Full Judgment Text
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PETITIONER:
COMMISSIONER OF INCOME-TAX, CALCUTTA
Vs.
RESPONDENT:
KOKILA DEBI
DATE OF JUDGMENT:
20/04/1970
BENCH:
HEGDE, K.S.
BENCH:
HEGDE, K.S.
SHAH, J.C.
GROVER, A.N.
CITATION:
1970 AIR 1732 1971 SCR (1) 312
1970 SCC (2) 10
CITATOR INFO :
R 1971 SC2463 (12)
ACT:
Indian Income tax Act, 1922-S. 41 (1) Proviso-scope, of..
HEADNOTE:
B, a Hindu governed by Mitakshara School of Hindu Law
dedicated certain self-acquired properties in favour of the
deity Sri Sri lswar Gopal Jew. He executed a deed of trust
and supplemented it by two subsequent deeds. Two-thirds of
the income of the trust properes was under tile said deeds
to be utilised for the seva of the deity and the remaining
one third was to be retained in the hands of the trustees to
meet the. collection charges, taxes and other incidental
expense relating to the- trust properties. Under the
trust-deeds the first trustee was to be B’s third wife. and
each of his sons on attaining majority was to become a
trustee automatically. In proceedings for the assessment
of income-tax, the Income-tax Officer assessed the income
from all the properties in. the hands of the trustees at
the maximum rate in accordance with the provision contained
in the first proviso to section 41 (1 ) of the Indian,
Income-tax Act, 1922. The order was confirmed by the
Appellate Assistant Commissioner-. In further appeal the
Tribunal held that the sole beneficiary under tile deeds was
the deity Sri Sri Iswar Gopal Jew. Hence according to the
Tribunal, the first proviso to s. 41(1) was no,, applicable
to, the facts of the case and the trustees were to be
assessed in the, status cf individual in respect of the
income received by them on behalf of the deity. The High
Court in reference took the same view as the Tribunal. The
Commissioner of Income-tax appealed to this court. The,
appellant placed reliance on the fact that in one of the
deeds executed by B, the trustees were referred to as
beneficiaries. As no argument had been canvassed before the
High Court or the tribunals below that a deity could not be
considered a ’person’ within the meaning of s. 2(9) of the
Act, the Court proceeded on the basis that a deity is a
’person’ within the meaning of the slid section.
HELD : In one of the trust-deeds the trustees were no doubt
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referred to as beneficiaries but on a reading of the entire
deed it was clear that reference to them as beneficiaries
was a misnomer and that they were not entitled to any
benefit under any of the deeds. Therefore, the finding of
the Tribunal that the sole beneficiary under the deeds was
the deity not open to challenge, and that being so, the case
clearly fell within the main section 4t(1), and the first
proviso to that section was not applicable to the facts of
the case. On the facts found by the Tribunal it could not
be said that the income or profits in question were "not
specifically receivable by the trustees on behalf of any
one person". [31 5 H316 B]
The fact that for certain purposes a trusteeship is
considered as "property" and that the trustees have an
interest in the trust was irrelevant in the present context.
In considering the scope of s. 41(1) the only thing that had
to be seen was whether the income in question was received
by the trustees on behalf of any person. [316 B-C]
Accordingly the appeal must be dismissed, [316 C]
313
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 220 to 230
of 1967.
Appeals from the judgment and order dated March 18, 1966 ,of
the Calcutta High Court in Income-tax Reference No. 103 of
1962.
S. K. A iyar and O. D. Sharma, for the appellant (in all
the appeals).
The respondent did not appear.
The Judgment o the Court was delivered by
Hegde, J. These appeals were brought on the strength of the
certificates granted by the High Court of Calcutta against
its judgment in references under s. 66(1 ) of the Indian
Income Tax Act, 1922 (hereinafter called the Act).
The questions referred to the High Court are
"(1) Whether on the facts and in the
circumstances of the case and on a proper
construction of three deeds executed on the
3rd November, 1944, the 25tb September 1947
and the 17th March, 1951 referred to in the
order, the Tribunal was right in holding that
there was only one beneficiary viz. Sri Sri
Iswar Gopal Jew, under the trust
(2) If the answer to the question (1) be in
the negative, then whether the income of the
Trust was to ’be assessed at the maximum rate
by virtue of the first proviso to s. 41(1) of
the Income-Tax Act, 1922 ?"
The High Court answered the first question in the
affirmative and in view of that answer, it did not find
it necessary to answer the second question.
The facts found by the tribunal, as could be gathered from
the statement of the case submitted by it are as follows :
Shri Badriprasad Agarwalla, a Hindu governed by Mitakshra
School of Hindu law, had three wives, (1) Sukti Devi, (2)
Krishna Devi and (3) Kokila Debi.’ From the second wife,
Krishna Devi, he had a son named Fulchand born in March
1929. After the death of the second wife, Badri Prasad
Agarwalla took Kokila Debi as his third wife. From her he
had six sons, the eldest of whom is Nirmal Kumar born in
1942. On November 3, 1944, he executed a deed of trust by
which be transferred to the trustees
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314
two of his self-acquired properties situate at 41/16-A,
Russa Road and 21, Paika Para Row for the benefit of the
deity Sri Sri Iswar Gopal Jew whom he had consecrated at his
ancestral house at 112, Krishnaram Bose Street, Calcutta.
The intended purposes of the said trust were set out in the
deed itself. Under that deed Kokila Debi was appointed as a
trustee. It was provided in that deed that each of the sons
of Badri Prasad on attaining majority would automatically
become a trustee of that trust. It may be mentioned here
that in accordance with this provision, Fulchand became a
trustee on attaining majority in March, 1947 and Nirmal
Kumar, the eldest son of Kokila Debi also became a trustee
in the year 1960. Under the said deed, Kokila Debi was
appointed as the sole shebait of the idol until the sons of
Badri Prasad became majours. But as soon as they became
majors they were to be joint Shebaits of the idol along with
Kokila Debi. 2/3rd of the rent realised from the trust
properties was to be utilised towards seva of the deity and
the balance 1/3rd was to be retained in the hands of the
trustees to meet the collection charges, taxes and other
incidental expenses relating to the said properties.
On September 25, 1947, Badri Prasad executed another deed to
Which he, Kokila Debi and Fulchand were parties. The deed
was admittedly a supplement to the earlier deed dated
November 3, 1944.
On March 17, 1951, Badri Prasad executed a third deed. To
that deed Badri Prasad, Kokila Debi and Fulchand were
parties. This deed was also expressly made as, a supplement
to the deed of November 3, 1944. The avowed object in
executing this deed was to clarify the status, rights and
liabilities of the trustees and the shebaits in office for
the benefit of and in the interest of the deitv and to avoid
future litigation. Under this deed, it is mentioned that
the properties covered by the first two deeds were given in
absolute dedication to the deity established by the settlor
at 1, 2, Krishnaram Bose Road, Calcutta. and the trustees
and shebaits held their offices as such for carrying on
daily and periodical sevas and worship of the deity and they
were to hold the properties for and on behalf of the deity.
Therein provision was niade for the management of the
property, for conducting the sevas and pujas of the deity
and for maintenance of proper and necessary accounts.
The Income-tax Officer assessed the income from all the pro-
perties in the hands of the trustees at the maximum rate in
accordance with the provision contained in the 1st proviso
to S. 41 (1) of the Act. In appeal, the Appellate Assistant
Commissioner confirmed the order of the Income-tax,Officer
but on a further appeal taken to the Income Tax Appellate
Tribunal, the Tribunal
315
held that the sole beneficiary under the three deeds was the
deity Sri Sri Ishwar Gopal Jew. Hence the 1 St proviso to
S. 41 (1 ) is not applicable to the facts of the case and
the trustees should be assessed in the status of an
individual in respect of the income received by them on
behalf of the deity. The relevant portion& of S. 41 (1) and
the 1st,proviso thereto read :
"In the case of income, profits or gains
chargeable under this Act any trustee or
trustees appointed under a trust declared by a
duly executed instrument in writing whether
testamentary or
otherwise ...................are entitled to
receive on behalf of any person, the taxshall
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be levied upon and recoverable from such trustee
or trustees in the like manner and to thesame
amount as it would be leviable upon and
recoverable from’ the person on whose behalf
such income, profits or gains are receivable
and all the provisions of this Act shall apply
accordingly
Provided that where such income, profits or
gains or any part thereof are not specifically
receivable on behalf of any one person or
where the individual shares of the persons on
whose behalf they are receivable are
indeterminate or unknown, the tax shall be
levied and recoverable at the maximum rate,
but, where, such persons have no other
personal income, chargeable under this Act
and none of them is an artificial juridical
person, as if such income, profits or gains or
such part thereof were the total income of an
association of persons........"
As seen earlier, the finding of the Appellate Tribunal
is that the trustees had no beneficial interest in the
income of the properties included in the trust deeds and
that the sole beneficiary under those deeds is the deity.
The question whether a deity can be considered as a ’person"
within the meaning of S. 2(9) of the Act had not been
canvassed before the High Court or the tribunals below nor
was that question raised before us. Therefore we shall not
go into that question. For the purpose of this case we shall
proceed on the basis that it is ’a person’ within the
meaning of s. 2(9) of the Act. Now coming to the deeds, all.
that the learned Counsel for the revenue was able to show us
is that in one of the trust deeds, the trustees were
referred to as beneficiaries but on a reading of the entire
deed, it is clear that reference to them as beneficiaries is
a misnomer and that they are not entitled to any benefit
under any of those deeds. Therefore the finding of the
tribunal that the sole beneficiary under those deeds is the
deity is not open to challenge. If that is so, the case
clearly falls within the main section 41 1 ) and the 1 St
proviso to that section is-
316
inapplicable to the facts of the case. On the facts found
by the Tribunal, it cannot be said that the income or
profits in question are "not- specifically receivable by the
trustees on behalf of any one person".
The fact that for certain purposes, a trusteeship is
considered as ’property’ and that the trustees have an
interest in the trust is irrelevant for our present purpose.
In considering the scope of s. 41 (1), the only thing
that we have to see is whether the income in question was
received by the trustees on behalf of any person. If the
deity is considered as a person’ then quite clearly the case
does not come Within the 1 st proviso to s. 41 (1) and it
has to be dealt with under S. 41 (1).
For the reasons mentioned above, these appeals fail and they
are dismissed. The respondents are ex-parte in this Court.
Hence there will be no order as to costs in these appeals.
G.C. Appeals dismissed.
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