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TMI Blog1942 (4) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... Radha Prasad Singh Bahadur, made a will by which he appointed his wife and the Dewan of the estate executrix and executor thereof. At the date of this will the Maharaja had no son, and in the event of no sons being born to him he empowered his wife, if she survived him, to adopt a son. He left the property subject to certain legacies to his wife for life with the remainder to the son to be adopted by her. The wife survived the Maharaja and purported to adopt a son; but on her death this adoption was challenged by the nearest reversioner who claimed the estate on failure of the will. The question was litigated and was compromised. By the compromise decree the adoption was held to be invalid and the child who had been so adopted was given a large sum of money. The reversioners, who challenged the adoption, therefore, obtained possession of the estate. The present assessee is a son of the reversioner who so acquired possession of the estate. The present assessee, therefore, does not hold the property under the terms of the will. It appears that the late Maharaja Sir Radha Prasad Sungh and his predecessor had from time to time established various religious, charitable and educational ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xing authorities have refused to exempt from taxation the actual sum spent by the Maharaja on these institution or indeed any sum expended on such institutions . These are the facts which give rise to the first question set out in the case. It will be convenient to deal with these questions separately, and I will first deal with the question whether the assessee is entitled to exemption from taxation on the amount spent by him in accordance with the terms of the will. Exemption from taxation is claimed under Section 8, Bihar Agricultural Income Tax Act, 1938, which is in these terms :- " (1) Where the assessee is a trustee and the trust under which he holds is a trust, created before the commencement of this Act for public purpose of a charitable or religious nature, any income applied or finally set apart for application, to any public purpose of a charitable or religious nature in accordance with the terms of the trust subject to which he holds the property from which such agricultural income is derived shall not be included in the total agricultural income of such assessee. (2) In this section purposes of a charitable nature include relief of the poor, education, medi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be assailed. According to the definition of the Indian Trusts Act, a trust is an obligation annexed to the ownership of the property, and in my view paragraph 21 of the will does not annex any obligation to the ownership of the Durmraon Raj or to any portion thereof. Had the income from any specific property been set aside for the maintenance of the charitable and religious institutions referred to in the will, it could be said that an obligation to maintain such institutions was annexed to the ownership of that particular property. If this paragraph creates a trust, then it must be held that the owner of the Durmraon Raj for the time being holds the whole of the Raj property in trust to maintain and support these institutions; but in my view such a construction cannot be placed on the will. The other paragraphs of the will make it clear that the devises were intended to make the property absolutely, and apart from paragraph 21 there is no suggestion that they were to take the property as trust property. It is true that a grantor or a testator need not use the word "trust" to create a valid trust; but in order to create such trust words must be used which make it clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a successor to the nearest reversioner on failure of the provisions of the will. Holding as I do that the will does not create a trust, it is unnecessary to consider further these questions raised by the learned Advocate-General. For the reason which I have given, I would answer the first question submitted in the negative. The second question as to what is meant by "rent." The question arises in this way. In the return in question made by the assessee be claimed a deduction of ₹ 1, 73,911-1-7 on account of collection charges under Section 6 (c), Bihar Agricultural Income Tax Act, which provides that a sum equal to 12 1/2 percent. of the total amount of the rent which accrued due in the previous year may be deducted in respect of the charges for collecting the same. The assessee had claimed a deduction of 12 1/2 percent. not only on the rent which had accrued due in the previous year but also on interest which had accrued on such rent. The Income Tax Authorities allowed a deduction of 12 1/2 percent. on the actual amount of rent which fell due in the previous year and disallowed and percentage on the interest thereon. Accordingly, ₹ 1,66,508 was allowed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 54, Bengal Tenancy Act, and carries interest under Section 67 of the Act. The money payable as interest, therefore, became part of the rent, and the Legislature could never have intendant in Section 169 (c) to exclude interest accruing upon the rent and to put the decree-holder under the necessity of bringing a fresh suit for interest only. Section 169 (1) (c), Bihar Tenancy Act, provides that if there is a balance after payment to the decree-holder of the costs and the decretal amount there shall be paid to the decree-holder therefrom any rent which may have fallen due to him in respect of the tenure or holding between the institution of the suit and the date of the confirmation of the sale. The Calcutta Bench decision to which I have referred held that the decree-holder was entitled under Section 169 (c) not only to the actual rent which had fallen due to him between the institution of the suit and the date of the confirmation of the sale but also interest upon such rent as provided by the statute. Mr. Das contended that this decision is a clear authority for the proposition that rent does include interest. It must be observed that there is no definition of "rent& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of an article is not paid on due date that the price increase because of the provision as to payment of interest? In my view, it cannot. Neither can it be said that the rent of a holding increases by reason of the failure of the tenant to pay his due at the proper time. If the ordinary definition of "rent" be accepted, it is, in my view, clear that it does not include any interest which a contract or statute may provide in case of non-payment on due date. Even if the word"rent" used in the Agricultural Income Tax Act, be given the same meaning as that given to it in the Bihar Tenancy Act, yet the word would not, in my view, include interest. For the purpose of the Bihar Tenancy Act"rent" is defined in Section 3, sub-section (5), in these terms :- "Rent means whatever is lawfully payable or deliverable in money or kind by a tenant to his landlord on account of the use or occupation of the land held by the tenant : In Section 53 to 67, both inclusive, Sections 72 to 75, both inclusive Chapter XII, Chapter XIII and Schedule 3 of this Act, rent includes also money recoverable under any enactment for the time being in force as if it was rent; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest on arrears of rent realised under Section 67, Bengal Tenancy Act, was not the agricultural income within the meaning of section 2 (1) (a), Indian Income Tax Act. It is neither rent nor revenue derived from land. In Bihar it has been held that interest on rent may be revenue derived form land; but in my view there is no doubt whatsoever as to the correctness of the decision that interest on arrears of rent is not rent. The case of Ram Lal Das v. Bandiram Mukhopadhya (1919) 26 CWN 511 relied upon by the assessee is really not an authority for the proposition that rent includes interest. It merely held that in Section 169, Clause (c), the word rent must include interest, and it is to be observed that the Bench in arriving at the decision it did, placed reliance upon the Section 161, Clause (c), which provided that the terms arrear and arrears of the rent shall be deemed to include interest decree under Section 67. In view, the word rent appearing in Section 6 (c), Bihar Agricultural Income Tax Act, means rent only and does not include interest, and, therefore, an assessee is only entitled to deduct in respect of collection charges twelve and half per cent of the total amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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