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PETITIONER: COMMISSIONER OF INCOME-TAX, CALCUTTA

       Vs.

RESPONDENT: KOKILA DEBI

DATE OF JUDGMENT: 20/04/1970

BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. SHAH, J.C. GROVER, A.N.

CITATION:  1970 AIR 1732            1971 SCR  (1) 312  1970 SCC  (2)  10  CITATOR INFO :  R          1971 SC2463  (12)

ACT: Indian Income tax Act, 1922-S. 41 (1) Proviso-scope, of..

HEADNOTE: B,  a  Hindu  governed by Mitakshara  School  of  Hindu  Law dedicated certain self-acquired properties in favour of  the deity Sri Sri lswar Gopal Jew.  He executed a deed of  trust and supplemented it by two subsequent deeds.  Two-thirds  of the  income of the trust properes was under tile said  deeds to  be utilised for the seva of the deity and the  remaining one third was to be retained in the hands of the trustees to meet  the.  collection charges, taxes and  other  incidental expense relating to the- trust properties.   Under       the trust-deeds the first trustee was to be B’s third wife.  and each of  his  sons on attaining majority was  to  become   a trustee automatically.   In  proceedings for the  assessment of  income-tax, the Income-tax Officer assessed  the  income from  all the properties in. the hands of the  trustees  at the maximum rate in accordance with the provision  contained in  the  first  proviso to section 41 (1 )  of  the  Indian, Income-tax  Act,  1922.   The order  was  confirmed  by  the Appellate  Assistant Commissioner-.  In further  appeal  the Tribunal held that the sole beneficiary under tile deeds was the  deity Sri Sri Iswar Gopal Jew.  Hence according to  the Tribunal, the first proviso to s. 41(1) was no,,  applicable to,  the  facts  of the case and the  trustees  were  to  be assessed  in  the, status cf individual in  respect  of  the income  received by them on behalf of the deity.   The  High Court in reference took the same view as the Tribunal.   The Commissioner  of  Income-tax appealed to this  court.   The, appellant  placed  reliance on the fact that in one  of  the deeds  executed  by  B, the trustees  were  referred  to  as beneficiaries.  As no argument had been canvassed before the High Court or the tribunals below that a deity could not  be considered  a ’person’ within the meaning of s. 2(9) of  the Act,  the  Court proceeded on the basis that a  deity  is  a ’person’ within the meaning of the slid section. HELD : In one of the trust-deeds the trustees were no  doubt

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referred to as beneficiaries but on a reading of the  entire deed  it was clear that reference to them  as  beneficiaries was  a  misnomer  and that they were  not  entitled  to  any benefit  under any of the deeds.  Therefore, the finding  of the  Tribunal that the sole beneficiary under the deeds  was the deity not open to challenge, and that being so, the case clearly  fell within the main section 4t(1), and  the  first proviso  to that section was not applicable to the facts  of the  case.  On the facts found by the Tribunal it could  not be  said  that the income or profits in question  were  "not specifically  receivable by the trustees on behalf  of  any one person". [31 5 H316 B] The  fact  that  for  certain  purposes  a  trusteeship   is considered  as  "property"  and that the  trustees  have  an interest in the trust was irrelevant in the present context. In considering the scope of s. 41(1) the only thing that had to  be seen was whether the income in question was  received by the trustees on behalf of any person. [316 B-C] Accordingly the appeal must be dismissed, [316 C] 313

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 220 to 230 of 1967. Appeals from the judgment and order dated March 18, 1966 ,of the  Calcutta High Court in Income-tax Reference No. 103  of 1962. S.   K.  A iyar and O. D. Sharma, for the appellant (in  all the appeals). The respondent 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 Court of Calcutta  against its  judgment  in references under s. 66(1 ) of  the  Indian Income Tax Act, 1922 (hereinafter called the Act). The questions referred to the High Court are               "(1)   Whether  on  the  facts  and   in   the               circumstances  of  the case and  on  a  proper               construction  of three deeds executed  on  the               3rd  November, 1944, the 25tb  September  1947               and  the 17th March, 1951 referred 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               (2)   If the answer to the question (1) be  in               the  negative, then whether the income of  the               Trust was to ’be assessed at the maximum  rate               by virtue of the first proviso to s. 41(1)  of               the Income-Tax 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 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 Debi.’ From the  second  wife, Krishna  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 November 3, 1944, he executed a deed of trust  by which be transferred to the trustees

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314 two  of  his self-acquired properties  situate  at  41/16-A, Russa  Road  and 21, Paika Para Row for the benefit  of  the deity Sri Sri Iswar Gopal Jew whom he had consecrated at his ancestral  house at 112, Krishnaram Bose  Street,  Calcutta. The intended purposes of the said trust were set out in  the deed itself.  Under that deed Kokila Debi was appointed as a trustee.  It was provided in that deed that each of the sons of  Badri Prasad on attaining majority  would  automatically become  a trustee of that trust.  It may be  mentioned  here that  in accordance with this provision, Fulchand  became  a trustee  on  attaining majority in March,  1947  and  Nirmal Kumar,  the eldest son of Kokila Debi also became a  trustee in  the  year 1960.  Under the said deed,  Kokila  Debi  was appointed as the sole shebait of the idol until the sons  of Badri  Prasad  became majours.  But as soon as  they  became majors they were to be joint Shebaits of the idol along with Kokila  Debi.  2/3rd  of the rent realised  from  the  trust properties was to be utilised towards seva of the deity  and the  balance  1/3rd was to be retained in the hands  of  the trustees  to  meet the collection charges, taxes  and  other incidental expenses relating to the said properties. On September 25, 1947, Badri Prasad executed another deed to Which  he, Kokila Debi and Fulchand were parties.  The  deed was  admittedly  a  supplement to  the  earlier  deed  dated November 3, 1944. On  March 17, 1951, Badri Prasad executed a third deed.   To that  deed  Badri  Prasad, Kokila  Debi  and  Fulchand  were parties.  This deed was also expressly made as, a supplement to  the  deed  of November 3, 1944.  The  avowed  object  in executing  this deed was to clarify the status,  rights  and liabilities  of the trustees and the shebaits in office  for the benefit of and in the interest of the deitv and to avoid future  litigation. Under this deed, it is  mentioned  that the properties covered by the first two deeds were given  in absolute dedication to the deity established by the  settlor at  1, 2, Krishnaram Bose Road, Calcutta. and  the  trustees and  shebaits  held their offices as such  for  carrying  on daily and periodical sevas and worship of the deity and they were to hold the properties for and on behalf of the deity. Therein  provision  was  niade for  the  management  of  the property,  for conducting the sevas and pujas of the  deity and for maintenance of proper and necessary accounts. The Income-tax Officer assessed the income from all the pro- perties in the hands of the trustees at the maximum rate  in accordance  with the provision contained in the 1st  proviso to S. 41 (1) of the Act.  In appeal, the Appellate Assistant Commissioner  confirmed the order of the  Income-tax,Officer but  on a further appeal taken to the Income  Tax  Appellate Tribunal, the Tribunal 315 held that the sole beneficiary under the three deeds was the deity  Sri Sri Ishwar Gopal Jew.  Hence the 1 St proviso  to S.  41 (1 ) is not applicable to the facts of the case  and the  trustees  should  be  assessed  in  the  status  of  an individual  in  respect of the income received  by  them  on behalf of the deity.  The relevant portion& of S. 41 (1) 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 taxshall

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             be levied upon and recoverable from such trustee               or trustees in the like manner and to thesame               amount  as  it  would  be  leviable  upon  and               recoverable  from’ the person on whose  behalf               such income, profits or gains are  receivable               and all 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  behalf 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  have  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 properties included in the trust  deeds  and that  the sole beneficiary under  those deeds is the  deity. The question whether a deity can be considered as a ’person" within  the  meaning  of S. 2(9) of the  Act  had  not  been canvassed  before 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 proceed  on  the  basis that it is  ’a  person’  within  the meaning of s. 2(9) of the Act. Now coming to the deeds, all. 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  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  so,  the  case clearly  falls within the main section 41 1 ) and the  1  St proviso to that section is- 316 inapplicable  to the facts of the case.  On the facts  found by  the  Tribunal,  it cannot be said  that  the  income  or profits in question are "not- specifically receivable by the trustees on behalf of any one 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 considering the scope of s.     41  (1), the  only  thing that we have to see is whether the income in question    was received by the trustees on behalf of any person.  If  the deity is considered as a person’ then quite clearly the case does  not come Within the 1 st proviso to s. 41 (1)  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 in this  Court. Hence there will be no order as to costs in these appeals. G.C.                                     Appeals dismissed. 317