1966 (1) TMI 13 - HC - Income Tax

Trust - there was no trust in the technical or in the English sense in favour of the deity but there was a dedication of the properties to the deity - such dedication may be considered to be a trust in the larger sense

Issues Involved:
1. Nature of the endowment: Trust or Dedication.
2. Classification of the trust: Private or Public.
3. Tax liability of the deity under the Indian Income-tax Act.

Analysis:

Issue 1: Nature of the Endowment - Trust or Dedication
The primary question was whether the endowment constituted a trust in favor of the deity or a dedication of properties to the deity. The court clarified that the term "trust" in the question refers to a technical trust as understood in English law. It was agreed by both parties that the dedication of properties to the deities was not by way of a technical trust. Instead, it was a dedication under Hindu law, where the dedicator divests themselves of property for religious purposes in favor of a deity. The relevant documents (ekrarnama dated 25th May 1820, postscript dated 27th February 1822, and the will dated 8th December 1842) did not create a trust in the technical sense. There was no conveyance of properties in favor of any trustee. The court concluded that there was a dedication of the properties to the deity but no trust in the technical sense. However, such dedication could be considered a trust in a broader sense.

Issue 2: Classification of the Trust - Private or Public
The second question was whether the dedication constituted a private religious trust that did not enure to the benefit of the public. The court noted that a dedication in Hindu law is also a trust in a broader sense. Both parties agreed that the word "trust" in this context did not mean a technical or English trust. The court referred to several judgments to explain that a dedication could be considered a trust in the general sense, within the meaning of sections 4, 40, and 41 of the Income-tax Act.

The court then examined whether the trust enured for the benefit of the public. It was noted that the trust was a private religious trust and did not enure for the benefit of the public, except for the direction given for the feeding of the poor as contained in the order of Ameer Ali J. dated 11th August 1943. The court referred to various precedents to determine whether an endowment is public or private, emphasizing that the matter depends on the facts of each case. The court concluded that the endowment was a private religious trust and did not grant any benefit to the public, except for the feeding of the poor as directed by the court.

Issue 3: Tax Liability of the Deity under the Indian Income-tax Act
The third question was whether the deity, Thakur Radhagobind Jew, was liable to assessment under the Indian Income-tax Act. The court noted that the charging section of the Income-tax Act (section 3) includes the term "individual," which could encompass a juristic person like a Hindu deity. The court referred to various judgments and legal principles to establish that a Hindu deity, though not a sentient being, is considered a juristic entity capable of holding property and being assessed for income tax. The court concluded that Thakur Radhagobind Jew was liable to assessment under the Indian Income-tax Act.

Summary of Questions and Answers:
1. Question: Whether upon a proper construction of the relevant documents executed by Smt. Chitra Dassi and the relevant schemes sanctioned and/or passed by the High Court, there was a trust in favor of the deity or whether there was a dedication of the properties to the deity.
Answer: There was no trust in the technical or English sense in favor of the deity, but there was a dedication of the properties to the deity. Such dedication may be considered a trust in the larger sense.

2. Question: Alternatively, if the dedication to the Thakur constituted a trust, is it a religious trust which did not enure to the benefit of the public?
Answer: The question is not an alternative one. The dedication to the Thakur constituted a trust in the larger sense. It is a private religious trust and does not enure for the benefit of the public except the direction given for the feeding of the poor as contained in the order of Ameer Ali J. dated 11th August 1943.

3. Question: Is the Thakur Radha Gobinda Jew liable to assessment under the Indian Income-tax Act?
Answer: Thakur Radha Gobinda Jew is liable to assessment under the Indian Income-tax Act.

In the facts and circumstances of the case, there will be no order as to costs, excepting that the official trustee will pay his costs as between attorney and client out of the estate in his hands. Certified for two counsel.

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