1962 (10) TMI 50 - SC - Income Tax

Whether the amounts received by the assessee under the Attika Patra are liable to tax ? Whether the contributions made through Annadan Patra by the donor would amount to a trust or else whether it is a mere device to give the entire income to the Panda for his own benefit? Held that - Appeal dismissed. On the true meaning of section 4(3)(i) in the absence of any finding that the Annadan income was derived from property held under a religious or charitable trust, the claim of the assessees for exemption must fail. Their claim to exemption under section 4(3)(ii) must fail because they are not a religious or charitable institution.

Summary

Issues:
Liability of the assessees to pay income-tax on receipts known as Annadan during assessment years of 1946-47 to 1951-52.

Detailed Analysis:
The case involved a Hindu undivided family acting as Pandas or priests at the temple of Jagannath at Puri, receiving emoluments called Dakshina or Pranami, and collecting amounts known as Annadan from pilgrims. The assessees claimed exemption from income tax on Annadan amounts under section 4(3)(i) and (ii) of the Indian Income-tax Act, arguing that the offerings were income derived from property held under a trust or were income of a religious institution from voluntary contributions solely for religious purposes. The Annadan amounts were collected under written Annadan Patras, credited to an Annadan account, and used for temple expenses and property acquisition in the name of the deity.

The Income-tax Officer, Appellate Assistant Commissioner, and Income-tax Appellate Tribunal held that the Annadan receipts were not exempt from tax, as there was no valid trust in writing, no evidence of trust enforcement, and the funds were not used exclusively for religious or charitable purposes. The Tribunal found that the assessees' activities resembled a business of pilgrim-traffic, and the receipts did not qualify for exemption under section 4(3)(i) or (ii) as they were not derived from property held under a trust or by a religious institution.

The High Court, in addressing the reference, determined that the Annadan amounts did not qualify for exemption under section 4(3)(i) or (ii) as the trust created by the Annadan Patras was deemed a private religious trust, and the assessees were not a religious or charitable institution. The Court highlighted the requirements for exemption under the relevant sections of the Income-tax Act and concluded that the assessees' income did not meet the criteria for exemption.

The Supreme Court upheld the decisions, emphasizing that the assessees' income did not qualify for exemption under section 4(3)(i) or (ii) as it was not derived from property held under a trust or by a religious institution. The Court clarified the limitations of the High Court's jurisdiction in reviewing the Tribunal's findings and underscored the need for factual support in determining tax liability. Ultimately, the appeals were dismissed, and the assessees' claim for exemption from income tax on Annadan receipts was rejected due to the income's nature and the assessees' status as members of a Hindu joint family engaged in a business activity.

This detailed analysis of the judgment illustrates the legal intricacies surrounding the liability of the assessees to pay income tax on the receipts known as Annadan, providing a comprehensive understanding of the issues and the court's decision.