1971 (11) TMI 39 - HC - Income Tax

Orissa Agricultural Income Tax Act 1947 - Charitable Or Religious Trusts - section 8 does not contravene article 14 of the Constitution - even assuming that there is any discrimination it is section 9 which will be hit by article 14 and not the impugned clause in section 8 which is of a general nature

Summary

Issues:
Challenge to constitutionality of clause "and actually spent for the said purposes" in section 8(1) of the Orissa Agricultural Income-tax Act, 1947 based on article 14 of the Constitution.

Analysis:
The petitioner, as the Mahant of a Hindu Religious Endowment, challenged the clause in section 8(1) of the Act, claiming that the entire agricultural income of the trust should not be taxed. The main contention was that the Act discriminates between Hindu public religious trusts and Mussalman wakfs in terms of tax exemptions. The court examined sections 8 and 9 of the Act to assess the validity of the petitioner's claim.

In analyzing section 9, the court focused on wakf-alal-aulad and its classification under the Mussalman Wakf Validating Act, 1913. The court highlighted the historical background of wakfs and the legislative intent behind the Validating Act to validate wakfs benefiting the wakif's family. The court clarified that section 9 applies specifically to wakf-alal-aulad and not to wakfs for public charitable or religious purposes, which fall under section 8 of the Act.

The court emphasized that wakf-alal-aulad, dedicated to the wakif and his family, is distinct for taxation purposes, justifying the classification and taxation of beneficiaries' shares. The court upheld the legislature's power to classify subjects for taxation, provided there is a reasonable differentia related to the Act's objective. It concluded that section 8(1) does not violate article 14 of the Constitution as it applies uniformly to various trust categories, including Hindu, Mussalman, Christian, or Sikh trusts.

The court further stated that even if there were any discrimination, it would be section 9, not section 8, that would contravene article 14. Ultimately, the court held that the clause in section 8(1) was not unconstitutional, and the petitioner was rightfully assessed. The writ application challenging the clause was dismissed, with no costs awarded.

In a concurring opinion, Justice Acharya agreed with the judgment, affirming that the clause in section 8(1) was not ultra vires article 14 of the Constitution. The judgment clarified the legal position regarding the taxation of agricultural income derived from religious trusts, particularly distinguishing between wakf-alal-aulad and trusts for charitable or religious purposes under the Orissa Agricultural Income-tax Act, 1947.