1992 (6) TMI 7 - HC - Income Tax

Summary

Issues Involved:

1. Rejection of the assessee's claim that expenses for maintaining horses, carriages, motor cars, and allowances to trustees were part of religious and charitable purposes.
2. Tribunal's findings on the apportionment made by the Income-tax Officer and the adequacy of deductions permitted.

Issue-Wise Detailed Analysis:

1. Rejection of the Assessee's Claim:

The primary issue was whether the expenses incurred by the assessee for maintaining horses, carriages, motor cars, and allowances paid to trustees and others should be considered as part of the amount applied for religious and charitable purposes. The Tribunal rejected the claim, stating that these expenses could not be disallowed in computing the total income of the assessee. The Tribunal referenced the Supreme Court's decision in the case of CIT v. Sri Jagannath Jew [1977] 107 ITR 9, where it was determined that the testator created an absolute debutter and obligated the managers to discharge certain secular but secondary behests, including benefits to family members, their residence, and transportation. The Tribunal found that the question before the Supreme Court was whether these expenses were to be assessed as income in the hands of the assessee, not whether they were deductible as expenses. Thus, the Tribunal and the authorities below had the jurisdiction to decide on the deductibility of these expenses.

2. Tribunal's Findings on Apportionment and Adequacy of Deductions:

The second issue was whether the Tribunal's findings that the apportionment made by the Income-tax Officer was not incorrect and that the deduction permitted was not inadequate were based on no material and/or were perverse. The Tribunal upheld the Income-tax Officer's decision, which disallowed a part of the expenses while allowing another part attributable to charitable and religious purposes. The Tribunal maintained that the apportionment and deductions were reasonable based on the materials on record and the facts and circumstances of the case. The Supreme Court's decision in CIT v. Sri Jagannath Jew was cited, where it was held that the directions in the will did not divert the income at source but merely directed the shebaits to apply the income received from the debutter properties for specified purposes. This supported the Tribunal's decision to uphold the Income-tax Officer's apportionment and deductions.

Conclusion and Remand:

The court concluded that the question of whether the expenses incurred for maintaining horses, carriages, motor cars, and allowances paid to trustees were part of the amount applied for religious and charitable purposes required further consideration. It was noted that the Income-tax Officer had not thoroughly examined whether these expenses were incurred for religious and charitable purposes. Consequently, the court declined to answer the questions and remanded the matter to the Tribunal with a direction to decide the same and refer it to the concerned Assessing Officer for proper determination, taking fresh evidence in detail if necessary.

Separate Judgments:

Both judges concurred with the judgment, and there were no separate judgments delivered.

Final Judgment:

The matter was remanded to the Tribunal for further consideration and determination by the Assessing Officer.