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Issues:
1. Whether income from a private trust created for the maintenance of a deity is exempt from taxation under the Income-tax Act. Analysis: The case involved a reference under section 66(1) of the Income-tax Act regarding the assessability of income allegedly received under a deed of dedication for the maintenance of a deity, Sree Bala Tripura Sundari. The key question was whether the income of Rs. 2,051, deducted by the assessee for temple maintenance, was exempt from taxation. The deed of dedication created a legal obligation on the assessee to allocate funds for the deity's worship and temple repairs from his income derived from a fair. The argument presented was that the income was settled on trust for religious purposes and hence should be exempt from taxation under section 4(3)(i) of the Income-tax Act. The court analyzed the provisions of section 4(3)(i) which exempt income derived from property held under trust for religious or charitable purposes. It was noted that while a legal obligation had been created for religious purposes, the income from the fair was first accruing to the assessee before being used for temple maintenance. The court distinguished cases where income was directly settled on trust, emphasizing that in this case, no property was exclusively set apart for the temple's maintenance. The court referred to precedents like Raja Bijoy Singh Dudhuria v. Commissioner of Income-tax and Commissioner of Income-tax v. Thakur Dass Bhargava to support its reasoning. Further, the court discussed cases such as J.K. Trust, Bombay v. Commissioner of Income-tax, where it was held that income settled upon a charitable trust is exempt only if derived from property held for charitable purposes. The court also referred to A. Eggar v. Commissioner of Income-tax, Burma, where income assigned to a trust was not considered exempt under section 4(3)(i) as it was not income from property held under trust. The court concluded that the income in question was not exempt under section 4(3)(i) as the temple's maintenance assets remained the property of the assessee, and the income used for obligations was not received under the deed of dedication to the deity. In the final decision, the court answered the reference against the assessee, ruling that the income of Rs. 2,051 was assessable in the hands of the assessee. The court also directed the assessee to pay costs to the Income-tax Department. The judgment was delivered by Banerji J., with Choudhary J. concurring.
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