1983 (7) TMI 66 - AT - Income Tax

Summary

Issues:
- Appeal against the order of AAC accepting assessee's claim for deduction of Rs. 48,030.
- Allowability of deduction claimed by the assessee trust.
- Interpretation of the Scheme framed by the District Court in Civil Suit No. 2 of 1960.
- Whether the payment of Rs. 48,030 to Mujawars was allowable expenditure.
- Application of income earned by the assessee trust.

Analysis:
The case involved a departmental appeal against the order of the AAC accepting the assessee's claim for deduction of Rs. 48,030. The assessee, a public religious trust assessed as AOP, claimed the deduction based on a Scheme framed by the District Court in Civil Suit No. 2 of 1960. The dispute arose from the ownership and income rights related to a Dargah, which was determined to be a public religious trust under the scheme. The scheme outlined disbursement rules, including the division of income amongst Mujawars after necessary expenses. The ITO initially disallowed the deduction, considering the payment to Mujawars as non-allowable expenditure.

Upon appeal, the assessee argued that the payment was obligatory under the scheme and should not be included in its total income. The AAC agreed with the assessee's position and directed the ITO to accept the deduction. The revenue appealed to the Tribunal, contending that the payment was an application of income, not a diversion by overriding title. The assessee's counsel supported the deduction claim, citing relevant judgments and the nature of the scheme, which indicated the income was to be divided among Mujawars.

After considering the submissions and relevant material, the Tribunal upheld the AAC's decision. It noted that the scheme provided for the division of income among Mujawars, indicating an overriding title for the payment. Referring to legal principles and precedents, the Tribunal concluded that the amount paid to Mujawars could not be considered part of the assessee's total income. Therefore, the Tribunal dismissed the appeal, directing the ITO to delete Rs. 48,030 from the total income of the assessee trust.