1958 (4) TMI 123 - HC - Income Tax

Summary

Issues Involved:
1. Whether the disputed income is exempt from income-tax on the ground that it is income applicable only for public religious purposes.
2. Whether the trust created by the 'Annadan Patra' is a public religious trust or a private religious trust.
3. Whether the petitioner-assessee is entitled to exemption under clauses (i) and (ii) of sub-section (3) of section 4 of the Indian Income-tax Act.

Detailed Analysis:

1. Exemption from Income-Tax for Public Religious Purposes:
The petitioner-assessee, a Panda attached to the temple of Lord Jagannath at Puri, contended that the disputed income was exempt from income-tax as it was meant for public religious purposes. The income in question was derived from payments made by pilgrims through a document known as 'Annadan Patra'. The Tribunal had to determine whether this income could be considered as applicable solely for public religious purposes.

2. Nature of the Trust Created by 'Annadan Patra':
The primary issue was whether the trust created by the 'Annadan Patra' was a public religious trust or a private religious trust. According to the 'Annadan Patra', the money was to be used for offering bhog to Lord Jagannath, with the Mahaprasad then being appropriated by the Panda and his family, and distributed to pilgrims from the donor's home district who worship the Panda. The Tribunal found that the income was used to purchase property in the name of Lord Jagannath, with the Panda's family members described as marfatdars.

The distinction between a public and a private trust was clarified using the Supreme Court's judgment in Deoki Nandan v. Muralidhar, which stated that a public trust benefits the general public or a class thereof, while a private trust benefits specific individuals. The beneficiaries under the 'Annadan Patra' were the Panda himself and pilgrims from the donor's home district who were his jajmans and worshipped him. This made it a private religious trust, as the beneficiaries could be specifically identified.

3. Entitlement to Exemption under Section 4(3) of the Indian Income-tax Act:
The petitioner claimed exemption under clauses (i) and (ii) of sub-section (3) of section 4 of the Indian Income-tax Act, which exempts income derived from property held under a trust for religious or charitable purposes, and income of a religious institution derived from voluntary public contributions. However, the Tribunal noted that for income to be exempt, it must benefit the public and not be for private religious purposes.

The Tribunal concluded that the 'Annadan Patra' created a private religious trust, as the income was primarily for the benefit of the Panda and a specific group of pilgrims. This conclusion was supported by the analysis of the terms of the 'Annadan Patra', which specified that the Mahaprasad was to be distributed among the Panda and certain pilgrims, making it a private arrangement rather than a public trust.

Conclusion:
The Tribunal held that the trust created by the 'Annadan Patra' was a private religious trust, and the income derived from it was not exempt from income-tax under clauses (i) or (ii) of sub-section (3) of section 4 of the Indian Income-tax Act. The petitions were dismissed with costs, and the answer to the question posed by the Tribunal was in the affirmative.

Separate Judgment:
Barman, J., concurred with the Chief Justice's judgment, emphasizing that the burden of proof for exemption lies with the assessee. He reiterated that the 'Annadan Patra' primarily benefited the Panda and specific pilgrims, making it a private trust. Therefore, the assessee was not entitled to the claimed exemptions.