9911796707
TMI Blog2005 (10) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... JUDGMENT The judgment of the court was delivered by Prakash Krishna J.- The assessee-respondent, a medical practitioner, filed her return of income for the assessment years 1978-79 and 1979-80. In the return she did not include income from the property No. 16/72 Civil Lines, Kanpur. In reply to the show cause notice issued by the Income-tax Officer it was submitted by her that the said property with hospital has been irrevocably set apart and dedicated for public charitable purpose in favour of Chandra Kanta Jawahar Lal Public Charitable Trust, Kanpur, on April 1, 1977. The assessee placed a copy of the trust deed and other details along with the certificate under section 12A of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), before the Income-tax Officer, Kanpur, in support of her case. The Income-tax Officer rejected the aforesaid contention of the assessee on the ground that property No. 16/72 Civil Lines, Kanpur, was not transferred to the trust by means of a registered deed as required under section 17 of the Registration Act, meaning thereby the assessee continues to be owner of the said property. Such act of the assessee amounts to transfer within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment has referred the following common questions of law under section 256(1) of the Act: "1. Whether, in law and on facts the Tribunal was justified in excluding the income from property at 16/72 Civil Lines, Kanpur, from the hands of the assessee? 2. Whether, transfer of an immovable property by any person without any consideration to a trust which is not regarded as charitable trust, is covered under the definition of dedication/endowment? 3. Whether, to complete such transfer as described in question No. 2 above, there is no need of an instrument duly registered as prescribed in section 123 of the Transfer of Property Act as well as under section 17 of the Indian Registration Act, 1908?" Heard learned counsel for the parties and perused the record. It appears from the record that the assessee founded a public charitable trust in the name of Chandra Kanta Jawahar Lal Public Charitable Trust, Kanpur, by means of a registered deed on April 18, 1976, and she settled Rs. 1,100 on the trust. Eight persons were appointed as trustees of the trust. The trust came into existence on account of the deed of declaration which was executed on April 18, 1976. The objects of the trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andrakanta Rohatgi, Kanpur. The civil court has granted a declaration under the aforesaid decree that the aforesaid property is in the ownership of the said trust. The objection by the Revenue is that the property in question cannot be treated as trust property in view of the fact that the declaration in writing dated April 7,1977, which dedicated the property in question to the trust is unregistered. Elaborating the argument learned standing counsel submitted that in view of the provision of section 17 of the Registration Act as well as of the Trusts Act, the document compulsorily required registration under the aforesaid two statutes. The failure on the part of the assessee to execute a registered document in favour of the trust would amount that the assessee continues to be the legal owner of the property in question and in this view of the matter the Income-tax Officer was fully justified in adding the income from the said property in the hands of the assessee. In contra, learned counsel for the assessee submitted that the trust was already created by means of a registered deed dated April 18, 1976. The creation of the said trust is not in dispute. It is also not in dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shrinathji on the ground that no gift or trust deed had been executed by the settlor in that behalf. The above view has been reiterated by the apex court on numerous occasions. Recently in the case of Kuldip Chand v. Advocate-General to Government of H.P. [2003] 5 SCC 46 it has been held by the apex court that a Hindu is entitled to dedicate his property for religious and charitable purposes and for this even no instrument in writing is necessary. A Hindu, however, in the event, he wishes to establish a charitable institution must express his purpose and endow it. Such purpose must clearly be specified. For the purposes of creating an endowment, what is necessary is a clear and unequivocal manifestation of intention to create a trust and vesting thereof in the donor and another as trustees. The subject of endowment however must be certain. Dedication of property either may be complete or partial. When such dedication is complete a public trust is created in contradistinction to a partial dedication which would only create a charity. A dedication for public purposes and for the benefit of the general public would involve complete cessation of ownership on the part of the founder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a religious and charitable endowment a registered deed is a sine qua non. It has been established beyond doubt that such an endowment for public charitable purposes can be created orally. What is required is that there should be sufficient evidence to establish complete relinguishment by the settlor. A dedication of property by a Hindu renouncing his/her entire right, title or interest in the property for religious charitable purposes for the benefit of public at large or for part of it is sufficient to create such endowment. Reverting to the facts of the present case we find that the Tribunal has recorded a finding that the assessee dedicated the property in question to the trust on April 1, 1977. Subsequently, on April 7, 1977, she executed a deed of declaration to avoid any future dispute or conflict in the matter. The dedication of the property by the assessee on April 1, 1977, has not been seriously disputed by the Department. The only objection to such dedication is with regard to non-registration of the deed of declaration dated April 7, 1977. We are of the view that the dedication of the property on April 1, 1977, is fully established on record. It is supported by clinchin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the assets and liabilities of the firm to the trust within the meaning of section 34(3)(b) read with section 155(5) of the Act. The next case, which according to standing counsel is the sheet anchor of his argument is CIT v. Podar Cement Pvt. Ltd. [1997] 226 ITR 625 (SC). Strong reliance was placed by learned standing counsel on the aforesaid judgment of the Supreme Court and it was contended that the assessee continues to be the owner of the property in question within the meaning of section 22 of the Act and, as such, income of the property is liable to be taxed in her hands. The said contention of learned standing counsel is misconceived and is liable to be rejected for reasons more than one. In that case the apex court was called upon to interpret the meaning of word "owner" in the context of section 22 of the Act. In this connection the apex court has held that since the focal point of tax under section 22 is to tax income from the house property, the real intention is to tax income of house property in the hands of such person who is the beneficiary or the person who is receiving income from such property. The apex court has considered the concept of ownership as given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, failing which there is no transfer. Reliance has been placed upon the judgment of the Supreme Court in the case of CIT v. Sirehmal Nawalakha [2001] 251 ITR 108. The apex court while interpreting section 4 of the Gift-tax Act, 1958, has held that there can be no doubt that certain transaction may not be regarded as a gift for the purposes of the Transfer of Property Act but would fall within the ambit of the expression "gift" by virtue of section 4 of the Gift-tax Act. In this case the assessee who was the owner of the immovable property by a declaration sought to give a gift of certain out-houses attached to a building to his wife. The declaration which was made was not registered. The said gift was not treated as a valid gift by the Department but was so held by the High Court. Reversing the judgment of the High Court the apex court observed that what is important is that there is to be a valid transfer of property and whether the transfer amounts to a gift or not would bring into question the applicability of the provisions of the Gift-tax Act. Meaning thereby it was held by the Supreme Court that immovable property can be gifted only in accordance with section 122 of the Tra ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
