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TMI Blog1985 (8) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... shwardas Birla, Shri Brajmohan Birla and Shri Laxmi Niwas Birla were made the trustees of the Santati Kosh. Some time in May, 1943, M/s. Ujjain General Trading Society Ltd. (hereinafter referred to as " the Ujjain Company ") donated 25,000 shares of Jiyajeerao Cotton Mills Ltd. to the Santati Kosh. The said shares were subsequently divided into 3,75,000 shares and some shares of other companies were also received by way of dividends from Jiyajeerao Cotton Mills Ltd. by the Santati Kosh. On March 13, 1964, Birla Jankalyan Trust was created and the Santati Kosh Trust transferred all the shares of Jiyajeerao Cotton Mills Ltd. to the Jankalyan Trust for utilisation for the objects and purposes of that trust. A resolution was passed to this effect on March 23, 1964, by the board of trustees of the Santati Kosh. The trustees also wrote a letter to the Ujjain Company seeking their confirmation in respect of the decision of Santati Kosh Trust to make a donation of the shares of Jiyajeerao Cotton Mills Ltd. to the Jankalyan Trust for the utilisation thereof for the objects and purposes of the latter trust. A letter was also addressed by the trustees to the settlor of the Santati Kosh, Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the income of the assessee, Santati Kosh, by his order of assessment dated March 29, 1973. An appeal was preferred by the assessee, Santati Kosh, before the Appellate Assistant Commissioner of Income-tax, which was partly allowed and it was held that the assessee, Santati Kosh, was entitled to transfer portion of the trust corpus and income by making a gift of the same to the Jankalyan Trust and that the transfer of the shares of Jiyajeerao Cotton Mills Ltd. by the assessee, Santati Kosh, to the Jankalyan Trust was valid. The appellate authority held that the transfer of the said shares was not void, but was perfectly valid and, as such, the dividend income from the shares was deleted from the assessment of the assessee, Santati Kosh. As regards the expenses, the Appellate Assistant Commissioner agreed with the Income-tax Officer that the entire expenditure was not incurred by the assessee wholly and exclusively for the purpose of earning the income of the assessee, Santati Kosh, and that part of the expenditure had already been allowed by the Income-tax Officer, which constitute reasonable allocation under the provisions of section 57(iii) of the Act. As such, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court: " 1. Whether, on the facts and in the circumstances of the case and on a proper construction of the deed of settlement dated May 20, 1943, the trustees of Raja Baldeodas Birla Santati Kosh could make donation of 3,75,000 ordinary shares in Jiyajeerao Cotton Mills Ltd. and other shares on March 30, 1964, to Birla Jankalyan Trust, a public charitable trust for its objects ? 2. Whether, on the facts and in the circumstances of the case and on a proper interpretation of the deed of settlement dated May 20, 1943, the Tribunal was right in holding that the consent of the minor beneficiaries and/or competent civil court on their behalf was necessary for making donation of the shares in Jiyajeerao Cotton Mills Ltd. and other shares to the trustees of Birla Jankalyan Trust ? 3. Whether, on the facts and in the circumstances of the case and on a proper construction of the deed of settlement dated May 20, 1943, the transfer of the aforesaid shares by the trustees of Raja Baldeodas Birla Santati Kosh is valid or void or voidable ? 4. Whether, on the facts and in the circumstances of the case, even assuming that the transfer of the said shares was void the income from the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1882, the Tribunal was right in holding that the donation of the shares in question to the trustees of Birla Jankalyan Trust was void notwithstanding that the said donation was consented to and/or acquiesced in by the concerned beneficiaries ? 6. Whether, on the facts and in the circumstances of the case, the Tribunal applied the correct principles while interpreting the deed of settlement dated May 20, 1943, the provision of the Indian Trusts Act, 1882, the Indian Contract Act, 1872 and the Transfer of Property Act, 1882 ? 7. Whether, on the facts and in the circumstances of the case, the findings of the Tribunal that there was nothing to establish that in earlier years all the facts were brought to the notice of the Department and that no enquiry was made by the Department regarding the genuineness of the transfers of the said shares are perverse and/or were arrived at by ignoring materials and evidence on record ? 8. Whether, on the facts and in the circumstances of the case, the finding of the Tribunal that no material was brought on record to show that the finding of the Appellate Assistant Commissioner in not allowing the entire claim of expenses was incorrect, pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, Santati Kosh, the Appellate Tribunal was justified in coming to the conclusion that there was no evidence on record to show that the transfer of the said shares was made by the Ujjain Company with the direction that they shall be used for public and charitable purposes. However, it is not denied that the resolution of the assessee, Santati Kosh, dated March 23, 1964, and the correspondence between the Ujjain Company and the assessee, Santati Kosh, thereafter, was placed on the record of the assessee and the same has not been considered by the Appellate Tribunal before arriving at the aforesaid conclusion regarding the absence of purpose or direction for which the said shares were transferred by the Ujjain Company to the assessee, Santati Kosh. We are, therefore, of the opinion that the Appellate Tribunal should be directed to submit an additional statement of the case referring a question in this regard, which we shall indicate later on, to this court for its opinion. As regards the third question suggested by learned counsel for the assessee, Santati Kosh, it was argued by him that no question was ever raised before any of the Income-tax Authorities or even before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy been referred and, as such, the Tribunal cannot be directed to refer a new question in this respect. Questions Nos. 5 and 6 have not been pressed by learned counsel for the assessee and, as such, we need not consider those questions. As regards question No. 7, it may be observed that principles of res judicata are not relevant to the assessment during the subsequent years and, as such, the finding of the Tribunal in respect of earlier years or subsequent years regarding the validity or genuineness of the transfer of the said shares will be of no avail to either party in respect of the assessment during the relevant assessment year. As such, whether all the facts were brought to the notice of the Department and that no enquiry was made by the Department regarding the genuineness of the transfer of the said shares are not relevant to the enquiry so far as it relates to the assessment of the assessee, Santati Kosh. Lastly, it was argued by learned counsel for the assessee that the finding arrived at by the Tribunal on the question of not allowing the entire claim of expenses was without considering the evidence on the record. Learned counsel for the assessee referred to us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal on this question of expenses constitutes a finding of fact and no question of law arises. It cannot be said that the said finding had been arrived at by the Tribunal ignoring the evidence on record or is otherwise perverse or incorrect in law. We, therefore, decline to refer question No. 8 mentioned above. In the result, we allow the application under section 256(2) of the Income-tax Act, 1961, in part and direct the Income-tax Appellate Tribunal to state the case and refer the following two questions of law arising out of its order dated September 23, 1976, for our opinion : " 1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was not justified in holding that the basis and directions and purposes for which 25,000 ordinary shares in Jiyajeerao Cotton Mills Ltd. were transferred by the Ujjain General Trading Society Ltd. to the trustees of Raja Baldeodas Birla Santati Kosh in May, 1943, has not been proved and that the said finding was arrived at by the Appellate Tribunal ignoring relevant evidence and/or material on record ? 2. Whether, on the facts and in the circumstances of the case, the finding of the Tribunal that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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