VALLABHDAS KARSONDAS NATHA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference under Section 66 (1) of the Indian Income-tax Act raises a short point, though one which has shown a tendency to become obscured by the historical background and by the more prominent features concerning questions of fact, of recent times. The question which has been referred to us is in these terms :-

(2.) BEFORE turning to the somewhat involved circumstances of the case, it is essential to consider and bear in mind the terms of sub-section 4 (3) (i) of the Act. It is that sub-section which exempts from the incidents of taxation certain types of income, described under 12 heads. The opening words are : any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them, and it is with the first head or class with which we are concerned in this case. It is (i) any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and then the sub-section continues to make provision for apportionment, in the case in which property is partly so held.

(3.) UNDER the settlement of 1908, surplus income again began to accumulate, and the assessees father brought a third suit in this Court to have the destination of that surplus determined. Again it was declared that the surplus belonged to the assessees father and again in view of declarations of this Court, challenge to the trust of the 1908 settlement as not being religious or charitable, does not lie. The assessees father died in 1927 and the assessee as his heir brought in 1934 a fourth suit in this Court to have the destination of the then existing accumulations and surplus determined. On the 12th of October 1934, Mr. Justice Tyabji declared that on the construction of the decree in Suit No. 785 of 1903 and Suit No. 989 of 1917 on the file of this Honourable Court, Karsondas Natha, the deceased, mentioned in the plaint, was absolutely entitled to the surplus income remaining under the deed of trust dated 1st April 1908; and this Court does further declare that the deceased Karsondas Natha being entitled to the said income and accumulations thereof as aforesaid the plaintiff as his sole heir is entitled to the same and to execute a trust deed in respect of the accumulations and surplus of income to arise in future for the religious and charitable objects mentioned in the plaint.