1965 (4) TMI 2 - HC - Income Tax

Legal ownership by deities exempts income: Indian Income-tax Act ruling

Commissioner of Income-Tax, Calcutta Versus Pulin Chandra Daw.

Commissioner of Income-Tax, Calcutta Versus Pulin Chandra Daw. - [1967] 63 ITR 179 Issues Involved:1. Assessability of income from properties under section 9 of the Indian Income-tax Act.2. Interpretation of the deed of dedication (arpannamah).3. Legal status and ownership of the debutter properties.4. Role and liability of the shebait or trustee in managing debutter properties.Issue 1: Assessability of Income from Properties under Section 9 of the Indian Income-tax ActThe primary question was whether the income from properties covered by the deed of dedication dated April 28, 1896, was assessable under section 9 of the Indian Income-tax Act in the hands of the respondent-assessee. The Tribunal found that no trust in the technical sense had been created by the arpannamah and that there was no formal conveyance in favor of any trustee or the idols. The Tribunal held that the idols were the legal owners of the property dedicated to them, and the assessee, as a shebait or manager, had no beneficial interest in the property. Consequently, the Tribunal concluded that the assessee was not liable to be taxed under section 9, and the assessments made in respect of the income from property could not be sustained.Issue 2: Interpretation of the Deed of Dedication (Arpannamah)The deed of dedication was examined in detail, and it was found that the translation of the arpannamah was not accurate. An official translation was obtained and marked as an exhibit. The deed indicated that the settlors divested themselves of all their rights, title, and interest in the properties and created a debutter for the seva and worship of various deities. The properties were put in the custody of Purna Chandra Daw, who was to act as the first trustee, with the descendants of the settlors becoming trustees according to seniority in age.Issue 3: Legal Status and Ownership of the Debutter PropertiesThe court examined the position of a person who is a shebait of a deity or who holds properties belonging to a debutter estate described as a trustee in the deed of settlement. It was determined that the properties vested in the deities, who were the owners of the property. The shebait or trustee had the custody of the deities and the properties, the right to manage them, and the right to let out portions thereof and sue and be sued in respect of the property. However, the shebait was not the owner of the property. The property never vested in the shebait so as to make him the full owner, and therefore, no assessment could be made on him under section 9.Issue 4: Role and Liability of the Shebait or Trustee in Managing Debutter PropertiesThe shebait or trustee was found to be a mere custodian of the property, with the duty to carry out the daily seva, puja, and periodical rites, and to preserve the debutter property. The shebait was to spend the income of the property towards deb seva work and repairs, and invest any surplus in purchasing property to be made debutter. The shebait had only a limited right of residence in some of the debutter properties. The court concluded that the shebait could not be assessed under section 9 of the Act by describing him either as shebait or as trustee for the deities.ConclusionThe court answered the question in the negative and in favor of the assessee, concluding that Pulin Chandra Daw could not be assessed under section 9 of the Act. The judgment emphasized that the deities were the legal owners of the debutter properties, and the shebait, as a mere custodian, did not have the ownership required for assessment under section 9. The answer to the question proposed was in favor of the assessee, who was awarded the costs of the reference.