VISHESWAR SINGH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This is a reference made under Section 66 (1), Income-tax Act, by the Income-tax Appellate Tribunal, Bombay Bench. The point of reference is

(2.) The facts are that in the Darbhanga Raj, which is claimed to be an impartible estate, maintenance grants are made in favour of the junior members of the family. They are commonly known as Babuana grants. In pursuance of this practice it appears that the present Maharajadhiraj of Darbhanga executed the deed aforesaid under which a Babuana grant was given to the applicant in respect of a number of villages in separate enjoyment. I shall briefly refer to the relevant terms of the document in question. After the preliminary recitals, it proceeds to state as follows:

(3.) The Income-tax officer held that the income of the properties mentioned in the trust deed was not receivable on behalf of any particular person; the shares of the beneficiaries being indeterminate, be, therefore, assessed at the maximum rate. The appellate Assistant Commissioner of Income-tax upheld the assessment. He observed that, on the terms of the deed the individual shares of the persons on whose behalf the incomes of the trust properties were receivable were indeterminate or unknown and that the mere fact that the trustee disbursed or appropriated the income in a certain manner did not affect the legal position. When the matter came to the Income-tax Tribunal, the Tribunal was of the view that in respect of Schedule B properties mentioned in the document the income of which was wholly devoted to the worship of the deities is of the different temples, the assessment should not be at the maximum rate but at the rate applicable to each beneficiary and deity. In doing so, they relied upon a decision of this Court Sri Sri Jyotishwari Kalimata v. Commissioner of Income tax, B & O., (A. I. R (34) 1947 Pat. 178: 1916-14 I. L. R. 703. In regard to Schedule C properties, however, they took the view that the income from these properties stood on a different footing. They held that the income of these properties was to be utilised for the upkeep of she palaces, gardens, tanks, temples, etc. As these objects were not juridical persons, it could not be said that the properties were vested in them; nor could it be said that the income was to be disbursed over these objects according to some determinate shares. They, therefore, held that the assessment in respect of the income from these properties in Schedule C should be at the maximum rate; in other words, they allowed the objection of the assessee in respect of Schedule B properties but rejected his claim in respect of Schedule C properties. And this they did on the basis that in their view the document created two different trusts, one for the Puja Path etc. of the deities, & the other for the maintenance of the palaces, gardens, tanks, temples, etc. They also observed that in regard to the second trust, if it had been restricted to the up keep of temples only, it might well have been assumed that it was intended for the benefit of the deities. But the objects mentioned therein include other objects also, & therefore the principle that a trust in favour of the temple means a trust in favour of the deities installed therein, & therefore, a trust in favour of a juridical person does not apply to such a case. In my opinion, the members of the Tribunal were in error in thinking that the document created two different kinds of trusts. It is true that the provision in the document that the income from Schedule C properties was to be utilised entirely for the maintenance, upkeep, repair & preservation of the said palaces temples, gardens & other appurtenance may apparently load to this impression; but this recital has to be read in the light of the recital in the earlier part of the para, which quite clearly shows that the intention was to provide for the performance of the daily worship of the various deities installed in the several temples of marble & masonary, all of rare architectural beauty, & also to provide for the upkeep of those monumental works of art with their appurtenances of gardens, tanks, etc. It was, therefore, in substance a dedication of all the properties to the deities of which the applicant was appointed the first trustee under the terms of the document & in making the dedication, it separately provides on the one hand for the performance of the pujas & observance of the festivals etc. & on the other for the repair & upkeep of the temples & other appurtenances. The mere fact that the palaces, gardens & tanks have also been mentioned does not in any manner affect the position because these things go along with the temples & the idols which are installed therein. The intention of the document was not to treat these objects as separate entities, & it is difficult to hold that the trust created in respect of Schedule C properties in view of their small income was something quite apart from the trust in favour of the idols in the temples. Beading the whole para together, the impression is that they are all part & parcel of the same trust though is enjoined upon the trustee to spend the income from the properties in the two schedules in different ways, one exclusively for the purposes of worship & the other for the upkeep of the temples, gardens & other appurtenances thereof- If the above construction of the documents is adopted, then it is quite clear that both Schedules B & C properties have the same characteristics, & in that case the income from both the properties is to be spent over determinate objects, namely, the deities which are undoubtedly juridical persons. It is true that; the shares of these deities have not been defined but all the various deities have been mentioned in the document, & as such, it will have to be assumed that in the eye of law they had equal shares in the income of the properties, & in the circumstances, the income of the properties in Schedule C also should be assessed in the same manner as the income of the properties in Schedule B. The Tribunal have relied upon a decision of this Court in Sri Joytishwari Kalimata v. Commissioner of Income-tax, B. & O., A. I. R. (34) 1947 Pat. 178, which clearly lays down the principle that the income of the trust property in the hands of the trustee is not liable to be assessed at the maximum rate under the first proviso to Section 41 (1), Income tax Act, but should be assessed at the rate applicable to the individual income of each of the deities.