Indeterminate income test under trust taxation rejected where deities were treated as the beneficial owners of the dedicated property.

Income under a deed of dedication was held not liable to the maximum rate under the first proviso to Section 41(1) of the Income-tax Act, 1922, because the properties had vested in two deities without specified shares and the assessment had consistently treated them as the beneficial owners of the corpus and income. The attempt to characterise the receipt as income for a large and indeterminate class of persons and charities was not accepted, since that basis was not open after the assessment had proceeded on a different footing. On that footing, the income was not indeterminate and the maximum-rate proviso did not apply.

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Issues: Whether income received under the deed of dedication was chargeable at the maximum rate under the first proviso to Section 41(1) of the Income-tax Act, 1922.

Analysis: The dedication vested the properties in the two deities without specification of shares, and the earlier assessment had proceeded on the footing that each deity was entitled to an equal moiety of the corpus and income. The attempt to recast the matter as one of income being received for a large and indeterminate group of persons and charities was not open at this stage, because the assessment had throughout treated the deities as the persons beneficially entitled to the income. On that footing, the income was not indeterminate and there was no basis for applying the first proviso to Section 41(1) at the maximum rate.

Conclusion: The income was not chargeable at the maximum rate under Section 41(1) of the Income-tax Act, 1922, and the answer was in the negative, in favour of the assessee.

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