU RELIGIOUS AND CHARITABLE ENDOWMENTS

FAMILY LAW II
II YEAR. VI TRIMESTER
B.A LL.B (HONS.)

PROJECT SUBMITTED BY: ABHIJIT DHOLE
ID NO: 1950
DATE OF SUBMISSION: APRIL 21, 2014






2


TABLE OF CONTENTS

INDEX OF AUTHORITIES .................................................................................................................. 3
CASES .............................................................................................................................................. 3
STATUTES ........................................................................................................................................ 4
INTRODUCTION ................................................................................................................................ 5
PRE-REQUISITES FOR HINDU RELIGIOUS AND CHARITABLE ENDOWMENTS .................................. 5
PRINCIPLE HINDU ENDOWMENTS ................................................................................................... 8
JUDICIAL APPLICATION OF PRINCIPLES OF LAW OF TRUSTS .......................................................... 9
HINDU RELIGIOUS AND CHARITABLE ENDOWMENTS: PUBLIC AND PRIVATE ................................ 9
REGULATION OF THE HINDU RELIGIOUS AND CHARITABLE ENDOWMENTS ................................ 10
THE LEGISLATIVE SCHEME: .......................................................................................................... 11
TAX BENEFITS TO HINDU RELIGIOUS AND CHARITABLE ENDOWMENTS ..................................... 12
CONCLUSION ................................................................................................................................. 14
BIBLIOGRAPHY .............................................................................................................................. 15
ARTICLES ...................................................................................................................................... 15
BOOKS ........................................................................................................................................... 15
WEBSITES ...................................................................................................................................... 15










3

INDEX OF AUTHORITIES
CASES

1. A.S. Narayana Deekshitulu v. State of A.P., AIR 1996 SC 1765.
2. Addangi Nageswar Rao v. Sri Aukamma Devatha Temple, (1973) 1 An WR 379.
3. Bai Hirbai Rahim Aloo Paroo & Kesarbai Dharmasey Kakoo Charitable and
Religious Trust v. CIT, Bombay City, (1968) 68 ITR (Bom).
4. Bhagwati Pd. v. Laxminath, AIR 1988 All 228.
5. Brijlal v. Naraindas, ILR 14 Lah. 827.
6. Bupati v. Ramlal, ILR 37 Cal. 128 (FB).
7. C.I.T. v. Shivanai Jushal Trust, (1980) 4 Taxman 418 (Del).
8. CIT v. Sivakasi Hindu Nadars Uravinmurai, (1996) 86 Taxman 290 (Mad).
9. Co mmissioner, HRCE v. Sri Lakshmindra Thitrtha Swamiar of Sri Shirur Mutt, AIR
1954 SC 282.
10. Deoki Nandan v. Murlidhar, AIR 1957 SC 133.
11. Dongarshee Shyamjee Joshi v. Tribhuvan Das, AIR 1947 All 375.
12. G.S. Mahalaxmi v. Shah Ranchhoddas , AIR 1970 SC 2025.
13. Govindlalji v. State of Rajasthan , AIR 1963 SC 1638.
14. J.K.Trust v. CIT, (1957) 32 ITR 535 (SC).
15. Jamnabai v. Khiniji , ILR 14 Bom. 1.
16. Kandakama Kshetra v. Karunakara Thandar, 1995 AIHC 618 (Kar).
17. Kishore Joo v. Guman Behari Joo, AIR 1978 All 1.
18. Lakshamana Yatendrulu v. State of A.P. (1996) 8 SCC 705.
19. Matam Nandipudi Koti Veerayya v. Board of Commissioners for Hindu Religious
Endowments, Madras, AIR 938 Mad 810.
20. Narsimha v. Venkatalingam, ILR 50 Mad 687 (FB).
21. P.C. Pant, N. Suryanarayana Iyers The Indian Trust Act, 5
th
ed., (New Delhi:
Butterworths India, 2001) at 42.
22. Parthasarthi v. Thiruvengada Subrammania, ILR 30 Mad 340.
23. Phul Chand v. Hukum Chand, AIR 1960 Bom 438.
24. Ram Saroop Dasji v. S.P.Sahi, AIR 1959 S.C. 951.
25. Runchor-das Vondravandas v. Parbati Bai, ILR 28 Bom. 735 (PC).
26. S. Shanmugham Pillai v. K. Shanmugham Pilla,i AIR 1972 SC 2069.
4

27. Shahazad Kunwar v. Ram Karan Singh, AIR 1965 SC 254.
28. Shri Thakurjee v. Sukhdeo Singh, ILR 42 All 395.
29. Sri Rama Krishan Mission v. Dogar Singh, AIR 1984 All 72.
30. Trustees of Shri Kot Hindu Shree Mandal v. CIT, (1994) 209 ITR 396 (Bom).
STATUTES
1. Income-Tax Act, 1961
2. Indian Succession Act, 1925
3. Indian Trusts Act, 1882
4. The T.N. Hindu Religious and Charitable Endowments Act, 1959.
5. Transfer of Property Act, 1882

5

INTRODUCTION
Endowments are defined as assets, property and funds which are earmarked to generate
income for the upkeep of individuals, groups or institutions. For Hindus, there is no
distinction between religious and charitable endowments as both of them are supposedly
sufficient for acquisition of religious merit. From Rig Veda itself, charity through the mode
of endowments has been encouraged by the Ishta-Purtha system which outlined the benefits
to be accrued through endowments for Vedic purposes and endowments for charitable
purposes such as construction of public wells, schools, hospitals etc. Religious and Charitable
endowments had been kept out of the purview of the legislation regarding trusts and
decisional law has been used by the Courts to advance the given field of law, given the
sensitive nature of issues involved and the important role played by such endowments in our
society. The respect accorded to temples and endowment supported institutions in our
society is immense as the role played by these institutions is pivotal for the moral and social
fabric of our society. Moreover, the endowments themselves are of such economic
importance that coupled with their social and religious and influence, endowments need to be
regulated against risks of mal-administration, mismanagement and corruption.
The researcher has tried to enunciate the requirements for instituting a Hindu religious or
charitable endowment and the formalities associated with the same. The researcher has also
dwelt upon the major role played by decisional law apropos endowments. An attempt has
been made to analyse the principle form of religious endowments, i.e. Debuttor and Math.
The researcher has attempted to delineate the key differences between public and private
endowments and the reasons for the classification. The researcher has analysed the Tamil
Nadu state legislation of Hindu charitable and religious endowments to understand the
regulation of such endowments by the state and its efficacy and an attempt has also been
made to highlight the tax breaks available to such endowments.
PRE-REQUISITES FOR HINDU RELIGIOUS AND CHARITABLE ENDOWMENTS
A Hindu religious or charitable endowment can be brought into existence through a will or
inter vivos. Indian Succession Act (section 118) states that if a person has a nephew/niece or
any closer relation then he cannot institute a religious or charitable endowment, however, for
Hindu charitable and religious endowments, the section is inapplicable.
1
Correspondingly, for
instituting endowments inter vivos, Section 5 of the Indian Trusts Act can be an impediment

1
Paras Diwan, LAW OF ENDOWMENTS, WAKFS & TRUSTS, 26, (Allahabad: Wadhwa & Company, 1992).
6

as it disallows any dedication of property to a trust unless it is declared through a signed non-
testamentary instrument or unless the title of the property is issued to the trustee. The
Supreme Court clarified the position of law in Govindlalji v. State of Rajasthan
2
and held that
until and unless, a Hindu institutes an endowment through a will; he is competent to dedicate
property for endowments sans written documents. Nevertheless, if an endowment is instituted
through a registered deed then, section 17 of the Registration Act applies and the deed has to
be registered for the dedication to take effect.
3
The Honourable Courts have enunciated a
principle that an endowment for religious or charitable purposes is not a gift as defined in the
Transfer of Property Act, hence; the formalities associated with giving gifts need not be
complied with while instituting a religious or charitable endowment.
4

Traditional Hindu law prescribes two formalities which have to be carried out as a
prerequisite for instituting a religious or charitable endowment, i.e., sankalpa and utsarga.
Sankalpa, essentially is the resolution or rather the expression of intention to dedicate the
property for a religious or charitable endowment. Sankalpa involves mentioning the purpose
of the endowment and the purpose behind it along with the year, time and date of the
Sankalpa.
5
Utsarga involves renunciation of the dedicated property by the owner of the
property.
6
Essentially, for a Hindu religious or charitable endowment, a valid dedication
requires an unqualified and clear expression of intention to dedicate the property to the
endowment. There are certain Dharmashastras which call for elaborate ceremonies to be
performed when religious or charitable endowments are instituted but the Supreme Court
clarified in Shahazad Kunwar v. Ram Karan Singh
7
that if ones intention to dedicate
property for a religious and charitable endowment is clear and manifest, then, the
performance of any formal ceremonies is not required. Just as it has been held that the
performance of the ceremonies is not necessary for the dedication to be complete similarly it
has also been held that just the performance of the ceremonies sans the requisite intention to
institute an endowment is not sufficient to make a dedication valid.
8

The Courts have stressed on the principle that a religious and charitable endowment must
have a prescient purpose and a vague purpose like Dharma cannot be held valid for want of

2
Govindlalji v. State of Rajasthan , AIR 1963 SC 1638.
3
Supra note 1, at 30.
4
Narsimha v. Venkatalingam, ILR 50 Mad 687 (FB).
5
Supra note 1, at 27.
6
Supra note 1, at 27.
7
Shahazad Kunwar v. Ram Karan Singh, AIR 1965 SC 254.
8
Shri Thakurjee v. Sukhdeo Singh, ILR 42 All 395.
7

certainty. In a Privy Council judgment Runchor-das Vondravandas v. Parbati Bai
9
, the Privy
Council considered judgments of the Presidency Courts and the Wilsons dictionary meaning
of the term Dharma to hold that an endowment for the purposes of Dharma was vague
and would be void for want of certainty of object. The view of the Privy Council was
contested amongst the Indian jurists who drew an analogy between charity and Dharma and
contended that if the term charity can be legislated then, the term Dharma too ought to be
legislated otherwise numerous Hindu testators would be adversely affected.
10

11

12
. The
attempts of the jurists to relax the ratio laid down by the Privy Council eventually failed when
the Privy Council subsequently endorsed its previous decision in subsequent decisions.
13

It is the acquirement of religious merit which is the foremost cause for determining whether
the endowment has been instituted for an appropriate purpose or not.
14
What acts are
acknowledged as acts attracting religious merit has been enumerated in various Hindu law
texts but one cannot claim with certainty that any list is exhaustive in nature apropos
attracting religious merit.
15
It is necessary that the purpose outlined has basis in Shastras as
held in Ram Saroop Dasji v. S.P.Sahi
16
.It is imperative that the purpose is either for Istha
(religious endowments) or for Purtha (charitable endowments) as both would grant religious
merit.
17
Hindu Law does not enshrine any difference between religious and charitable
endowments and both are considered to bring religious merit.
18
The Courts have also
enshrined the principle that for an endowment to be valid, not only should the purpose be
certain, but also the words used for demarcating the property to be dedicated must be
unambiguous or the amount of dedication should be inferable from the conduct of the parties
or any instrument instituting the endowment.
19
In S. Shanmugham Pillai v. K. Shanmugham
Pillai
20
, the SC clarified the position of law on partial endowments and held that if the
substantial income accruing from the property is apropos endowment then the whole property
is apropos endowment but if only a part of the income is apropos endowment then it will

9
Runchor-das Vondravandas v. Parbati Bai, ILR 28 Bom. 735 (PC).
10
Parthasarthi v. Thiruvengada Subrammania, ILR 30 Mad 340.
11
Bupati v. Ramlal, ILR 37 Cal. 128 (FB).
12
Brijlal v. Naraindas, ILR 14 Lah. 827.
13
B. Mukherjea, HINDU LAW OF RELIGIOUS AND CHARITABLE TRUSTS. 48, (3
RD
edn,, EASTERN LAW HOUSE,
1970)
14
Supra note 1, at 20.
15
P.C. Pant, N. SURYANARAYANA IYERS THE INDIAN TRUST ACT, 42,( 5
th
ed., New Delhi: Butterworths India,
2001).
16
Ram Saroop Dasji v. S.P.Sahi, AIR 1959 S.C. 951.
17
Supra note 1, at 21.
18
Supra note 13, at 49.
19
Jamnabai v. Khiniji , ILR 14 Bom. 1.
20
S. Shanmugham Pillai v. K. Shanmugham Pilla,i AIR 1972 SC 2069.
8

result in a charge on the property to the extent of the endowment. The judiciary has
consistently favoured the practical application of the laws, so as to, give effect to religious
and charitable endowments as far as possible but the judiciary has also been circumspect in
certain areas as once an endowment is instituted with valid dedication then it is irrevocable.
21

PRINCIPLE HINDU ENDOWMENTS
For the purposes of Hindu law, an idol is a juristic person who can hold property and the
properties endowed for the temple vest in it.
22
An endowment of such a nature is generally
referred to as Devottur (Debutter) and it is one of the principle forms of Hindu endowments
along with Maths. The mere establishment of a deity or a consecration of the idol does not
lead to a Devottur but rather when property is dedicated to it that the Devottur is said to come
into existence.
23
It is not necessary that religious and charitable endowments have to be made
to idols as was laid down in Addangi Nageswar Rao v. Sri Aukamma Devatha Temple
24
,
wherein the Court held that to constitute a temple, it was enough to establish that the place
was for public religious worship and people attributed spirituality to it, irrespective of the
presence of idols. The management of the Devottur is done through the Sevayat (Shebait),
who is appointed by the founder and is vested with certain rights, liabilities and duties
apropos the Devottur.
25
The Powers and Obligations of the Sevayat range from a duty to do
Seva-Puja of the deity and maintain accounts to powers which include right to alienate
property, right to remuneration, residence and to enter into litigation on behalf of the
Devottur. The Sevayat is expected to operate in good faith for the best interests of the
Devottur and the principle circumscribes many of its powers, such as the Devottur property
can only be alienated by the Sevayat, if, there exists a legal necessity or there is a clear
benefit to the endowment.
26
Among Hindu religious endowments, endowments to the Math
stand next to Devottur endowments. While temples are places of worship wherein, the legal
personality is imputed to the idol, Maths are places of knowledge and learning wherein, the
legal personality is imputed to the Math itself. The Math is administered based on the rules
framed during the institution of the Math and the customs and practises of the Math along
with any relevant statutory provisions. The Math is headed by a Mahanta, the spiritual guru

21
Sri Rama Krishan Mission v. Dogar Singh, AIR 1984 All 72.
22
Deoki Nandan v. Murlidhar, AIR 1957 SC 133.
23
Supra note 1, at 5.
24
Addangi Nageswar Rao v. Sri Aukamma Devatha Temple, (1973) 1 An WR 379.
25
Supra note 1, at 59.
26
Bhagwati Pd. v. Laxminath, AIR 1988 All 228.
9

or teacher and is tasked with the secular management of the Math.
27
As a Mahanta, the rights
and obligations are analogous to the Sevayat apropos management of the endowments.
28

JUDICIAL APPLICATION OF PRINCIPLES OF LAW OF TRUSTS
Indian Trusts Act is used to regulate trusts in India, however, section one of the Act has a
savings clause which states that the Act shall not be applicable to religious and charitable
endowments. The rationale behind excluding religious and charitable trusts from the purview
of the Act has been enumerated by the Privy Council in the case of Vidyavaruthi v. Balusaini
Iyer
29
where the Court observed that the term trust as understood in English law has no
synonymous parallel in Hindu Law and it used the example of the Sevayat to draw out the
difference. The property is not conveyed to the Sevayat nor is he vested with it and under no
possible construction can one call the Sevayat a trustee despite the fact that his duties and
obligations might resign him to the fate of the trustee if there is any mal-administration. The
Courts in India have tried to work around the savings clause and apply the common law
principles associated with the law of trusts on religious and charitable endowments. In the
case of Kishore Joo v. Guman Behari Joo
30
, the Court held that even though the savings
clause in Section 1 of the Indian Trusts Act makes the at inapplicable to religious and
charitable endowments, the principles of English Law of trusts which have been
incorporated in the Indian Trusts Act will apply to such trusts. In Phul Chand v. Hukum
Chand
31
, the Court said that it is true that by section1 the provisions of the ITA are not
applicable to public trusts. Even so, the provisions of the Indian Trusts Act are founded on
the general principles and, Rules of English Law. In matters which are not provided for, the
courts in India apply the principles and Rules of English Law on the subject unless they are
inconsistent with the Rules and practice of this court. One can safely say that most of the
development in the field of religious and charitable endowments has come through legal
decisions though states have enacted certain legislations to regulate and manage endowments.
HINDU RELIGIOUS AND CHARITABLE ENDOWMENTS: PUBLIC AND PRIVATE
Indian law classifies religious endowments into two distinct categories private and public
religious trusts. The nature of this classification is important to the extent it affects the
relationship of the state with such religious trusts. Although, historically, the state has had
powers of superintendence over private religious trusts, any interference in such matters is

27
Lakshamana Yatendrulu v. State of A.P. (1996) 8 SCC 705.
28
R.C. Nagpal, MODERN HINDU LAW, 1071( 2
ND
Edn., Lucknow:Eastern Book Company, 2008).
29
Vidyavaruthi v. Balusaini Iyer , ILR 44 Mad 831.
30
Kishore Joo v. Guman Behari Joo, AIR 1978 All 1.
31
Phul Chand v. Hukum Chand, AIR 1960 Bom 438.
10

restricted to instances when one of the parties involved approaches the state. Citing another
example, only public religious trusts are entitled to a tax exemption under Sections 10 and 11
of the Income Tax Act while no such exemption exists for private religious trusts. The
defining characteristic of private religious trusts is that the dedication made in such cases is
restricted only to the members of a certain family, and not to the public at large. On the
contrary, in the case of private temples, courts would not entertain a suit at the instance of a
person who has no interest in the temple as he does not belong to the family of the founder,
until and unless, evidence of mal-administration of the endowment is presented.
32
In Matam
Nandipudi Koti Veerayya v. Board of Commissioners for Hindu Religious Endowments,
Madras
33
, the Court was tasked with determining whether a mutt was of a private or public
nature. It was held that although the property may have initially belonged to one family only,
the fact that over the years it attracted grants from pious donors cannot be termed completely
irrelevant. Further, a large number of people used to visit the mutt and participate in the
religious ceremonies held there. Relying on these facts, in addition to documentary evidence,
the Court declared the mutt to be a public religious trust. However, it must be kept in mind
that mere public participation in worshipping and voluntary contributions of funds in temple
is not sufficient to change a private Trust to a public one.
34
In G.S. Mahalaxmi v. Shah
Ranchhoddas,
35
the SC held that for determining if it is a public temple, one needs to study
the Sevas and Utsavas conducted at the temple and whether they are public in nature, whether
the public is entitled to worship there and if the management and the devotees treat the
temple as a public institution temple expenses are partially borne by public contributions
REGULATION OF THE HINDU RELIGIOUS AND CHARITABLE ENDOWMENTS
India has adopted a unique form of secularism which is hinged on the policy of principled
distance, i.e. the government has largely tried to refrain from interfering in the essential
matters of religion but have not shied away from regulating or intervening in situations which
it considers to be against the constitutional morality of the nation. It is the fundamental
dilemma of what infringes constitutional morality, under whose ambit, policy making
apropos temple regulation and its endowments is conducted. The state has tried to regulate
endowments through various legislations enacted by different state legislatures. The state has
couched the interference as necessary intervention to support the creaky systems through

32
Dongarshee Shyamjee Joshi v. Tribhuvan Das, AIR 1947 All 375.
33
Matam Nandipudi Koti Veerayya v. Board of Commissioners for Hindu Religious Endowments, Madras, AIR
938 Mad 810.
34
Kandakama Kshetra v. Karunakara Thandar, 1995 AIHC 618 (Kar).
35
G.S. Mahalaxmi v. Shah Ranchhoddas , AIR 1970 SC 2025.
11

which endowments function and the susceptibility of the same to mismanagement and
corruption and the same has been challenged in courts.
36
In the case of Commissioner, HRCE
v. Sri Lakshmindra Thitrtha Swamiar of Sri Shirur Mutt
37
, the petitioner, the mathadhipati of
the Shirur Mutt monastery challenged the Madras Hindu Religious and Charitable
Endowments (HRCE) Act, 1951 on the grounds of infringement of freedom of religion and
guarantees provided by Art.26 of the Indiann Constitution. The judgment is a landmark
judgment as it validated Madras HRCE Act of 1951, the first state legislation which
mandated an elaborate framework for regulation of Hindu temples, maths and their
endowments. Subsequent to the decision, multiple states followed with their own legislations
to regulate the said field.
38
The primary reasons which prompted the slew of regularization
statutes stem from the numerous instances of mismanagements of public religious
endowments which were borne out through

mismanagement of funds and corrupt practices
such as fixing of inexplicably low rents and improper forms of alienation of property by
Sevayat and misuse of these institutions as instruments of tax evasions.
39
In light of the
constitutional framework of the country, the first thing which was struck down by the said
legislations was the hereditary nature of temple priests and Sevayat.
40
In A.S. Narayana
Deekshitulu v. State of A.P.
41
, the petitioner, an archaka of Thirumala Tirupathi, contended
that the A.P. Charitable and Religious Endowments Act of 1987 was an infringement of
Articles 25 and 26 of the Constitution as it abolished the hereditary succession among
archakas, and took away their right to a share of offerings made to the deity. The Court
struck down the petition and held the impugned Act to be valid.
THE LEGISLATIVE SCHEME:
To completely understand the legislative scheme of temple regulation, let us analyse the
Tamil Nadu Hindu Religious and Charitable Endowments Act, 1959 which has been the
bellwether of other such legislation. There are more than 30,000 public temples in
TamilNadu and historically, temple endowments have largely centered on dedications of
large tracts of land which has led to the temples controlling swathes of land.
42
The said
legislation set-up an extensive bureaucracy to manage the temple endowments, i.e. Hindu

36
F. A. Presler, The Structure and Consequences of Temple Policy in Tamil Nadu, 1967-81, 232, PACIFIC
AFFAIRS, Vol. 56, No. 2, 1983.
37
Commissioner, HRCE v. Sri Lakshmindra Thitrtha Swamiar of Sri Shirur Mutt, AIR 1954 SC 282.
38
R. Sen, Legalizing Religion: The Indian Supreme Court and Secularism, EAST-WEST CENTER
WASHINGTON, www.eastwestcenterwashington.org/publications, last accessed on 12
th
april, 2014.
39
Supra note 36, at 234.
40
Supra note 36.
41
A.S. Narayana Deekshitulu v. State of A.P., AIR 1996 SC 1765.
42
Supra note 36 at 234.
12

Religious and Charitable Endowments (Administration) Department, HRCE. Trustees,
priests, and other religious personnel are held answerable and accountable to HRCE
government offices and are obligated to depose periodically. Another characteristic of this
legislative apparatus is the Government appointed trustee who is held in high regard apropos
temple rituals, temple honours etc. and their influence plays a role in land leases, affixing of
rents, and awarding of contracts involving building and renovation. Even though the HRCE
policy does restrict the authority of a trustee in a temple via certain prerequisites such as
budgetary approval, auditing of accounts etc, yet, trustees continue to hold and play a pivotal
role in allocating temple resources.
43
Certain trusteeships continue to be hereditary, but
HRCE regulations have abridged their number and derogated the authority of those which
continue to function and now all the important temples are now under government trustees.
44

It is important to realise that the said framework might have reduced the mismanagement of
endowments but it has also led to an excessive bureaucratization of religious and charitable
endowments through the HRCE framework which has brought along its own ancillary
problems.
45
As it stands today, the Government through its bureaucratic machinery under the
HRCE act, effectively controls and supervises administration of temples, approves the
budgets and carries out auditing of accounts, sanctions alienation of property which has been
endowed to the temple, and after having nearly abolished the hereditary trusteeship, appoints
and supervises the trustees and uses the trusteeship as a method of political patronage.
46
In
effect, the government has near absolute control over the finances and functioning of
endowments made to temples. The extent to which the state-appointed officers interfere with
temple authorities can be seen through the functions of the Executive Officer which is
appointed for each and every temple. The EO is a full time, government employee with an
office within the temple premises and is tasked with accounts of the temple and framing of its
budget. Its activities have expanded into supervision of priests and other personnel,
organising festivals and taking routine day-to-day decisions, making the temple his fief.
47

TAX BENEFITS TO HINDU RELIGIOUS AND CHARITABLE ENDOWMENTS
The issue of tax exemption in respect of income arising from properties used for religious or
charitable purposes is covered under Sections 11, 12, 12A and 13 of the Income Tax Act.

43
A. Appadurai & C. Beckeridge, The South Indian Temple: Authority, Honour and Redistribution, CONTRIBUTIONS
TO INDIAN SOCIOLOGY, Vol.10, No.2, 1976.
44
Supra note 36 at 237.
45
Supra note 38.
46
S. 47, The T.N. Hindu Religious and Charitable Endowments Act, 1959 & Supra note 43.
47
Supra note 36 at 236.
13

Further, the provisions under Section 10 of the Act envisage an exemption on income
obtained by trusts and other institutions engaged in activities which qualify as charitable. The
focus of the current paper is with the first two clauses of Section 11 of the Income Tax Act.
The aforesaid Section provides that any income derived from property held under trust held
wholly or partly for religious purposes is to be excluded from the total income of the trust, to
the extent that such income is applied for the above purpose.
48
The requirements for the
application of the above exemption are: (a) the derived income should be from property held
under trust wholly or partly for charitable purposes; (b) such income must be applied for
charitable purposes within India. In addition, there are restrictions with regard to
accumulation, the persons eligible to benefit from the income, etc.
49
The Courts have
interpreted the expression property in a broad manner so as to include even business
undertakings within its ambit.
50
Movable and immovable property such as money, shares,
securities, lands, buildings and houses have also been held as within the scope of this
expression.
51
Certain decisions have included partnership in a firm as well.
52

For the exemption to be granted, the property is to be held under trust. This entails
satisfaction of all the conditions for the creation of a trust in relation to that property. The
exemption under Section 11(1)(a) is available only to those trusts which utilize their income
solely for religious and charitable purposes. In Bai Hirbai Rahim Aloo Paroo & Kesarbai
Dharmasey Kakoo Charitable and Religious Trust v. CIT, Bombay City
53
, the court held that
the term religious purpose is to be construed according to the settlors personal law. Where
the income is derived from property held in trust partly for religious and charitable purposes,
the exemption applies to the extent that such income is utilized for the above purposes so
long as the creation of the trust predates the the Income Tax Act, 1961.
54
Donations made to a
trust with specific directions from the donor on how they shall form part of the corpus of the
trust are known as corpus donations. Such donations do not qualify as the income of the trust
and are treated as capital assets which can be retained without attracting any tax liability.
Exemptions granted to corpus donations are covered under Section 11(1)(d), provided they

48
Section 11(1)(a);(b);(d), Income Tax Act, 1961.
49
Nabhi Kumar Jain, NABHIS FORMATION & MANAGEMENT OF A TRUST ALONGWITH TAX PLANNING; A
PRACTICAL HANDBOOK FOR PRIVATE, CHARITABLE & RELIGIOUS TRUSTS, 108, (NewDelhi: Nabhi Publication,
1998).
50
J.K.Trust v. CIT, (1957) 32 ITR 535 (SC).
51
Supra note 49, at 109.
52
C.I.T. v. Shivanai Jushal Trust, (1980) 4 Taxman 418 (Del).
53
Bai Hirbai Rahim Aloo Paroo & Kesarbai Dharmasey Kakoo Charitable and Religious Trust v. CIT, Bombay
City, (1968) 68 ITR (Bom).
54
CIT v. Sivakasi Hindu Nadars Uravinmurai, (1996) 86 Taxman 290 (Mad).
14

are used for religious or charitable purpose.
55
Apart from corpus donations, voluntary
contributions are also eligible for tax exemption insofar as this income is applied for the
objects of the wholly or partly religious or charitable trust. However, membership fees or
subscriptions collected by the trust cannot be classified as voluntary contributions and hence
are not tax exempt.
56
Donations to other religious and charitable trusts was non-taxable under
CBDT guidelines, if, the donation is utilized for religious and charitable purposes. The
Finance Act of 2002 has, however, rendered payments made to other trusts taxable in the
hands of the payer trust even if the entire income is utilized by the other trust for charitable
purposes.
57
The exemptions outlined above are contingent on the fulfilment of the
requirements under Sections 11(2) and 12A of the Income Tax Act, 1961.
CONCLUSION
Religious and Charitable endowments are largely in the framework of decisional law with no
overwhelming national legislation. Under Hindu law, there is no legal difference between
Religious and Charitable endowments and both are considered the same, hence, the ambit of
activities which can be undertaken under such an avenue is vast and that has led to an
expansion of endowments at a rapid pace over time. The economic and social muscle enjoyed
by the endowment backed temples calls for regulation. It was deemed necessary to regulate
and properly manage the temple institutions and endowments given the stakeholders involved
which included the citizenry, state and the temples itself and the sensitive role played by the
temples in the societal fabric of the nation. Given the ideals associated with religious and
charitable endowments and the role played by temples it supports in our societies, the state
has an effective claim for regulation but the current legislative framework has gone beyond
the mandate of regulation and extended into unnecessary management of the religious
domain. While the state has over-regulated in the context of religious endowments, there is
very little regulation apropos charitable endowments which are not made for religious
purposes exposing a critical regulatory gap exposing substantial assets to mismanagement
and embezzlement. Hence, it is the submission of the researcher that the state should reduce
its footprints apropos religious endowments and probably attempt to regulate charitable
endowments, given the assets involved and the role played by these endowments.

55
Supra note 49, at 109.
56
Trustees of Shri Kot Hindu Shree Mandal v. CIT, (1994) 209 ITR 396 (Bom).
57
T.C.A. Ramanujam, A raw deal for trusts, http://www.thehindubusinessline.com/2002/05/18/04hdline.htm,
visited on 19-11-2003.
15

BIBLIOGRAPHY

ARTICLES
1. F. A. Presler, The Structure and Consequences of Temple Policy in Tamil Nadu,
1967-81, Pacific Affairs, Vol. 56, No. 2, 1983.
2. A. Appadurai & C. Beckeridge, The South Indian Temple: Authority, Honour and
Redistribution, Contributions to Indian Sociology, Vol.10, No.2 1976.

BOOKS
1. B. Mukherjea, HINDU LAW OF RELIGIOUS AND CHARITABLE TRUSTS. 48, (3
RD
edn,,
EASTERN LAW HOUSE, 1970)
2. Durga Das Basu, Equity, Trusts, Specific Relief, 6
th
ed., (Kolkatta: Kamal Law
House, 1996).
3. J. Mayne, Maynes Treatise on Hindu Law and Usage, (R. Mishra ed., 16
th
edn.,
2008).
4. Mulla Principles of Hindu Law, (S. Desai ed., 21
st
edn., 2010).
5. Nabhi Kumar Jain, NABHIS FORMATION & MANAGEMENT OF A TRUST ALONGWITH
TAX PLANNING; A PRACTICAL HANDBOOK FOR PRIVATE, CHARITABLE & RELIGIOUS
TRUSTS, 108, (NewDelhi: Nabhi Publication, 1998).
6. P.C. Pant, N. Suryanarayana Iyers The Indian Trust Act, (5
th
ed., New Delhi:
Butterworths India, 2001).
7. P.P. Saxena, Family Law Lectures: Family Law II, 142, (2
nd
edn., 2007).
8. Paras Diwan, Law of Endowments, Wakfs and Trusts, (4
th
edn., Allahabad: Wadhwa
and Company, 1992).
9. R.C. Nagpal, MODERN HINDU LAW, 1071( 2
ND
Edn., Lucknow:Eastern Book
Company, 2008).
WEBSITES
T.C.A. Ramanujam, A raw deal for trusts,
http://www.thehindubusinessline.com/2002/05/18/04hdline.htm, Last accessed on
12
th
April, 2014.
R. Sen, Legalizing Religion: The Indian Supreme Court and Secularism, East-West
Center Washington, www.eastwestcenterwashington.org/publications, Last accessed
on 12
th
April, 2014.


16