1971 (1) TMI 24 - HC - Income Tax

U.P. Agricultural Income Tax Act, 1948 - Assessee, Mahant Indresh Charan Das - Whether the property was held by the assessee under other legal obligations wholly for religious or charitable purposes - whether property belonged to the math and not the mahant

Summary

Issues Involved:
1. Whether the property was held by the assessee under 'other legal obligations' wholly for religious or charitable purposes.

Issue-wise Detailed Analysis:

1. Legal Obligation and Religious/Charitable Purpose:

The core issue referred under section 24(4) of the U.P. Agricultural Income-tax Act, 1948, was whether the property was held by the assessee under 'other legal obligations' wholly for religious or charitable purposes.

Background:
A notice under section 15(3) of the U.P. Agricultural Income-tax Act was served to the assessee, who claimed that the agricultural income of the darbar was exempt under section 8 of the Act. The initial assessing authority agreed, but subsequent assessments for different years resulted in a different view, leading to appeals and revision applications. The Revision Board eventually ruled against the assessee, prompting this reference.

Section 8 of the Act:
Section 8 provides that income derived from property held under trust or other legal obligation wholly for religious or charitable purposes shall be exempt from tax.

Assessee's Argument:
The assessee argued that the property, consisting of forty villages, was endowed for the temple of Guru Ram Rai and managed by successive mahants who lived celibate lives and did not treat the property as personal. The institution performed various charitable and religious activities, including running educational institutions, providing medical relief, and organizing religious festivals.

State's Argument:
The State contended that the property was neither held under trust nor any legal obligation for religious or charitable purposes, and the income was not spent on such purposes.

Revision Board's Findings:
The Revision Board dismissed the relevance of historical gazetteers and relied on a written statement allegedly filed by the assessee in previous proceedings, concluding that the property was not held under any legal obligation for religious or charitable purposes. The Board also noted the absence of penal clauses in the thamra patras (copper plates) granted by the Nepal ruler, which it interpreted as a lack of enforceable obligation on the mahant to perform religious duties.

Court's Analysis:
The court examined the historical and legal context of the Udasi sect, founded by Sri Chand, son of Guru Nanak, and its practices. The court considered various historical documents, including inscriptions, memoirs, and gazetteers, which supported the view that the property was endowed for religious and charitable purposes.

Key Findings:
- The property was endowed by Raja Fateh Shah of Garhwal and confirmed by subsequent rulers, including the British, for the support of the temple and its religious activities.
- The institution performed various charitable and religious functions, including running educational institutions, providing medical relief, and organizing religious festivals.
- The property was managed by successive mahants who were elected from among the disciples of the last deceased mahant, indicating a religious institution rather than personal property.
- The court rejected the Revision Board's reliance on the written statement without having it on record and emphasized the historical evidence supporting the endowment's religious and charitable nature.

Conclusion:
The court concluded that the property was held by the assessee under a legal obligation wholly for religious and charitable purposes. The question was answered in the affirmative, and the assessee was entitled to costs assessed at Rs. 300.

Separate Judgments:
R.L. Gulati J. concurred with the judgment delivered by Pathak J., agreeing with the analysis and conclusion.

Final Decision:
The property was held under a legal obligation wholly for religious and charitable purposes, and the assessee was entitled to the tax exemption claimed.