9911796707
TMI Blog1982 (5) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... as " the respondent Late Sm. Akshay Kumari Devi, wife of late Arun Kumar Tagore had received several house properties from her husband by way of legacy in the year 1914 when the latter died. Late Sm. Akshay Kumari Devi died issue less on 14th November, 1960. She had not adopted any child and during her lifetime by a registered deed executed in the year 1934, appointed her two brothers and their three sons as shebaits of a private deity Sri Sri Saradeswar Siva Linga. It was declared in the said deed that all her properties would be vested in the said deity on her demise. In view of the questions raised in this case )and the contentions urged, it would be necessary to refer to the relevant portion of the said deed. After reciting about the death of her husband, the sole settlor went on to observe as follows : " As a result the responsibility to give effect to the desire of my husband and make suitable arrangement in respect of everything left behind by him is being vested on me only. My respected husband's utmost desire was to establish a temple of Iswar Sarada Sundari Devi at Iswar Kashidham in the name of his grandmother and instal Siva Linga but due to paucity of funds I could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pathuriaghata and defraying such other necessary expenses or after defraying necessary expenses for the maintenance of the estate, shall, out of the profit of the said estate defray your necessary expenses and household expenses, and out of the balance amount shall perform the deva seva of the debutter of the aforesaid Iswar Saradeswar Siva Linga installed at Iswar Kashidham feed the Brahmins and guests and if funds permit, shall establish Annachatra, etc., and if capable, shall perform such other acts of public charity or any other charitable acts. But, if any sum becomes surplus even after the same, then you shall keep the same in deposit in bank for meeting necessary future expenses of the said debutter, i. e., expenses for payment of land tax, etc., and shall make provisions for payment of debts. To that no plea or objection by the relatives or heirs of my husband shall be tenable as per provisions of the aforesaid Will executed by my husband and according to provisions of this, you shall be competent to borrow money for meeting necessary expenses for maintenance of the estate, viz., for payment of taxes, etc., and for the benefit of the future debutter estate or for any law s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, therefore, proceed on the assumption that under the registered deed for vesting the properties in the deity the shebaits were bound to spend a portion of the income from the property on the pujas of the deity and that during the previous year this amount is Rs. 15,014. 7. The question that requires consideration in this appeal, therefore, is a very short one. Whether the aforesaid stipulation amounts to art annual charge on the property because it is only then that the annual charge can be allowed as a deduction against the property income. In this connection I would like to observe that there is no dispute regarding the principles relating to debutter properties, their legal character and incidence as propounded by the learned commentator, B. K. Mukherjea, in his commentary referred to by the counsel for the assessee. There is also no serious dispute that unless the assessee's claim falls within section 24(1)(iv), the assessee will not be entitled to succeed. I have, therefore, to consider whether or not the assessee's case falls within that clause." 8. So far as the Allahabad High Court decision is concerned it appears that on the face of it the ratio is against the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nection, we may appropriately refer to the relevant provisions of s. 24(1)(iv). Section 24 provides for deduction from income from house property. Sub-section (1) of s. 24 stipulated that income chargeable under the head " Income from house property " should be computed after making certain deductions. Sub-section (1)(iv) of s. 24 provides as follows: " (iv) where the property is subject to an annual charge (not being charge created by the assessee voluntarily or a capital charge), the amount of such charge." The expression " not being a charge created by the assessee voluntarily Or a capital charge " had been substituted with effect from 1st April, 1969. We ire not concerned in the relevant assessment year with the said addition made with effect from 1st April, 1969, as the assessment year involved is prior thereto. It appears to us to be well settled that any expenditure incurred by an owner on itself or any obligation of the owner to incur certain expenditure on itself or himself could not form part of any annual charge of the property because the assessee is the owner of the property himself or itself. If any authority is needed for this proposition, we may refer to the obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he I.T. Act, 1961. In this connection, our attention was drawn to some of the judicial decisions to which we may refer. Reliance was placed on the decision of the Supreme Court in the case of New Piece Goods Bazar Co. Ltd. v. CIT [1950] 18 ITR 516. In that case the Supreme Court observed, in computing an income from property under s. 9 of the Indian I.T. Act, 1922, which was in similar terms with s. 24 of the present Act, an assessee was entitled to deduct under s. 9(1)(iv) the Municipal Property Tax paid under the City of Bombay Municipal Act, 1888, and the urban immovable property tax paid under the Bombay Finance Act, 1932, inasmuch as, according to the Supreme Court, these taxes came within the expression " annual charge not being a capital charge ". The words " capital charge ", the Supreme Court noted, in sub-cl. (1) of s. 9(1)(iv) meant the charge created for capital sum, that is to say, a charge to secure the discharge of a liability of a capital nature and the words " annual charge " in the 2nd sub-clause meant a charge to secure an annual liability. There, the Supreme Court referred to the observations in the case of Moss Empires Ltd. v. IRC [1937] AC 785 ; [1938] 6 ITR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee before it could become his income. The Division Bench of this court noted that the "annual payment" as used in the taxing statutes should be taken to mean payments in whatever kind of instalments paid, made every year in discharge of a liability incident to that year, if it has to be made during more than one year, whether consecutively or otherwise. A payment was annual if it had the quality of recurrence in different years, although it might not be in every one of succession of years. It was held, it was not necessary that its quantum should be fixed by reference to a whole year. This court noted that the expression " charge " used in s. 9(1)(iv) meant payment and not more security. What this section provided for was a deduction of certain sums out of the assessee's income after the income had become his. The broad ground that where there was only an application of the income, there could be no claim to exemption from tax or deduction in the computation of the income was, therefore, not available as an argument against literal construction of s. 9(1)(iv) which seems to be same for s. 24(1)(iv) of the 1961 Act. In a taxing statute, there was no room, this court noted, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meant and also, to a certain extent, what was meant by an 'annual charge Capital charge ' they held, meant charge created to secure the discharge of a liability of a capital nature; and an 'annual charge', they said, meant a charge to secure an annual liability. We are not concerned, in view of what I have already said, with the true meaning of the expression ' capital charge' in the present case. With regard to the expression 'annual charge' all that the Supreme Court actually decided appears to have been that a charge, in order to be an annual charge', had to be a charge, in respect of a payment to be made annually or to secure the discharge of an annual liability and that provided a charge was of that nature, it was, although of a variable or contingent character, none the less an ' annual charge'. The direct decision in the case does not appear to go beyond excluding the view that if a charge was of a variable character, that is to say, liable to be increased or reduced or of the nature of a contingent charge, it would not be an annual charge, as contemplated by section 9(1)(iv). What, however, ' payment to be made annually' or 'an annual liability' really meant, namely, the po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : " The payments might not require to be made every year, because the Will directed them to be made only if the income available did not suffice to keep the sister in her customary comfort. Nevertheless, the court held that inasmuch as the payments contemplated were of such nature that they could be made and might have to be made recurrently, although it might not be consecutively in different years, they were annual payments." Chief justice Chakravartti then referred to the actual terms of r. l(a) of Case III of Sch. D and thereafter expressed the following view (p. 559): "I would only add here that the word 'charge' as used in section 9(1)(iv), must mean payment and not security. The relevant words of the section are : 'where the property is subjected to an annual charge ...... the amount of such charge ' Clearly, the phrase 'the amount of such a charge' indicates that the word ' charge ' used in the earlier phrase also means payment. It would be singularly inappropriate to use the word 'charge' if security was intended, for 'annual security' would be wholly meaningless. That the meaning is 'payment' would also seem to be clear from the explanation appearing after clause ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd transportation. The deity was the legal owner of the whole estate and liable to be assessed as such. The directions in the Will, the Supreme Court noted, did not divert the income at source but merely directed the shebaits to apply the income received from the debutter properties for the specified purposes and, therefore, the income of the deity was not restricted to the amounts spent by the shebaits for the daily puja and religious ceremonies connected with the deity and the amount spent for the remuneration of the shebaits, payment of allowances to the widows of shebaits, expenditure in maintaining horses, carriages and cars and repairs, could be included in the income of the assessee. The surplus income of the estate after defraying expenses were not held in trust for charitable purposes and were not exempt from taxation under s. 4(3)(i) of the Indian I.T. Act, 1922, and the amounts spent for performing sraddha and other ceremonies for the spiritual benefit of the testator were not diverted by an overriding title. The Supreme Court was not concerned with the question, as it appears to be the case, on the construction of the deed, in the instant case. Our attention was also dr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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