Jewish National Fund Must Pay Income Tax on Interest: Appeal Against Judgment Dismissed by Appeal Co

The Master of the Rolls, and Lords Justice Lawrence and Slesser, in the Court of Appeal to-day gave judgment in an appeal by Keren Kayemeth le Yisroel, Ltd., (Jewish National Fund) against the decision of Mr. Justice Rowlatt, confirming the decision of the Commissioners for the Special Purposes of the Income Tax, that the Association does not come within any of the classes of organisations entitled to exemption from Income Tax.

The Association had appealed to the Commissioners for Special Purposes against the refusal of the Commissioners of Inland Revenue to grant exemption on the interest of £32,000 consolidated stock owned by the Association and representing donation. That appeal was refused, it being held that the Association was not a charity.

The Association then appealed to Mr. Justice Rowlatt who dismissed their appeal with costs.

SIR JOHN SIMON PUTS CASE FOR JEWISH NATIONAL FUND: DOES NOT AND BY ITS CONSTITUTION CANNOT MAKE ANY PROFITS: DEFINITELY RELIGIOUS SINCE IT IS ESSENTIAL PART OF JEWISH FAITH TO ASSIST SETTLEMENT OF JEWS IN HOLY LAND: ALSO RELIEVING POVERTY BY ASSISTING SETTLEMENT OF THOSE WHO CANNOT HELP THEMSELVES: NO PART OF OBJECT OF FUND TO ESTABLISH JEWISH STATE: RELATED TO ZIONIST MOVEMENT AS ORGANISATION HELPING IN MOVING LARGE NUMBERS OF JEWS FROM UNHAPPY CIRCUMSTANCES AND SETTLING THEM IN PALESTINE.

Sir John Simon K.C., in submitting the present appeal for the Jewish National Fund, said that there was no question that the Association did not-and could not by its Constitution make any profits.

The question was whether or not the case was one which justified the application of the phrase “charitable purposes”, and the four divisions which they had to consider were: Trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; trusts for other purposes beneficial to the community not falling under any of the preceding heads.

The organisation received the offerings of Jews in various parts of the world, and considerable sums came into its hands. Its objects, as members of the Jewish faith most stoutly maintained, were definitely religious, in view of the fact that it was an essential part of the Jewish faith and a fundamental tenet of the Jewish religion that they should assist the settlement of Jews in the Holy Land. That was regarded by good Jews as a definite part of their religious duty, and that was the gain purpose for which this money had been used.

A “trust for the relief of poverty” would be the aspect of the matter if one had regard, not only to the means which were used to settle the Jews in the Holy Land-which naturally meant assisting those who could not help themselves, but also if one looked at the way in which the Fund, in fact, worked.

It was no part of the object of the Association to establish a Jewish State, Sir John said. It was related to the Zionist movement in the sense that it was an organisation by means of which, and with the help of the funds of which, large numbers of Jews had been moved from most unhappy circumstances and had been settled in Palestine.

It was very clear on the documents that, apart altogether from the aspect of relieving poverty and assisting people to live better lives, there was here what certainly every good Jew regarded as being a definitely religious object.

Then, he submitted, there was a certain amount of incidental matter in relation to the settlement of these poor Jews in Palestine, which would come within the fourth division. There had been, for instance, the establishment of water works, the planting of trees, and things of that sort.

PROMOTION OF RELIGION MEANS PROMOTION OF SPIRITUAL TEACHING AND MAINTENANCE OF DOCTRINE AND OBSERVANCES: RELIGION AS SUCH FINDS NO PLACE IN MEMORANDUM OF JEWISH NATIONAL FUND MASTER OF ROLLS SAYS.

The Commission contended that the phrase “charitable purposes” was not applicable to the organisation; that its intention was quasi-political; that the founders intended a wide scheme of colonisation; and that the Association had much wider powers than the carrying out of the tenets of any religious faith.

The Master of the Rolls, in giving Judgment said that the objects for which the Association was established, set out in the memorandum, were very wide. It could build, control and superintend railways, factories and workshops; purchase, develop, deal with and turn to account mines, minerals, and precious stones; purchase and acquire any personal property; purchase and carry on businesses suitable for the purposes of the Association and acquire concessions in the represented region.

He agreed with Mr. Justice Rowlatt on the question of religion. The promotion of religion meant the promotion of spiritual teaching in a wide sense and the maintenance of the doctrine upon which it rested and the observance which served to promote and manifest it; not merely a foundation or cause to which it could be related. Religion, as such, found no place in the memorandum of the Association.

There were some items in the details exhibited in the case of expenditure upon schools, but in his judgment the Association failed to establish that it fulfilled the requirements under the head of education.

The Association was not established for religious or educational purposes only, and similarly he found that the relief of poverty did not fit the purposes of the Association. It was true that a scheme which dealt with settling Jews upon land in a new country, away from unhappy surroundings, might be interpreted as mitigating poverty and as being of service to persons in need and distress. He, however, agreed with Mr. Justice Rowlatt that it was not the improvement of the position of poor Jews and their families which was the characteristic purpose of the Association; it was rather the repopulation of the Holy Land and other land in a wide area around, so that once more the population of that district might be Jewish. That was the aim and primary object of the Association.

A careful survey of the principles to be applied, the Master of the Rolls added, led him to the conclusion that the Commissioners were right in law and that the judgment of Mr. Justice Rowlatt must be upheld. The yearly interest received by the Association upon this fund could not be held to form part of the income of a body of persons or trust established for charitable purposes only.

Lord Justice Lawrence and Lord Justice Slesser agreed.

APPEAL TO BE TAKEN TO HOUSE OF LORDS.

The Jewish National Fund intends to take the appeal to the House of Lords, the J.T.A. learns. The Fund, it understands, is concerned particularly with the principle on which its claim for exemption from income tax is based, and is specially interested in obtaining a ruling in regard to future contributions and chiefly legacies, in view of the heavy claims of death-duties.

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