BANKIM CH DATTA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) : In this reference under s. 66(1) of the IT Act, 1922, the short point to be decided is whether the income derived by trustees under a deed of endowment in respect of certain immovable properties for the purpose of certain religious functions including services and poojas of particular deities fall under the mischief of the first proviso to s. 41(1) of the Act. The facts of the case are as follows :

(2.) SRI Rajendra Nath Dutt executed a will dt. 6th Aug., 1892, under which he created, inter alia, a trust in respect of several houses and godowns including the tenanted houses at No. 10, Convent Road, and No. 62, Dharamtolla Street, Calcutta. This settlement of trust was made to ensure due performance of certain religious festivals and ceremonies and poojas of certain deities. At the material period the applicants were the trustees to the estate of the late SRI Rajendra Nath Dutt for each of the asst. yrs. 1952-53 and 1953-54. The applicants were assessed to a total income of Rs. 7,973 being the rental income from the house property at No. 10, Convent Road, Calcutta, and No. 62, Dharamtolla Street, Calcutta, and ground rent, etc. The ITO taxed this income at the maximum rate under s. 41(1) of the IT Act on the ground that the income is to be utilised by the trustees for performing certain poojas and was "not specifically receivable on behalf of any one person." On appeal, the AAC held that the income was not liable to tax at the maximum rates under the proviso to s. 41(1) as the income was not receivable by the trustees on behalf of any one person, natural or artificial. The Department, thereafter, appealed against the said order of the AAC before the Tribunal which allowed the appeal. On these facts the following question of law arising out of the Tribunal's order has been referred to us : "Whether, on the facts and in the circumstances of this case, the income from the property in the hands of the assessee- trustees was assessable at the maximum rate by virtue of the first proviso to s. 41(1) of the Income-tax Ac ?"

(3.) THE point involves a matter of first impression and no reported judgment has been cited before us for resolving the doubt raised. THE relevant provisions of the deed of endowment which have been referred to us by the parties may be stated as follows : "I hereby direct my trustees to provide for and defray out of the said rents and profits the performance of the following services, poojas, festivals and other religious ceremonies, that is to say, for the services of the family idol the said Sri Sri Madhusudan Jeu (monthly), Rs. 6. For the services of the said Banlingo Mahadeva (monthly), Rs. 4. For performance of the Durga Pooja (annually), Rs. 600. For Jagadhatri Pooja (annually), Rs. 200. For Akodist Sradh of my parents (annually), Rs. 50. And I hereby also direct my trustees to set apart surplus (if any) of the rents and profits of the aforesaid houses, godowns and lands as a reserve fund to provide against any deficiency in the said rents and profits for the purpose aforesaid owing to any of the houses and premises remaining unlet or unproductive for any time, and to apply the said reserve fund or so much thereof as may be required for any of the purposes aforesaid provided always that when from time to time the said reserve fund shall be in the opinion of the trustees in excess of the amount required as such reserve fund the trustees shall spend the excess surplus of the said fund for the performance of the worship of the Shiva on the night called Shivaratri and feed the Brahmins in the next day following and pay them in cash as much as the said surplus will suffice to pay."