1982 (5) TMI 31 - HC - Income Tax

Summary

Issues Involved:
1. Whether the expenditure incurred for the deity's pujas qualifies as an annual charge under section 24(1)(iv) of the Income-tax Act, 1961.
2. Whether the expenditure incurred for the puja of the deity is deductible in computing the income under the head 'Income from house property.'

Issue-wise Detailed Analysis:

1. Expenditure for Deity's Pujas as an Annual Charge:
The primary issue was whether the expenditure incurred for the deity's pujas could be considered an annual charge under section 24(1)(iv) of the Income-tax Act, 1961. The Tribunal had allowed the deduction, but the High Court scrutinized this decision. The court noted that the deity, Sri Sri Saradeswar Siva Linga, became the owner of the properties in question. The court emphasized that any expenditure incurred by the owner on itself could not form part of an annual charge under section 24(1)(iv). The court referred to the Supreme Court's decision in CIT v. Sri Jagannath Jew [1977] 107 ITR 9, which established that expenditures incurred by the owner on itself do not qualify as an annual charge. Consequently, the court concluded that the Tribunal did not proceed on the correct principle, and question No. 1 was answered in the negative, favoring the Revenue.

2. Deductibility of Expenditure for Puja of the Deity:
The second issue was whether the expenditure incurred for the puja of the deity was deductible in computing the income under the head 'Income from house property.' The court noted that the question was not very clear and seemed to indicate confusion about whether the entirety of the expenditure incurred for all obligations imposed by the deed was considered to be incurred on the puja of the deity or other obligations. The court referred to the relevant provisions of the deed, which charged the shebaits with expenses for various deities, including Iswar Durga puja, Iswar Shyama puja, and others. The court cited the Supreme Court's decision in New Piece Goods Bazar Co. Ltd. v. CIT [1950] 18 ITR 516, which held that an annual charge could include contingent and variable payments. The court also referred to its own decision in CIT v. State Bank of India [1957] 31 ITR 545, which established that an annual payment could be made in instalments and still qualify as an annual charge. The court concluded that the expenditures for the four deities constituted an annual charge under section 24(1)(iv) and were deductible. However, the actual amount spent on the four deities needed to be determined by the Tribunal. Therefore, question No. 2 was answered affirmatively, with the Tribunal directed to determine the actual expenses incurred on the four deities out of the claimed amount.

Conclusion:
The court ruled that the expenditure incurred by the deity itself did not qualify as an annual charge under section 24(1)(iv), thus favoring the Revenue on the first issue. However, the court affirmed that the expenditures for the four deities mentioned in the deed constituted an annual charge and were deductible, subject to the determination of the actual expenses by the Tribunal. Each party was ordered to bear its own costs.