Commissioner of Income-Tax, Calcutta v Kokila Debi

J\2 **COMMISSIONER OF INCOME-TAX, CALCUTTA** \'. **KOKILA** **DEBl** _A pri/_ 20, 1970 [J . c. StWI, K . s. l-JEGDE AND A. N. GROVER, JJ.] _fll<li<ll_ _l_ _t_ _11colll<'·ttU:_ _Act,_ 19:!.:!.-S. 41 (I l _Prfll·isa-Sn>pc_ _nf._ 1!. :t Hindu £Ovcrncd b~ M_it'ak, hara S~hocil o~ Hin~u ~a w tlcdic:ucu certain >cl(-acquircc.l propcrues m fnvour ot the dctty _Sn Sn l•war Gopal Jew. He cxccutcc.I a <.Iccc.I of trust anc.I supplemented ll _by t wo subsequent <.Iccc.Is. Two-thirds of the income o( t~c trust. propcrttcs w:os unucr the ~aid c.Jccds to be utilised for the scva ot ~he dcoty and the remaining onethird w:os to he retained in the hands of the trustees. to meet the collection charges. taxes and other incidcn~ al expense-s relillmg to the tnm pm. pertic.<. Under the trust·<.lccus the lnst . trustee wns to be B s thtrJ wife .. ;1 nJ each of his sons on attaining mujonty was to become 11 tru>tcc automntically. In proceedings for the a'scssment o'i inco~c-~ax, the Incometax OITicer a•••mcd the income from a ll the proper11e~ 10 the l~<mtl' of the trustees at the maximum rate in nceortlance with the pro>ision con· tainctl in the first proviso to section 4 1 tIl of the Intlinn Income-Iii:<; Act. 1 !1:!.:!. The order was confirmed by the Appellate A~sistant Commt,.,ioncr. In furth~r :tppcal the Tribun~l hclo.l thJt the sole beneficiary untl~r th~ tlcc<.l' wns the dcily Sri Sri lswar Gopal Jew. Hence acconJing to the Trihunal, the first proviso to s. 41 ( 1) wa~ no~ applic:ohlc to the f:octs ol the case and the trustees were to h.: n,scsscd in the status oi individual in rc~pcct of the income receivctl hy them on hch:tlf of th~ Jeit~ . The High Court in reference took the same view as the T ribunal. The Com· mi,.,ioner ur Income-tax appealed to thi~ coun . The uppcllant placcJ rcli•ncc on the fact that in one ot the dcctls executed by B. the trustee' wcr~ rclcrrctl to •~ bcnclicianes. A> no a rgument had hcen cnnva **.** . etl bctorc the High Court or the tribunals hclo" that a deity could 'not he con,illcr<J a ·pcr..on' within the mc;onint; or s. :!.( 9t of the Act, the Court procccJctl on ~he ha'i~ th:l! a deity h; a 'person' within the mc:.nong nf the ~.~iJ ,..;ctoon. HELD : In one of the tru•t-<lcctls ! lie trustee' "ere no duuht l'derrco.l to as beneficia ric' hut on a reading of the entire deed it "as ck;~r th,or rdcrencc to them los beneficiaries " a~ a misnomer :ond that they \\~ rc tll't entitled to ~ny benefit unller any o'i tne Jccus. Therdorc. the linJing ol the Trihun:ol that the sole hcncficiar>· unuer the <.Iectls w:os the deity ""' not_ open to chaflcngc, :md that bcin~ so, tflc ca'c clc:~rl y fell withon th.c m~m,.'Ction 41 (I), and the fir' t provi><> ro thut section w:ts not :opnl!· c.o~k to the fact< of the c.""· On the fact• founJ hv the Trihun~l II could not. be 1>aid that the income or prulits in quL-..tion i, crc. "not ~p~cill· caflv rc.:ctvahlc hy the tru>tcc. on hdwlt of any one pcr.;on '. IJ I::> H 316 Bl ·me fuel that for certain purpose.~ a tru,tcc>hip is con'i'krcll "' "pmpcny" anu that the tnl\tccs hti\'C :oil int~rcst in tht: trl"l WO~ irl\.~.:-;ant in the prc..ent context. In con•idcrin~: the ~cope o/ ' · 41 t I) the o:'nly thint; thM had to he seen was \<>hethcr the income in quc,tiun '"os f\.'0:1\'CJ hy the tru,tcC"o on behalf ol any pcr.;on. (316 B-CI AcconJingl~· the ;tppcal mu<t he Ji,mi,wJ. [316 CJ {l; _c:_ £ li II .,.. _(_ C.l. _T._ _t_ CALCUTTA _v._ KOKILA DiBI _(Hegde,_ J.) 3l3 **A** CIVIL APPELLATE JuRISDICTION : Civil Appeals Nos. 220 10 . 230 of 1967. **8** c **1.)** **E** Appeals from the judgment a:nd order dated March 18, L 966 of the Calcutta High Court in lncome-.tax Reference No. 103 of 196~. _S._ _K._ _Aiyar_ and _B._ _D._ _Sharma.,_ for the appellant (in all the appeals). The responoent did not appear. The Judgment o the Court was delivered by **Hegde,** **J.** These appeals were brought on'the strength of the certificates granted by the High Coun of Calcutta against. its judgment in references under s. 66(1) of the Indian Income Tax Act, 1922 (hereinafter called the Act). of the case and on a proper construction of three deeds executed on the 3ro November, 1944, the 25th September 1947 and the 17th March, 1951, refened to in the order, the Tribunal was right in holding that there was only one beneficiary viz. Sri Sri Iswar Gopal Jew, under the trust? The questions referred to the High Court are : , .. ( 1 ) Whether on the facts and in the circumst~nces ... . { 2) 1f the answer to the questio1n ( 1 ) be in the negative, then whether the income o.f the Trust was to he assessed at the maximum rate by virtue of the first proviso to s. 41 ( 1 ) of the Income-Tax F Act, 1922 ?" The High Court answered the first question in the affirmative and in view of that answer, it did not find it necessary to answer the second question. The facts found by the tribunal, as could be gathered from G the statement of the case submitted by it are as follows : Shri Badriprasad Agarwalla, .a Hindu governed by Mitakshra School of Hindu law, had three wives, (1) Sukti Devi, (2) Krishna Devi and ( 3) Kokila Dcbi. From the second wife, Kri~hna Devi,. he had a son named fulchand born in March 1929. After the death of the second wife, Badri Prasad Agarwalla took Kokila Debi as his third wife. From her he had six sons, the eldest of whom is Nirmal Kumar born in 1942. On No,vember 3, 1944, he executed a deed of trust by which he transferred to the trustees 31-< . SUPREME COURT REPOR'!:S· . ~l97JJ J S.C.R; ## l ·~ I jl ! be~ame a trustee on attaining majority in March, 1947 and Nirmai \ ·j two of his self-acquired p~operties situate a! 41/16:-A, R_ussa RoaJ anJ _:2_ J, Pnika Para Row for the benefit of t~e deity Sn Sri Iswar GIJp:ll Jew whom he had consecrated at h•s ~ncestral house at _1_ _1_ _2._ Krishnaram Bose Street, Calcutta. The Intended purposes ot tit.: said trust were set out in the deed itself. Under that del!d K,,Kila Debi was appointed as a trustee. It was provided ilt that dc.:J that each of the sons c·f Badri Prasad on attaining majority would automatically become a truste7 of t.hat tr~s~. It may be mentioned here that in accordance wnh th1s provision, Fulchand be~ame a trustee on attaining majority in March, 1947 and Nirmai Kunwr. the el<kst son of Kokila Debi also became a trustee in the . ye<tr 1960. Under the said deed, Kokila Debi was appointed as th..: ~o le Shebait of the idol until the sons of Badri Pr<1sad became majors. But as soon as they becume majors they were to be joint Shcbaits of the idol along with Kokila Debi. 2/3rd ol' the rent reali.;.:J from the trust properties was to be utilised towards seva of the deity und the balance l / 3rd was to be retained in the hands of th!! trustees to meet the collection charucs, taxes a1td other .incid~ntal expenses relating to the said properties. . ; I # I ##### I _On_ September 25. i 947, Badri Prasad executed unother deed to \\hich he, Kokila D.:bi and Fulchand were parties. The deed was admittedly a supplement to the earlier dcctl dated November 3. 1944. i _i_ 1 l ### I I ·: : ##### ! On March 17. 1951, Badri Prnsad executed a third deed. To that J.:cd B:~dri Prasad. Kokil:t Do:bi und Fulchand were parties. Thi., deed was also expressly made as a supplement to the deed. of !\'<)\·ember 3, 1944. The avowed object in executing this dee:.! wa~ to clarify the ~latus, rights and liabilities of t[le trustees an::l the .,hcbaits in otlice for the benefit of und in the interest of the deity nnd to uvoid future litig:1tion_ Under this deed, it is mentioned that the properties covered by the first two deeds were given in ah\olutc dedicaticn to the deity established by the settlor at ~eva, and worship of the deity and they were to holu the prop.:rti.:~ for 'llld on behalf of the deity. Therein provision was mad.: for the. managcmcn~ of the propcrt~, .~or conducting the sevas and puru, of the dcily a;nu for m:untcnancc of proper and ncccs."try 112. Kri.,hnaram Bose Road. Calcuua and the trustl!cs nnd she-· bait, held their oOices as such for c:mying on daily and pcr:odicar n. c E '[: **'** G account~. !h~ Income-tax om(cr as~cssed the income from all th.: prl [1] peHI-:, ~n the hands of the tru~tces ut the muximum r:th! in acclml:mc.: wllh the provision contuined in the· 1st proviso tiJ s. 41 (I) 11 of t_h~ Act. In appeal, the Appellate Assi~tant Commi~sioncr conhrmcd the: ord.:r of the Income-tux Omcer but on a furth.:r <tppt::il taken to the f.ncomc Tax Appcl!ute Tribunal, the Tribunal B c D E C.T.T.f CALCUTTA _V._ KOKILA DEBI _(Hegde,_ /,) 315 held that the sole beneficiary under the three deeds was the deity Sri Sri Ishwar Gopal Jew. Hence the 1st proviso to s. 41 (1) is not applicable to the facts of the case and the trustees should be assessed in the status c{ an individual in respect of the income received by them on behalf of the deity. The relevant portions. of s. 4l (I ) and the 1st proviso thereto read : ''In the case of income, profits or gains chargeable under this Act . . . . . . . . . . . . any trustee or trustees appointed under a trust declared by a duly executed instrument in writing whether testamentary or otherwise . . . . . . . . . . . . . . . . . . are entitled to receive on behalf of any person, the tax shaH be lev1ed upon and recover abb from such . . . . . . . . . . . . trustee or trustees in the like manner and to the same amount as it would be levi able upon and recoverable from the person on whose behalf such income, profits or gains are receivable and an the provisions of this Act shall apply accordingly Provided that where such income, profits or gains or any part thereof are not specifically receivable on beha!f of any one person or where the individual shares of the persons on whose behalf they are receivable are indeterminate or unknown, the tax shall be levied and recoverable at the maximum rate, but, where, such persons htwe no other personal income, chargeable under this Act and none of them is an artificial juridical person, as if such income, profits or gains or such part thereof were the total income of an association of persons . . . . . . . . . . . . " As seen earlier, the finding of the Appellate Tribunal _is_ that the trustees had no beneficial interest in the income of the proper 1' . ties included in the trust deeds and that the sole beneficiary under those deeds is the deity. The question whether a dei_ty can be· considered as a 'perso,n' within the meaning of s. 2(9) of the Act had not been canvassed te.fore the High Court or the tribunals below nor was that question raised before us. Therefore we shall not go into that question. For .the purpose of this case we shall G proceed on the. basis that it is 'a person' within the meaning of s. 2(9) of the Act. Now coming to the deeds, al1 that the learned Counsel for the revenue was able to show us is that in one of the trust deeds, the trustees were referred to as beneficiaries but on a reading of the entire deed, it is clear that reference to them as beneficiaries is a misnomer and that they are not entitled to any H benefit under any of those deeds. Therefore the finding of the tribunal that the sole beneficiary under those deeds is the deity is not open to challenge. If that is s-J, the case clear:y falls within the main section 41 (1) and the lst proviso to that section i~ 316 SUPREME COURT REPORTS [1971] 1 S.C.R inapplicable to the facts of the case. On the facts founct by the tribunal, it cannot be said that the i.n~ome or profits in que5tiOtn are "not specifically receivable by the trustees .on behalf- of any QDe person" The fact that for certain purposes, a trusteeship is considered as 'property' and that the trustees have an interest in the trust is irrelevant for our present purpose. In consider.ing the scope of s. 41 (I), the only thing that we have to see is whether ~he income ·in question was received by .the trustees on behalf of any person. If the deity is considered as a 'person' then quite dearly the case does not come within the lst proviso to s. 41 ( l) and it has to .be dealt with under s. 41 ( 1). For the reasons mentioned above, these appeals fail and they are dismissed. The respondents are ex-parte iii this Court. Hence there will be no order as to costs in these appeals. G.C. _Appeals_ _dismissed._ n ###### c #### •