PATEL A J Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BY this reference under section 66 (1) of the Indian Income -tax Act, 1922 (hereinafter referred to as 'the Act'), at the instance of the assessee the following two questions of law are referred to us for our determination : '1. Whether, on the facts and in the circumstances stated in the statement of case, the income derived by letting out the space on Ambalal (sic Jhaverbhai) Patel Bridge at Chowpatty is exempt from tax under section 4 (3) (i) of the Indian Income -tax Act, 1922?

(2.) WHETHER , on the facts and in the circumstances stated in the statement of case, the income from the advertisements on the said overbridge could be added as income of the assessee?' 2. The questions referred for our determination relate to the assessment years 1954 -55, 1955 -56, 1959 -60 and 1957 -58, for which the previous years are calendar year ending December 31, 1953, 1954, 1958 and 1956, respectively.

(3.) IT was sought to be contended on behalf of the assessee before the Income -tax Officer that the income from advertisement business was exempt under section 4 (3) (i) of the Act. The Income -tax Officer rejected the contention of the assessee holding that there was neither a valid trust nor any legal obligation of whatever kind on the part of the assessee to spend income from the advertisement business for charitable purposes. In appeal by the assessee the contention of the assessee to claim exemption in respect of income from advertisement business was rejected by the Appellate Assistant Commissioner and the said decision was confirmed by the Tribunal in appeal. The Tribunal, inter alia, took the view that since there was no trust settlement actually in operation the assessee had taken resource to the fact that there was legal obligation i.e., a legal obligation to spend the income, not that any property from which income was derived was held under a legal obligation. Relying upon several decisions the Tribunal took the view that the assessee was not entitled to exemption under the provisions of section 4 (3) (i). It also rejected the alternative contention of the assessee that in any event the income did not belong to the assessee personally irrespective of the fact whether it was exempt or not under section 4 (3) (i) of the Act.