1968-VIL-210-CAL-DT

Equivalent Citation: [1969] 71 ITR 696

CALCUTTA HIGH COURT

Date: 06.07.1968

SMT. GANESHI DEVI RAMI DEVI CHARITY TRUST

Vs

COMMISSIONER OF INCOME-TAX, WEST BENGAL.

BENCH

Judge(s)  : SANKAR PRASAD MITRA., K. L. CHATTERJEE.

JUDGMENT

CHATTERJEE J.-The two questions which have been referred to this court are as follows :

" (1) Whether, on a true construction of the deed of trust dated 15th September, 1941, the trust in question was a public religious and charitable trust and as such the income of the trust is exempt under section 4(3)(i) of the Income-tax Act, 1922 ?

(2) If the answer to question No. 1 is in the negative, whether the Tribunal was right in holding that section 41 of the Indian Income-tax Act, 1922, was applicable and the assessment of tax was to be made at the maximum rate? "

The first point refers to the deed itself and, therefore, let me refer to the deed which is printed at page 20 of the paper-book. The deed provides as follows :

" To Have And to Hold the said premises set out in the schedule hereunder written unto the said Protapmull Bagaria, Ranglal Bagaria, Gangadhar Bagaria, Indra Chand Bagaria and Onkarmull Jhoonjhoonwalla upon the trusts and for the purposes hereinafter mentioned, viz :

(a) The name of the trust hereby created shall be styled Sreemati Ganeshi Debi Sreemati Rami Debi Charitable Trust'....

(c) The trustees shall out of the income to be derived from the trust property duly carry on the worship of the said deities Sri Rami Sita and Lakshman installed at Sujangarh confirmed (sic) by the parties hereto of the Second Part and shall spend Rs. 250 (rupees two hundred and fifty) monthly and every month for the daily and periodical pujas and shebas of the said deities Shri Ranm Sita and Lakshman and sadabrata and shall spend Rs. 25 (rupees twenty-five) monthly and every month for upkeep of the Dharamsala called Seth Sujanmull Protapmull Bagaria Dharamsala at Taura and said Piyau and Kund at Sujangarh Bazar and shall spend Rs. 125 (rupees one hundred and twenty-five) monthly and every month for the Sanskrit Patasala known as Seth Sujanmull Protapmull Bagaria Sanskrit Patasala at Sujangarh.

(d) The trusees shall in the next place pay an annuity of Rs. 50 to Baikishan Devi and a sum of Rs. 25 to Baimanbhari every month during the term of their natural life.

(e) The trustees shall pay a sum in course of any month not exceeding Rs. 50 to each of the settlors to be spent by them or her for such charitable and religious purposes as they or she may desire.

(f) The amount remaining as balance after meeting the abovementioned outgoings and expenses and annuities and allowances as aforesaid shall be hold by the trustees as reserve fund to be called Ganeshi Debi Rami Debi Charity Trust Reserve.

(g) In case the income of the trust property at any time be found insufficient to meet the outgoings and expenses hereinbefore provided it shall be lawful for the trustees to apply the said reserve fund known as 'The Ganeshi Debi Rami Debi Charity Trust Reserve' for the purpose of meeting such deficiency and if at any time the reserve fund in the hands of the trustees be found by the trustees as insufficient to meet the outgoings charges and expenses and payment directed to be made by these presents then and in that case all charges and expenses for performance of Sheba as mentioned in clause (c) shall abate proportionately provided that before touching the said reserve fund the trustees are to take the consent in writing from the settlors.

(h) The trustees shall at their discretion be at liberty to spend out of the said reserve fund known as 'The Ganeshi Debi Rami Debi Charity Trust Reserve' such sums of money from time to time for distribution of alms to the poor and contribution to hospitals or other religious or' educational institutions as they shall think fit with consent of the settlors and after the death of the settlors with the consent of the nominees of the settlors as hereinafter appointed."

This trust deed was considered by the Income-tax Officer and it was considered not to be a public religious and charitable trust.

Regarding the Sanskrit patasala the objection of the Income-tax Officer was that all the students belonged to one particular community, namely, Brahmin. Therefore, it would not be for the benefit of the public.

With regard to Dharamsala his comment was that the building was dilapidated and therefore it could hardly be called a dharamsala. With regard to the temple of Rama, Sita and Lakshman the Income-tax Officer found that there was no managing committee. It was pointed out that sadhus and Brahmins were given food and refreshment after pujas. This, according to the Income-tax Officer, was not a public charitable purpose recognised by law. According to him, in order to be a public religious and charitable trust, the larger section of at least of the same religion to which the settlors belong must have a right to worship and they must have a right to take food and refreshment after the daily puja.

With regard to the provisions regarding the two females, it was stated before him that nothing was paid. According to the Income-tax Officer, it was not for public charitable purposes.

There was an appeal to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner has considered the relevant provisions. He finds that the temple was situated in the " bazar " area and free distribution of food is daily made to the poor and the mendicants. He has considered the purposes of the trust. He has said that distribution of alms to the poor and Brahmins is an usual practice found in all private temples and, therefore, this cannot be considered to be any purpose which would come within the meaning of public charitable purpose.

He considered that piyau and kund would be in the nature of public charity but they could not find out what were the money spent for them.

With regard to dharamsala and the Sanskrit patasala the first appellate authority was of opinion that the parties were unable to produce any details regarding the rules for the use of dharamsala and the rules relating to education in the patasala.

The deities have been considered to be private deities and the puja is managed by a particular body of persons who would all belong to the settlors' family and the public have no control in the management of the pujas or in the worship. Therefore, the Appellate Assistant Commissioner has also been of the opinion that the said deed did not constitute a deed of public religious charitable trust.

There was an appeal to the Tribunal. The Tribunal also refers to the aforesaid clauses of the deed and then considers certain decisions but ultimately for the reasons stated in the order of the Income-tax Officer and of the Assistant Commissioner of Income-tax agreed that the said ; deed did not constitute a deed of public religious and charitable trust. The other question that has been considered is whether the maximum rate as under section 41 should be given or not and all the authorities below agreed that it should be the maximum rate. Therefore, this reference has been made on the two points.

The first question for consideration is whether the trust deed was for public religious and charitable purposes. There is no doubt that the control of the trust property is not left to the members of the public. There is no doubt that the control of the trust fund is left to the members of the family. But even though the control is with the members of the family and even though there is no control by the public, the question is whether the trust was created for religious and charitable purposes which would " enure to the benefit of the public ".

The first matter to consider is whether the deities which were installed viz., Rama, Sita and Lakshman, for the first time by the husband of the settlor were the family deities. " Family deities " ordinarily mean deities installed by members of the family in a part of their residential house for being worshipped by the members of the family only from generation to generation, but the said deities were installed for the first time by the husband of each of the settlors ; they were not installed in any part of the family residential house but were installed in a bazar. There is no restriction that pujas will be offered by members of the family only. A sum of Rs. 250 was directed to be spent for the " pujas ". A question arises, after the pujas to whom would the prasad (offering of food) go ? There is no specific provision in it that the prasad would go to the general public. There is also no specific provision that the members of the settlor's family would get the prasad (food) after it is offered to the deities. But there is a provision for sadabrata and there has been no separate fund for it. Sadabrata means offering of food to the poor ; the mendicants and any person who may come to the temple for getting the prasad. Members of the family are not debarred from taking food but anybody and everybody may come and take it. As a matter of fact, it has been found that it is the poor people of the locality and the mendicants and, some Brahmins who take it. But, apart from the finding of fact, the term is that the entirety of the food which after offering becomes prasad is to be distributed amongst persons who are ready to accept it. We cannot say that this food was restricted to be used for any private purpose by the settlor. On the other hand, the installation of the deities and the provision for sadabrata imply that the settlor intended that the entire benefit of the amount that is provided for " pujas " including food would go to the public.

The next matter relates to dharamsala. Dharamsala by the word itself does not mean a residence for one or more members of the family of the settlor. The word itself implies that persons who want to stay there would be allowed to stay there. It does not mean a residence for any or any group of defined persons but that any members of the public may come and may choose to reside there. So, even though it has not been specifically stated that the dharamsala would be used by the members of the public the implication is that the dharamsala would enure to the benefit of the public.

It has been urged by Mr. Mookherji for the department that the public has not been expressly granted any right either to reside in the dharamasala or to offer pujas to the deities or to partake in the distribution of food after worship. The public is not a juridical person ; a fluctuating body of persons is not a corporate body : vide Raja Braja Sundar Deb v. Moni Behara where it was held :

" . . . unless the defendants-fishermen form a corporate body, or it is found that a trust was created for their benefit, such a body of persons could acquire no right by the doctrine of lost grant."

Hence, we cannot expect an express grant of any right to the public but we are to find whether the trust in question was created for their benefit.

Clause (c) shows that certain deities, which were not the family deities of the settlors and which were installed for the first time by the respective husbands of the settlors, would be worshipped. These deities were installed not in any part of the family residential house but in a " bazar " area where it would be accessible to the public. It provided for sadabrata, any food that was offered to the deities would not be restricted to be consumed by the settlors or the members of the settlors' family, but it would be sadabrata or, in other words, it would be distributed to the members of the public who may happen to come and take it. They may be mendicants, they may be poor people, they may be bazar people but they need not necessarily be the members of the family.

A dharamsala is always meant for the public. The Sanskrit patasala is open to the public. There is no restriction. If Brahmin boys read there, still it would be for the public care. The absence of rules and registers of the school may be a matter of application of the fund but is not a matter relevant for the construction of the deed. Hence, no part of clause (c) can be said to enure to the benefit of the settlors or the members of the settlors' family. The intention is clear that members of the public would be benefited by it.

So far as piyau and kund are concerned, all the authorities below have agreed that they were for public purpose.

The next clause (d) relating to the sums of money paid to certain ladies have been argued to be for the benefit of the public. We find no substance in that argument. It is further urged, as it was never paid, this clause need not be considered. I do not think we can overlook the said clause, because we have to construe the deed. But, we cannot say that clause (d) would serve any public purpose.

Clause (e) directs that the settlors would spend Rs. 50 each for charitable and religious purposes. The money would be given for that purpose. If they do not spend in that manner in a particular year, that may be breach of confidence and for such breach consequence as under the Income-tax Act would follow immediately. But clause (e) referred expressly to religious and charitable purposes. The balance will go to a reserve fund ; under clause (f) that balance would be spent only for " hospitals, other religious or educational institutions ". Hospitals are meant for the public. " Religious and educational institutions " by themselves refer to institutions intended for the public. There is nothing in the context which would show that these institutions would be reserved for the members of the family. Unless they are so reserved by express words, the implication from the character of the institution would be that they would be for the benefit of the public. Mr. Mukherjee, on behalf of the department, has urged that even then such spending would depend upon the consent of the settlors and, if such consent is withheld, the money would not be spent, but then the money would be accumulated for the same religious and charitable purpose. But it does not mean that, if consent is not granted, the money would be spent for the private purposes of the settlors or of the trustees. Either the money would be accumulated for such purposes or the money would be spent only for religious and charitable institutions or for hospitals. Therefore, all the clauses other than clause (d) refer to public and charitable purposes. Hence, the result is that the control of the fund was not left to the public but to certain persons referred to by the settlors. The public has no hand in the control and management of the trust. Except for the purpose of clause (d), the entire money would be spent for religious and charitable purposes. We have now to consider (1) whether the existence of clause (d) would make the deed as a whole as one not for public and charitable purposes, and (2) whether keeping the management in charge of the members of the settlors' family would or would not make it a public religious and charitable trust for the purpose of the Income-tax Act. We are here concerned with a trust for the purpose of the Income-tax Act. Such trusts are also referred to in section 92 of the Code of Civil Procedure and in different statutes relating to religious endowments in different States. But we are here concerned with a trust for the purpose of the Income-tax Act.

I may now refer to section 4(3)(i) of the Income-tax Act together with the definition of the words " charitable purposes " in that Act. Section 4(3)(i) reads as follows :

" Subject to the provisions of clause (c) of sub-section (1) of section 16, any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, in so far as such income is applied or accumulated for application to such religious or charitable purposes as relate to anything done within the taxable territories, and in the case of properties so held in part only for such purposes, the income applied or finally set apart for application thereto : . . ."

We are not here called upon to decide whether the amounts referred to have been applied or accumulated in accordance with the provisions of section 4(3)(i) ; so we keep that matter open. Section 4(3)(i) says that relief may be obtained when the entire income is held in trust for religious and charitable purpose or when a portion of the income created by a deed is held for religious and charitable purposes. We may, therefore, hold, in view of the provisions of section 4(3)(i), that the clauses other than clause (d) of the trust deed in question relate to religious and charitable purposes but clause (d) does not relate to religious and charitable purposes.

The next point to be considered is whether the provision that management is left to private individuals and not to the public would, in any way, affect the nature of the trust for the purpose of the Income-tax Act. The phrase " charitable purpose " in the Income-tax Act " includes relief of the poor, education, medical relief and the advancement of any other object of general public utility ". It is further provided that " nothing contained in clause (i) or clause (ii) shall operate to exempt from the provisions of the Act that part of the income from property held under a trust or other legal obligation for private religious purposes which does not enure for the benefit of the public. " This definition does not deal with the matter of control and management of the fund. There is no reference of the same in it. The implication, therefore, is that the matter of management of the fund is not an essential matter for the purpose of defining " charitable purposes " so far as the Income-tax Act is concerned ; it may be essential for other purposes as, for example, for the purpose of section 92 of the Code of Civil Procedure. What is essential for the Income-tax Act is whether " it enures to the benefit to the public " or not, whoever may control the fund. Therefore, even if the funds are controlled by a body of persons which is not a public body in any sense, but if the fund " enures to the benefit of the public ", it would still be charitable purpose within the meaning of the Income-tax Act. Therefore, we do not agree with Mr. Mukherjee that because the control of the fund is not left to the public, it must be concluded that it is not a public charitable trust. That is not a condition essential for determining a " charitable " trust for the purposes of the Indian Income-tax Act. All that is required is that the fund is spent or accumulated for religious and charitable purposes.

Let us now refer to the different decisions which have been referred to by the learned advocates for both sides. We have been referred to a decision in Commissioner of Income-tax v. Andhra Chamber of Commerce. There the question was whether a particular chamber of commerce was holding a particular property for charitable purposes. The Supreme Court came to the conclusion that it was charitable purpose because the property was held for " the advancement of an object of general public utility ".

That question does not arise in the circumstances of the present case. If we are to consider that the primary purpose has to be considered, even then we find that the total income of the property would come to about Rs. 2,500 per month. Out of that, Rs. 500 is to be spent for specific religious and charitable purposes, Rs. 75 would go to two ladies and the rest would be accumulated or spent for " hospitals and religious and educational institutions ". Therefore, the primary object here again is for charitable purposes and the test is satisfied. Another decision of the Supreme Court in State of Bihar v. Smt. Charusila Dasi has been referred to. The question there was whether the trust was a public endowment within he meaning of the Bihar Hindu Religious Trusts Act (Act I of 1951), and naturally, the Supreme Court there considered in whom the management of the trust fund vested and they found that it was in the public and it held that it was a public religious charitable trust. There is some amount of similarity in the trust deed now in question and the deed in question there ; the deity was installed before the trust was created and there were provisions for religious and charitable purposes and the Supreme Court, on a consideration of the entire matter, found that the trust was for religious and charitable purposes ; the Supreme Court considered that the management was in the public. This last element is not present in the present case but, as we are not considering an endowment for the purpose of any Endowment Act or for the purpose of section 92 of the Code of Civil Procedure and as we are considering the meaning of that phrase with reference to the Income-tax Act and as that Act does not refer to the question of management, we do not think the question of management is an important factor in determining the matter before us. The next judgment which has been referred to is Commissioner of Income-tax v. Administrator-General of Bengal. This is a judgment of this court delivered by Banerjee J. The facts of that case were different. The deity was first installed in a part of the family residential house, and would be removed to another temple when constructed ; a member of the family was allowed to reside in that new structure which would be constructed. There was an arrangement for giving food after offering it to the deity on particular occasions only but there was no arrangement for sadabrata. On the facts of that case, it was held that it did not constitute a public religious and charitable trust. But the facts and circumstances of this case and the provisions of the deed are different. There is absolutely no provision anywhere except in clause (d) for benefiting any person who is a member of the settlors' family or who is interested in the settlors in any manner. We have considered that the entire benefit will go to the members of the public except that under clause (d). On behalf of the department Estate of Harendra Kumar Roy v. Commissioner of Income-tax was referred to by Mr. Mukherjee. There, the deity, which was directed to be worshipped, was the family deity. Expenses would be granted to members of the family for pilgrimage and there would be charity on particular dates only, namely, only on certain ceremonial occasions. That clearly proves that the benefit was intended primarily for the members of the family and incidentally to the public. On that interpretation of the document their Lordships came to the conclusion that it was not a public religious charitable trust. The facts here disclose completely different things. The last judgment which has been referred to by the department is Bankim Chandra Datta v. Commissioner of Income-tax. There again the worship was of family deities and not of deities which were open to public worship. " Family deities " mean those deities which have been worshipped by the members of a particular family from generation to generation and wherein the public by custom has acquired no right to offer " pujas ". There are family deities which are worshipped by the members of the family from generation to generation but still the public have acquired by custom a right to offer pujas, Those deities would not be considered to be family deities for the aforesaid purpose. There may be again certain deities which are not the deities of the family but installed by a particular gentleman and the public offer pujas without any objection and thus acquire a customary right of worshipping the deities. Here what was intended was that these deities installed in bazar area would be open to worship by any and every member of the public and the further provision of sadabrata therein makes it clear that the entire benefit of the worship would go to the public. No part of the offerings to the deities were reserved by the members of the family. No right to worship could be granted by the deed to the public because the public do not constitute a corporate body. On the decisions aforesaid and also on the construction of the deed we hold that the said trust was for charitable and religious purposes except that clause (d) does not serve that purpose and the income of the trust property, except for a sum of Rs. 900 per year, may be exempt under section 4(3)(i) of the Act.

And we answer the reference in that manner but we make it quite clear that we express no opinion as to whether the funds were in fact applied and accumulated for the aforesaid purposes or not, in any year or in the particular year of assessment. That matter is not covered by the reference and, therefore, we propose not to answer that question and we answer the reference that has been made in the following manner :

Except for clause (d) the trust is for public religious and charitable purposes and except for a sum of Rs. 900 per year the said income, if properly applied or accumulated, would be exempt under section 4(3)(i) of the Act. The assessee will get the costs.

The first question thus being answered in the aforesaid manner, the second question does not arise and we decline to answer the second question as this is unnecessary.

SANKAR PRASAD MITRA J.-  I agree.

 

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