COMMISSIONER OF INCOME TAX Vs. KESHARI SINGH NAHAR

JUDGEMENT

(1.) THIS is a reference under s. 66(2) of the IT Act. The facts are shortly as follows : Sri Rai Satab Chand Nahar Bahadur executed a deed of trust dt. 19th Jan., 1918, by which he conveyed certain properties and funds for the purposes mentioned therein. An English translation of the deed is annexed to the statement of case dt. 13th July, 1959, and marked as annexure "A". In the deed it is stated that with the object that the pious acts relating to the management, etc., of the sadabrata, the family religious rites and the dharamsala set up by the ancestors of the settlor and himself might be properly performed after his death he, the settlor, had created a trust known as the "Nahar Family Trust". It recites that he was making provision for the appointment of trustees for giving effect to the same. Altough it is stated that the settlor had already created a trust, and that this document was an appointment of trustees, the statement of case accepts it as the trust itself and no prior trust is mentioned. As a deed of trust, the document leaves much to be desired. Although there is the above-mentioned recital of the objects, yet it has not been specifically stated anywhere that the trust was for the purpose of benefiting members of the public. Indeed, no mention of the public is made anywhere in the deed. There is a schedule entitled "Schedule of pious and religious acts", but it merely sets out a list of certain immovable properties and mentions certain expenditures and against each item a sum is mentioned as the sanctioned expenditure. In this case we are not concerned with the other properties or assets vested in the trustees, but only with one particular property known as the "Kumar Singh Hall" at No. 46, Indian Mirror Street, in the town of Calcutta. Under the deed of trust the settlor constituted himself the sole trustee for the term of his life and provided, inter alia, that after his death the eldest of his lineal descendants in the male line, who professed the faith of the Swetamber Jains, would be the trustees. The schedule shows that the "Kumar Singh Hall" is a two-storied house standing on about 14 cottahs of land at No. 46, Indian Mirror Street. It is stated that on the first floor of this premises there is the Derasar of a temple of Sree Adinath Thakur, a Jain Tirthankar, which was established in 19I7. To the south of the said building there is a two-storied outhouse. The amount of expenditure sanctioned against this premises for the "upkeep of the said hall, Derasar and provision for the necessary puja and worship" is Rs. 2,000.

(2.) I now come to the relevant clause in the trust deed which runs as follows:

(3.) I must say that the statement of case and the order of the Tribunal are far from satisfactory. As I have stated above, no investigation was made in connection with the statement in the deed of trust itself that the settlor had already created a trust known as the "Nahar Family Trust". The user of the "Kumar Singh Hall" as a place for holding public meetings is not mentioned in the deed itself. It is curious to state that Rs. 2,000 is the expenditure sanctioned by the schedule to the deed in respect of the premises No. 46, Indian Mirror Street, and then seek to exempt it from taxation. Obviously, it is not the expenditure which is taxable but the income, In fact, there is no indication in the trust deed itself as to what the trust property consists of, and no mention is made of the income. We have been informed that subsequent to the execution of the trust, the settlor purchased various Government securities and vested the same in the trustees, and there is some house-rent realised from investments made by the trustees in real property. Really, therefore, it is a part of the income which is sought to be exempted and not the expenditure. For the purposes of this case, however, we are not able to go into these various aspects of the matter ourselves. We must take it that the "Kumar Singh Hall" is a two-storied house with an outhouse and courtyard, where there is a temple of Sree Adinath Thakur. There is a hall in which the public are allowed to hold meetings. There is also a library and a museum open to the public. Rs. 2,000 out of the income of the trust estate is expended in respect of this property to carry out the trusts in respect thereof. The relevant section of the IT Act is s. 4 (3)(i). Sec. 4(1) lays down as to what is deemed to be the total income of an assessee. The relevant part of sub-s. (3) runs as follows: