MEHRUNISSA BEGUM Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 66(1) of the Indian Income-tax Act, 1922, made by the Income-tax Appellate Tribunal, Patna Bench, on the following question of law:

(2.) FACTS of the case may be stated in a narrow compass. - The assessee in this case was Janab S. T. Karim of Jamshedpur. He appears to have died during the pendency of the proceedings at some stage and the reference application was filed by his widow, Mehrunissa Begum. Hereinafter in this judgment by the assessee would be meant the original assessee, S. T. Karim. He, by an indenture dated May 6, 1945, created a trust. Various properties were the subject-matter of the trust, including the property styled as "Karimia Mansion" as well as the machinery and furniture of the assessee's cinema house run under the name and style of Jamshedpur Talkies, which was located in Karimia Mansion. In the past, the assessee claimed that the income derived from the running of the Jamshedpur Talkies was the income of the trust and not his. The trust was wholly for charitable purposes and as such the income was exempt from tax under Section 4(3)(i) of The Income-tax Act. The assessee's claim was rejected by the departmental authorities. The Tribunal upheld the rejection of the assessee's claim. It accepted that the trust was created in respect of other properties but did not hold the cinema business to be covered by it. Income of the cinema business, therefore, was taxed in the hands of the assessee. The matter was finally brought on reference to this court, but it was decided against the assessee.

(3.) THE statements in the application (annexure "A") were that S. T. Karim had created a trust by a deed of transfer made on the 6th day of May, 1945. He had transferred all his properties to the trust. THE trust was mainly for the establishment of the Central Karimia School. This application was filed on behalf of S. T. Karim as trustee of Karim trust, Karimia Mansion, Jamshedpur Town. In paragraph 5 it was stated that he had spent up all his liquid resources in the construction of the building and was unable to proceed as expeditiously as it was necessary in the interest of the institution and in furtherance of the scheme of the trust. THE petitioner, therefore, approached the Minister of Finance Government of Bihar, as stated in paragraph 7, "for financial aid in the shape of exemption from payment of entertaiment tax for a period 2 years". In paragraph 8, it was stated that the Jamshedpur Talkies formed part of the assets of the Karimia trust, which was a wholly charitable trust and the entire income of the trust was being applied to the Central Karimia School. In the circumstances, the income from the Jamshedpur Talkies, it was claimed, was entitled to exemption from payment of entertainment tax under the Bihar Entertainments Tax Act, 1948. As already stated, exemption under Section 10 was not granted, but, surely, reading the order dated March 25, 1957, in the background of what is stated in the application (annexure "A"), the remission was granted by the Government of Bihar for the purpose of the charitable trust. At the time the money jn question was collected it was not the income of the assessee, as it was collected qua and earmarked for payment of entertainment tax. Question for consideration is : did it become the income of the assessee on the passing of the order dated 25th March, 1957 ?