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TMI Blog1946 (8) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellate Tribunal as follows:- 'In the circumstances of the case is the income of the trust properties in question in the hands of the trustee liable to be assessed at the maximum rate under the first proviso to Section 41(1) of the Income- tax Act?" And in Miscellaneous Judicial Case No. 41 of 1944 which relates to three applications by the Commissioner and numbered 66 R.A. Nos. 18, 19 and 20 of 1943-44 the additional question which has been referred to us is:- "Whether the sums spent by trustees on charitable purposes though the purposes are not specifically mentioned in the trust deed, are rightly excluded under Section 4(3)(i) of the Income-tax Act for the purposes of determining the income liable to be taxed.&qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iciaries had nothing to do with the income or the properties, and the trustee virtually was made the owner, disponer and custodian of the properties and their income, the joint assessment was valid by treating the deities as an 'association of persons." He further took the view that the Income-tax Officer should have levied the tax at the maximum rate by virtue of the proviso to Section 41, sub-clause (1), of the Income-tax Act. The Assistant Commissioner in agreement with the Income-tax Officer refused to give a deduction with regard to certain expenses which were claimed as being spent for charitable purposes for the benefit of the public. The assessee then moved the Appellate Tribunal who came to this conclusion: "The idol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges, cost of litigation and for the preservation and improvement of the trust properties and in the next place pay to the shebait or trustee for the time being as his commission or remuneration and then he is directed to apply and expend the balance of the rents, issues and profits towards the performance of the daily worship of the idol and other usual observances. He also draws attention to the other terms in these deeds which give full discretion to the trustee as to the manner and extent in which he will spend the whole or part of the income of a particular year. He, therefore, submitted that the trustee was the owner of the income as a whole of the properties in each group. The learned standing counsel also suggested in the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s aforesaid. These express words support the view taken by the Tribunal that the deities are the owners of the properties. The Tribunal have also correctly applied the principle of law laid down in Jogeshwar Narain Deo v. Ram Chandra Dutt [1896] I.L.R. 23 Cal. 670; 23 I.A. 37. It must, therefore, be held that the deities in each separate group, should have been assessed separately as their shares are well defined in law. The facts as regards the second question must now be stated. It is provided in the first part of paragraph 7 of the deeds that "the trustee or shebait shall have full power and authority to apply the additional income derived therefrom to increase the scale of the expenditure or of any one or more of the items of exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and must be accepted. The terms of the deeds themselves should indicate whether any portion of the trust income enures for the benefit of the public within the meaning of Section 4, sub-clause (3), of the Income-tax Act. The only provision in the deeds to which our attention is drawn on behalf of the assessee is to be found in paragraph 7 which I have quoted above. These provisions are not only vague and indefinite but do not contain any direction that any part of the income should or may be spent on specific public charitable purposes. Even though the trustee in a particular year may rightly spend part of the income on public charitable objects, that would amount merely to an application of a part of the income but would not entitle the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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