PETITIONER: COMMISSIONER OF INCOME TAX, KANPUR Vs. RESPONDENT: KAMLA TOWN TRUST DATE OF JUDGMENT16/11/1995 BENCH: MAJMUDAR S.B. (J) BENCH: MAJMUDAR S.B. (J) JEEVAN REDDY, B.P. (J) CITATION: 1996 AIR 620 1996 SCC (7) 349 JT 1995 (8) 364 1995 SCALE (6)517 ACT: HEADNOTE: JUDGMENT:
J U D G M E N T
S.B. Majmudar, J.
In this group of 17 appeals by special leave, the
Commissioner of Income Tax, Kanpur has brought in challenge
the judgment and order dated 20th February 1975 of the
Allahabad High Court in Income Tax References Nos. 18 of
1973 and 715 of 1972. Respondent – Kamla Town Trust – is the
common respondent in all these appeals. As common questions
of law and fact are involved between the very same parties
in all these appeals, the appeals were heard together and
are being disposed of by this common judgment.
The common respondent, Kamla Town Trust, was assessed
to income tax for the relevant assessment years 1949-50 to
1965-66. These assessment orders gave rise to hierarchy of
appeals under the Income Tax Act which ultimately culminated
into 17 income tax Appeals by the assessee before the Income
Tax Appellate Tribunal, Allahabad Bench, Allahabad. The
common question in the appeals before the Tribunal was
whether for the relevant assessment years the respondent-
assessee was entitled to exemption from payment of income
tax as per the provisions of Section 4(3)(i) of the Income-
tax Act, 1922 (hereinafter referred to as the ‘1922 Act’),
and under Section 11 read with Section 2(15) of the Income-
tax Act, 1961 (hereinafter referred to as the ‘1961 Act’) in
so far as they applied to the relevant assessment years. The
Income Tax Appellate Tribunal dismissed respondent-
assessee’s appeals for assessment years 1949-50 to 1955-56
but it allowed respondent-assessee’s appeals for assessment
years 1956-57 to 1965-66 subject to the rider that the
income derived from the trust property by the assessee will
be exempt only within the limit permissible under Section
11(1)(a) of the 1961 Act to the extent to which the income
so accumulated is not in excess of 25% of the income from
trust property or Rs.10,000/- whichever is higher, after the
1961 Act came into force. In other words the rider applied
to the assessments for the years 1962-63 to 1965-66. As both
the Revenue and the assessee were partly aggrieved by the
aforesaid common order of the Tribunal, they sought
reference of the questions, ventilating their grievances
under Section 256(1) of the 1961 Act. The Tribunal
accordingly granted these reference applications under
Section 256(1) and referred the following questions for
opinion of the High Court. At the instance of the
respondent-assessee two questions were referred for the
opinion of the High Court:
“(1) Whether on the facts and in the circumstances of the
case the Tribunal was justified in holding that the assessee
was not a public charitable trust and its income was not
exempt under Section 4(3)(i) of the Income Tax Act, 1922,
for the assessment years 1949-50 to 1955-56?
(2) Whether on the facts and in the circumstances of the
case the Tribunal was legally correct in holding that the
second rectification decree dated 10th May 1955, in suit
no.163 of 1954 operates prospectively from the assessment
year 1956-57 and does not have the effect of rectifying the
deed of trust dated 27th October, 1941, as from the date of
its execution.”
While at the instance of Revenue the Tribunal referred
five questions as under :
“(a) Whether on the facts and in the circumstances of the
case the Tribunal was right in holding by following the
decision of the Allahabad High Court in the case of M/s J.K.
Hosiery Factory v. Commissioner of Income Tax, 81 I.T.R. 557
that even the unamended clause 3(19) of the Memorandum of
Association of the settlor company viz., M/s J.K. Cotton
Spinning & Weaving Mills Co. Ltd., empowered the company to
create a public charitable trust and the insertion of sub-
section (22) in clause 3 of the Memorandum of Association by
the company was a matter of abundant caution?
(b) Whether on the facts and in the circumstances of the
case, it is open to the Revenue to take the objection in
these proceedings that the second rectification suit no.163
of 1954 was barred by section 11 and Order 2, rule 2 of the
Code of Civil Procedure?
(c) Whether on the facts and in the circumstances of the
case, the Tribunal was legally correct in holding that the
objects and activities of the trust fell objects and
activities of the trust fell within the first limb of the
definition of charitable purpose in section 2(15) of the new
Act and the residuary clause thereof is not attracted for
the assessment years 1962-63 to 1965-66?
(d) Whether on the interpretation of the various clauses of
the trust deed even as amended by the second rectification
decree dated 10.5.1955, the trust is void for uncertainty
and was not a public charitable trust?
(e) Whether on the facts and in the circumstances of the
case the Income Tax Officer was entitled to go behind the
civil court decree dated 10.5.1955 in suit No.163 of 1954
and adjudge the validity of the rectification?”
The Division Bench of the High Court after hearing the
rival contentions canvassed by the parties answered all the
referred questions in favour of the respondent-assessee and
against the Revenue. It is under these circumstances that
the Revenue through Commissioner of Income Tax, Kanpur
having obtained special leave to appeal has preferred these
17 appeals. It may be noted at the outset that though the
Revenue lost on all the referred seven questions before the
High Court, in the present proceedings at the stage of final
hearing Dr. Gauri Shankar, learned senior counsel for the
appellant-Commissioner of Income Tax highlighted the
grievance of the Revenue centering round the answers of the
High Court on some of the referred questions. The grievance
highlighted on behalf of the Revenue by Dr. Gauri Shankar
centered round the answers of the High Court to Questions
Nos. 1 and 2 referred on behalf of the assessee-respondent
as well as answers of the High Court on Questions Nos. (d)
and (e) referred on behalf of the Revenue.
Before proceeding to deal with the main submissions
canvassed by learned senior counsel for the Revenue
centering round the answers of the High Court on the
aforesaid questions and the rival contentions canvassed by
learned senior counsel Shri Verma for the respondent-
assessee in support of these answers, it will be apposite to
have a look at the relevant background facts leading to the
present proceedings.
Background facts
—————-
The assessee is a trust created by a trust deed dated
27.10.1941 executed between M/s. J.K. Spinning & Weaving
Mills Co. Ltd., Kanpur (hereinafter called ‘the company’) of
the one part and Sir Padampat Singhania, Lala Kailashpat
Singhania and Lala Laxmipat Singhania (hereinafter called
‘the trustees’) of the other part. The company was
registered under the provisions of the Indian Companies Act
7 of 1913 with its registered office at Cawnpore in U.P. The
objects of the trust deed in its original form show that it
was created with a view to construct a settlement or colony
for their workmen together with amenities in the shape of
hospitals, schools, temples, mosques, recreation places and
for such other works directly concerning the amenities of
workmen. The company made an application to the Improvement
Trust, Kanpur for demising to it two tracts of land in
Kanpur at concessional rates. The Improvement Trust demised
one plot of land to the company for constructing the colony
with an extra plot of land for the purpose of constructing a
Water Pump Station by an indenture dated 19.10.1936 for a
consideration of Rs. 43,700/-. Another plot of land was
demised by the Improvement Trust to the company by an
indenture dated 2.2.1938 for a consideration of Rs.26,300/-
for constructing an office for the said settlement. Both
these plots were demised to the company at concessional
rates for the welfare of workmen. The company transferred
both the plots by the said trust deed of 27.10.1941 to the
trustees for effectuating its object of settling these plots
upon the charitable trust thereinafter mentioned in the
deed.
We will deal with the relevant recitals in the Trust
Deed, in details, at an appropriate stage in latter part of
this judgment. Suffice it to state at this juncture that one
of the objects of the trust, as mentioned in paragraph 2(b)
of the Trust Deed of 1941 was as under :
“To erect, establish, equip, furnish, fit, maintain and
repair on the said two plots of land, and any land that may
hereafter be acquired by the Trust.
(1) residential quarters, chawls or buildings for the
workmen and staff and other employees of the Company or
other allied concerns under the management or in which the
Directors of the Company may for the time being be
interested and for their respective families and dependents
and for such other skilled and unskilled workmen craftsmen
traders merchants technical or professional men whom the
trustees may permit to reside or work in the said two plots
with a view to supply their needs and requirements or to
render them services or to cater to their wants comforts
conveniences and amenities.”
Later on the Settlor Company filed a suit being suit No.40
of 1945 in the Court of Civil and Sessions Judge, Kanpur
under Section 31 of the Specific Relief Act, 1877 for
rectification of the Trust Deed so as to bring it in
conformity with its real intention to create a public
charitable trust. It was alleged in the plaint that having
regard to its Memorandum of Association, the Settlor Company
intended to settle the properties mentioned in the Trust
Deed and transfer them to the trustees for the purposes of
creating a public charitable trust including the benefits of
its own employees, but the operative part of the Trust Deed
was found to be less comprehensive than what was intended by
the parties thereto at the time when instructions were given
for preparing a draft of the same and when they executed the
Deed of Trust. The Settlor Company further alleged that
through a misunderstanding on the part of the draftsman and
through a mutual mistake the Deed of Trust did not truly
express their intention. It was asserted that the real
intention of the parties was to create a public charitable
trust, but the Company was advised that it was doubtful
whether the Trust Deed on a strict construction thereof
might not exclude from its benefits the rest of the public
apart from the employees of the company and residents of the
said settlement. In order to give effect to the said
intention the company submitted that certain amendments by
way of rectification of the deed should be made in the
Object Clause 2 of the Trust Deed. The learned Civil Judge
by his judgment dated 18th August 1945 ordered the Deed of
Trust to be rectified as prayed for in the Plaint. We will
refer to the relevant rectified paragraphs of the Trust deed
as per the aforesaid order of the Civil Court a little
later.
The Deed of Trust of 1941 as rectified in 1945 became a
subject matter of interpretation by the Appellate Income Tax
Tribunal and High Court of Allahabad in the case of J.K.
Hosiery Factory v. Commissioner of Income Tax, U.P. (1971)
81 I.T.R. 557. In the said partnership the respondent-
assessee trust happened to be a partner. The High Court held
the rectification decree passed by Civil Court to be valid
and further held that it was not possible for the Income Tax
Officer to question the validity of the rectification on the
ground that conditions for grant of rectification did not in
fact exist. However, it was further held that the objects of
the Trust Deed as rectified in 1945 did not create a public
charitable trust and on an analysis of the object clause
2(b) (i) of the Trust Deed held that it being a mixture of
charitable and non-charitable objects, could not be treated
to be creating a public charitable trust.
In the meanwhile the Settlor Company had filed another
suit being suit No.163 of 1954 in the Court of First Civil
Judge, Kanpur for further rectification of the Trust Deed.
It was reiterated in the plaint that the real intention of
the Settlor Company was to create a public charitable trust
for the benefit of the public in the city of Kanpur and the
surrounding areas particularly, the members of the working
class including the workmen employed in the plaintiff
company, but in their capacity as members of the working
class. The intention, it was repeated, was to create the
said trust wholly and exclusively for charitable objects and
purposes. It was alleged that the trustees had, in fact,
been giving the benefit of the trust to the members of the
public and no part of the trust moneys had, at any time,
been used for a non-charitable or non-religious object or
purpose. It was contended that the said Deed of Trust even
as rectified was less comprehensive than what was intended
by the parties thereto at the time when instructions were
given for preparing a draft of the same and when they
executed it and the Settlor Company was advised that it did
not truly express the intention of the parties. It was
prayed that the rectifications sought for be allowed so as
to bring it in conformity with the real intention of the
parties. In the said suit besides the trustees two persons
interested in the trust were impleaded as defendants in
their representative capacity after the service of a public
notice under Order 1 Rule 8 of the Code of Civil Procedure.
The Civil Judge, Kanpur by judgment and decree dated
10.5.1955 decreed the suit. By the second rectification
decree certain rectifications were made in the Preamble of
the Trust Deed and in paragraphs 1 and 2 of the Trust Deed.
At an appropriate stage in latter part of this judgment we
will deal with these rectified clauses inserted in the Trust
Deed in 1955.
The jurisdictional Income Tax Officer issued notices
under Section 34 of 1922 Act and Section 148 of 1961 Act for
the relevant assessment years to the assessee-trust alleging
that the income had escaped assessment for the relevant
years. In response to the said notices the assessee filed
‘NIL’ returns for all the assessment years under reference.
The contention of the trust before the Income Tax Officer
was that it was a public charitable trust and, therefore,
its income was exempt from income tax. The Income Tax
Officer rejected this contention as discussed in his earlier
assessment order for the assessment year 1948-49. He stated
that in the earlier assessment order, he had come to a clear
conclusion that the trust was a private trust for the
benefit of the employees only and was not at all exempt from
tax. With regard to the rectifications made by the decrees
of the Civil Court, the Income Tax Officer held that the
trust was originally created for the benefit of the settlor
company and the objects of the trust could not be altered
subsequently unless the trust was revoked for which there
was no power under the Deed. The income from it was,
therefore, assessed to tax. He relied on the decision of the
Calcutta High Court in re. Mercantile Bank of India (Agency)
Ltd. (1942) 10 I.T.R. 512 and held that a trust for the
benefits of its employees and members of the staff is not a
charitable trust.
Respondent-assessee preferred appeals to the Appellate
Assistant Commissioner. The Appellate Assistant Commissioner
dismissed all the appeals of the respondent. It is under
these circumstances that the respondent-assessee approached
the Income Tax Appellate Tribunal as noted earlier. The
assessee partly succeeded while the Revenue also succeeded
in part before the Income Tax Tribunal and that is how seven
questions came to be referred to the High Court under
Section 256(1) by the Tribunal, two at the instance of the
assessee and five at the instance of the Revenue and which
came to be wholly decided in favour of the respondent-
assessee as already noted earlier.
Rival Contentions
—————–
Learned senior counsel Dr. Gauri Shankar raised the
following contentions in support of these appeals :
(1) The second rectification in the year 1955 as
decreed by the Civil Court was without jurisdiction as in
substance by the so-called rectification a new Trust Deed
was sought to be substituted, which was beyond the powers of
the Civil Court.
(2) The condition precedent for invoking the
jurisdiction of the Civil Court under Section 26 of the
Specific Relief Act of 1963 or under Section 31 of the
earlier Act that there should be mutual mistake on the part
of parties to the document was absent in the facts of the
present case and consequently the Civil Court had no
jurisdiction to grant such rectification.
(3) The rectification decree was in personam and not in
rem to which Revenue was not a party and, therefore, it was
not binding on the Income Tax authorities.
(4) Even assuming that Rectification Order of 1955 was
validly made, it would operate only prospectively and could
not have any retrospective effect. This submission was made
for challenging the answer to Question No. 2 posed for
consideration of the High Court at the instance of the
respondent-assessee.
(5) Even after the rectification of 1955 the Trust Deed
as rectified did not create any public charitable trust
entitling the respondent-assessee to claim income tax
exemption under the relevant provisions of 1922 Act as well
as 1961 Act as applicable to the concerned assessment years.
(6) The entire Trust Deed as originally executed and as
twice rectified in 1945 and 1955 was merely a colourable
device on the part of the three main trustees Singhania
brothers who held partnership interest in the firm of J.K.
Hosiery Factory but went out as partners of the said
partnership and entered by the back door assuming the garb
of the trustees of respondent-trust which became a partner
in the same partnership firm claiming income tax exemption.
Consequently such a colourable device on the part of the
respondent should not be countenanced.
Shri Verma, learned senior counsel for the respondent-
assessee on the other hand combatted the aforesaid
contentions of learned senior counsel for the Revenue and
submitted that even for the assessment years 1949-50 to
1955-56 wherein the rectified Trust Deed of 1945 prior to
its further rectification in 1955 was holding the field, it
was a trust for public charitable purposes and consequently
even apart from the retrospective effect of the
rectification in 1955, the respondent-asessee was entitled
to claim exemption from payment of income tax for these
relevant years. However, so far as the answer to Question
No. 2 referred for the opinion of the High Court at the
instance of the respondent-assessee was concerned, Shri
Verma fairly stated that he was not supporting the said
answer and that he was conceding that 1955 rectification of
the Trust Deed had only prospective effect.
Shri Gauri Shankar, learned senior counsel for the
Revenue in Rejoinder submitted that 1945 rectification did
not create a public charitable trust. He, however, fairly
stated that as there was no clear indication from the
judgment of the High Court about any colourable device on
the part of the assessee or its trustees underlying the
creation of trust he was not pressing that point any
further.
In the light of the aforesaid rival contentions the
battle lines are clearly drawn between the contesting
parties wherein the first five contentions canvassed on
behalf of the Revenue by Dr. Gauri Shankar will have to be
examined and the sixth and the last contention which arises
for consideration in the light of the additional contention
of learned senior counsel Shri Verma for the respondent,
namely, whether the rectification of 1945 created a public
charitable trust or not, will also fall for determination.
We shall now deal with the aforesaid six contentions
canvassed for our consideration seriatim:
Contention No.1
—————-
So far as jurisdiction of the Civil Court to grant
rectification of the Trust Deed is concerned the relevant
provision is found in Section 26 of the Specific Relief Act,
1963 which had succeeded the prior Specific Relief Act of
1877. Under the earlier Act an analogous provision was found
in Section 31 of the Act. As per these provisions a suit
could be filed before competent Civil Court for
rectification of an instrument when through fraud or a
mutual mistake of the parties a contract or other instrument
in writing does not express their real intention. It is
obvious that a Trust Deed is not a contract in the strict
sense of the term but it would certainly be covered by the
expression ‘other instrument in writing’. It could,
therefore, not be urged with any emphasis that competent
Civil Court which was approached by the Settlor Company for
rectification of the instrument of trust, was not having
requisite jurisdiction to entertain such proceedings.
However, Dr. Gauri Shankar, learned senior counsel for the
Revenue pitched his faith on a decision of the Andhra
Pradesh High Court in the case of Trustees of H.E.H. the
Nizam’s Pilgrimage Money Trust v. Commissioner of Wealth-Tax
(1988) 171 I.T.R. 323. In that case the trustees of H.E.H.
Nizam’s Pilgrimage Money Trust had applied to the Chief
Judge, City Civil Court, Hyderabad, under Section 34 of the
Indian Trusts Act, 1882 seeking his opinion, advice and
directions with respect to the utilisation of the income of
the trust fund in terms of the resolution. By the said
resolution the trustees contrary to the objects of the trust
had resolved to utilise the income of the trust fund for
charitable purposes in India when the settlor had clearly
laid down in the Trust Deed that the trust fund and unspent
accumulations, if any, were to be utilised for religious or
charitable objects at Hedjaz and/or Iraq. It was, therefore,
held that the resolution of the trustees was invalid and the
order of the Chief Judge permitting the trustees to spend
the trust income in India was equally inoperative and
without jurisdiction. It was also held that the Trust Act
applied only to private trusts and not to public trusts. And
that after the death of the settlor, the trust had become a
public trust. Moreover, Section 34 of the Trust Act provided
only for a summary enquiry and order with respect to
management or administration of the trust property other
than questions of detail, difficulty or importance. We fail
to appreciate how the aforesaid decision can be of any
assistance to the learned senior counsel for the Revenue in
the present case. On the facts of the case before Andhra
Pradesh High Court the City Civil Court, Hyderabad, had no
jurisdiction under Section 34 of the Trust Act to bring
about any changes in the objects of trust which had become a
public trust. On the facts of the present case Section 31 of
1877 Act (Specific Relief Act) or the corresponding
provisions of Section 26 of 1963 Act could be effectively
invoked for rectification of the instrument of trust. Such a
court does not suffer from any inherent lack of
jurisdiction, like the City Civil Court in the Andhra
Pradesh case which had no such jurisdiction under Section 34
of the Indian Trusts Act. The first contention must,
therefore, be rejected.
Contention No. 2
—————-
So far as this contention is concerned it was
vehemently contended by learned senior counsel for the
Revenue that Civil Court will get jurisdiction to entertain
rectification proceedings provided any of the two conditions
precedent are satisfied, namely, (i) through fraud; or (ii)
by mutual mistake of parties the instrument in writing does
not express real intention of parties. So far as fraud is
concerned it is not the case of anyone that either party to
the instrument had committed any fraud. In fact the learned
senior counsel went to the extent of submitting that there
are not two parties in an instrument of trust. It is
difficult to agree. Settlor is one party to the trust who
settles his property in trust for the benefit of others who
become beneficiaries and the legal ownership of the property
is transferred to the trustees. Thus not only there are more
than one party to the instrument of trust but in fact there
would at least be two main parties, namely, the settlor on
the one hand and the trustees on the other and also there
will be the beneficiaries who would be indirectly third
parties to the instrument though not being direct parties
thereto. Thus it would be almost a tripartite transaction.
Dr. Gauri Shankar then submitted that even if it is so, no
mutual mistake was alleged in the rectification proceedings.
Even this contention cannot be accepted. The Settlor Company
had clearly indicated in the rectification proceedings that
the real intention of the settlor to create a public
charitable trust was not clearly brought out on the wordings
of the original Trust Deed and, therefore, the need to
rectify the instrument, as neither the Settlor Company nor
the trustees who assumed the legal ownership of the property
settled in trust would have agreed to the transaction in
question if it had purported not to create a public
charitable trust. It was this mutual mistake on the part of
both the parties that required rectification of the
instrument to make, what was latent intention a patent one.
Even that apart it is strictly not open to the Revenue which
is not a party to the instrument to take up such a
contention about non-fulfilment of condition precedent as it
would be a fact in issue before the competent court which
was called upon to rectify the instrument by either of the
parties to the instrument. Absence of such a condition would
at the most make the order erroneous and which can be
challenged by either of the parties to the proceedings but
it will have no impact on the jurisdiction of the Civil
Court to pass such an order however erroneous it may appear
to be to the Revenue. At the highest such an error would
remain in the realm of error in the exercise of jurisdiction
and not an error depriving jurisdiction to the competent
court to entertain such rectification proceedings. In this
connection it is profitable to have a look at the decision
of Delhi High Court in the case of Jagdamba Charity Trust v.
Commissioner of Income-Tax, Delhi (Central) (1981) 128
I.T.R. 377. In that case Deed of Trust was got rectified by
the parties from the Civil Court. These proceedings had to
be initiated in the light of judgment of the High Court
which had held that due to provisions in certain clauses of
the Trust Deed the trust was non-charitable and the trust
was not entitled to exemption under Income-tax Act and that
since the decision had created some doubts regarding the
validity of some clauses of the deed it was necessary that
the deed should be rectified. The Civil Court granted a
decree and directed that the Trust Deed be rectified. The
question was whether such rectification order of the Civil
Court was binding on the Income Tax Department when the
assessee-trust armed with such rectification order claimed
exemption from income tax under Section 11 of the 1961 Act.
S. Ranganathan, J., as he then was, speaking for the Delhi
High Court took the view that the word ‘instrument’ used in
Section 26 of the Specific Relief Act has a very wide
meaning and includes every document by which any right or
liability is, or is purported to be created, transferred,
limited, extended, extinguished or recorded. There is no
reason to exclude a Trust Deed from its purview. A Trust
Deed is a document which sets out the terms of an
understanding between the author of the trust and the
trustees. Though in form, the trustees are not signatories
to the instrument as drawn up, they are parties to the
instrument in a real sense for it is on the terms of the
instrument that they accept office and proceed to administer
the trust. The law obliges them to act upon the terms of the
Trust Deed and they cannot commit a breach thereof. If a
gift deed, sale deed or promissory note could be within the
terms of the section, there is no reason why a Trust Deed
cannot be rectified under Section 26. It was further held
that since there was an order of Civil Court binding on the
author and the trustees, they could administer the trust
only in terms of the amendment directed by the Court. The
trustees were and must be deemed, from the beginning, to
have been under a legal obligation to hold the properties
only for the object and with the powers set out in the Trust
Deed as amended. Therefore, whatever might be the
correctness or otherwise of the order passed by the Civil
Court under Section 26 of the Specific Relief Act, 1963, it
was not open to the Income-tax Officer to say that the
trustees could administer the trust in accordance with the
original deed and that the claim for exemption had to be
dealt with on the basis of the original deed. Nor was it
open to the Income-tax Officer to say that in the relevant
accounting year, the trustees held the property subject to
the terms of the original and not the amended deed. In our
view the aforesaid decision of the Delhi High Court lays
down the correct legal position in connection with
proceedings for rectification of instruments like trust
deeds, initiated before competent civil courts under the
relevant provisions of the Specific Relief Act.
In the case of Laxminarain Lath Trust v. Commissioner
of Income-tax (1988) 170 I.T.R. 375 a Division Bench of
Rajasthan High Court speaking through S.C. Agrawal, J., as
he then was, had to consider the question whether any
rectification of the Trust Deed which changed character of
the private trust into public charitable trust could be
relied upon before the Income Tax authorities for claiming
exemption under Section 11 of the Income-tax Act, 1961 by
the assessee-trust. In that case the original Trust Deed
executed in August 1948 did not bring out the real intention
of the settlor to create a public charitable trust on
account of certain sub-clauses of Object Clause No. 2. It
was, therefore, felt necessary to rectify the mistake in the
original settlement deed so as to put on record the true
intention of the settlor and of the trust created by him. It
was held by the Rajasthan High Court that it was permissible
for the settlor to clarify his intention increating the
trust under the original settlement deed by executing the
supplementary deed. Even in the original deed, a discretion
had been conferred on the trustees to apply the income of
the trust in rendering aid to persons belonging to the L
family and it was permissible for the trustees not to apply
the income of the trust for the said object and in fact the
income of the trust had never been applied for that object.
It could not be said that the beneficiaries under clause
2(vi), namely, persons belonging to the family of L, had an
enforceable right to the application of the income of the
assessee for the object mentioned in clause 2(vi), and in
these circumstances their consent was not necessary before
altering the terms of the Trust Deed. In any case although
the supplementary deed was executed in May 1958, none of the
persons belonging to the family of L had challenged the
validity of the same in a court of law. After the execution
of the supplementary deed, it was not open to the trustees
to apply the funds of the assessee for non-charitable
purposes. The assessee-trust had acquired the status of a
trust wholly for charitable and religious purposes after the
amendment of the Trust Deed in May 1958. It was entitled to
exemption under Section 11 of the Income-tax Act, 1961. The
doctrine of cy pres was also invoked in the said case by
observing that in respect of christie the courts apply the
doctrine of cy pres which envisaes that if a clear
charitable intention is expressed, it will not be permitted
to fail because the mode, if specified, cannot be executed
and the law will substitute another mode cy pres, i.e., as
nearly as possible to the mode specified by the donor. The
said doctrine is applied on the principle that the court
would lean in favour of charity and where a general
charitable goal is projected and particular objects and
modes are indicated, the court, acting to fulfil the broader
benevolence of the donor and to avert the frustration of the
good to the community, reconstructs, as nearly as may be,
the charitable intent and makes viable what otherwise may
die. The aforesaid decision of the Rajasthan High Court also
takes a view which is almost parallel to the view taken by
the Delhi High Court though the binding nature of the
rectification order of the civil court on the Income Tax
Officer is not highlighted as no such occasion arose for
Rajasthan High Court to pronounce on the same on the facts
of that case. However, the fact remains that after due
rectification of the original Trust Deed either by the
settlor himself by executing a supplementary deed or by
getting it rectified through competent civil court under the
relevant provisions of the Specific Relief Act, the trustees
would be bound to carry out the amended and rectified
objects of the trust and if they fail to do so they would be
guilty of breach of trust for which even proper proceedings
can be initiated against them under Section 92 of the Code
of Civil Procedure. For all these reasons, therefore, it
must be held that when such rectified Trust Deed is pressed
in service before the Income-tax authorities in assessment
proceedings concerning the relevant assessment years the
Income-tax Officer will have to interpret such rectified
instrument for finding out its correct legal effect. But it
will not be open to the Income-tax Officer to refuse to look
at such rectified instrument of trust and to insist that the
trustees of the trust should ignore the said rectified
objects and should stick to the instrument as it existed
prior to its rectification. The Income-tax officer will have
to take the instrument as it exists in its actual amended
form when it is pressed in service for framing the
assessment concerning the relevant assessment year in which
such rectified instrument holds the field. The second
contention, therefore, fails and is rejected.
Contention No. 3
—————-
So far as this contention is concerned Dr. Gauri
Shankar, learned senior counsel for the Revenue was right
when he contended that order of rectification by a civil
court is not a judgment in rem. It would be a judgment in
personam binding on the parties to the rectified instrument,
namely, the settlor on the one hand and the trustees on the
other as well as on the ultimate beneficiaries. It is also
true that Section 41 of the Indian Evidence Act cannot apply
to such rectification order as under the said provision only
judgments and orders passed in exercise of probate,
matrimonial admirality or insolvency jurisdiction would have
the character of judgments in rem. Similarly Section 42 of
the Indian Evidence Act also could not make them relevant in
any enquiry or proceedings unless they relate to matters of
a public nature relevant to the enquiry. However it is
Section 43 of the Evidence Act which would squarely get
attracted in such cases. Said section lays down that
judgments, orders or decrees other than those mentioned in
sections 40, 41 and 42, are irrelevant, unless the existence
of such judgment, order or decree is a fact in issue, or is
relevant under some other provision of this Act. Section 40
deals with ‘previous judgments relevant to bar a second suit
or trial’. That obviously cannot have any application. But a
rectified Trust Deed pursuant to the order of the court
would certainly make the rectification order relevant under
the provisions of Section 11 of the Indian Evidence Act, as
the fact in issue in an enquiry before the Income-tax
Officer would be whether on the basis of the rectified trust
instrument the assessee-trust is entitled to get its income
exempted from tax under the relevant provisions of the
Income-tax Act. In such proceedings, therefore, the order
granting rectification of such instrument of trust would
certainly remain relevant. Consequently it cannot be said
that such rectification orders passed by civil courts
permitting rectifications of trust deeds under the relevant
provisions of the Specific Relief Act could not be relied
upon by the assessee-trust in assessment proceedings before
the Income-tax Officer was not a party to such rectification
proceedings. It will be for the Income-tax Officer to
consider the real scope and ambit of the Trust Deed as
presented to him in rectified form with a view to finding
out whether on the basis of such a rectified instrument the
assessee trust had earned exemption from payment of income
tax under the relevant provisions holding the field in the
concerned assessment years. The third contention is,
therefore, decided by answering that though the
rectification orders of the civil court are not judgments in
rem they are relevant in assessment proceedings before the
Income-tax Officer and will have to be given effect to for
whatever they are worth.
Contention No. 4
—————-
So far as this contention is concerned learned senior
counsel for the Revenue is spared his pains as learned
senior counsel for respondent-assessee fairly stated in the
light of the debate that took place in the Court that he was
not supporting the answer given by the High Court in favour
of assessee on Question No. 2 referred for the opinion of
the High Court at the instance of the assessee-trust. In
short he submitted that he would treat 1955 rectification of
the instrument of trust as creating almost a new trust or
substituting the new for the old and, therefore, he would
not press that such rectification of 1955 would have any
retrospective effect. In view of the fair stand taken by the
learned senior counsel for the respondent-assessee, this
contention will have to be decided in favour of the Revenue
and against the assessee by holding that rectification
brought about by the order of the civil court in 1955,
namely, the second rectification had no retrospective effect
and would operate prospectively from the date on which such
rectification saw the light of the day and would cover
assessment years 1956-57 onwards upto assessment years 1965-
66 and would not look back on the previous assessment years
from 1949-50 to 1955-56. In other words the decision of the
Tribunal on referred Question No. 2 will remain operative
and that contrary answer of the High Court on this question
would stand rejected.
Contention No. 5
—————-
Having cleared the Revenue’s stand in connection with
the Trust Deed in question for the assessment years 1949-50
to 1955-56 as aforesaid, Dr. Gauri Shankar, learned senior
counsel for the Revenue set his sails on the subsequent
assessment years 1956-57 onwards wherein the Trust Deed as
rectified in 1955 held the field. He submitted that even
after the rectification of 1955 the situation had not at all
improved for the respondent-trust and it remained a private
trust and not a public charitable trust. So far as this
contention is concerned it was vehemently opposed by learned
senior counsel for respondent-assessee, Shri Verma. In fact
this has remained now the real bone of contention between
the warring parties.
In order to resolve this controversy it will be
profitable to have a close look at the relevant provisions
of the Trust Deed of 1941 as amended in 1955 pursuant to the
second rectification order of the civil court. The said
Trust Deed as amended in 1955 is found at Annexure ‘J’ to
the Paper Book Volume II. Leaving aside the introductory
recitals, the relevant operative recitals in the Trust Deed
read as under :
“1. That in exercise of the power reserved to it under the
Memorandum of Association and for effectuating its object of
establishing a trust or settlement for public religious or
charitable purposes including trust or settlements for
relief of property, education medical relief and advancement
of any other object of general public utility of religious
or charitable nature, the Company both hereby grant convey
and assure upto the Trustees the said plot of land situate
at Cawnpore and numbered as 1 in Block H Factory Workmen
Area containing by admeasurement 43.70 (forty three decimal
point seventy) acres more or less and more clearly
delineated and shown on the plan annexed to the said
Indenture bearing date the 19th day of October 1936 and
thereon marked red as also the said plot of land situate at
Cawnpore and numbered as 2 in Block H Factory Workmen Area
containing by admeasurement 26.30 (twenty six decimal point
thirty) acres more or less and more clearly delineated and
shown on the plan annexed to the said Indenture dated the
2nd day of February 1938 and thereon marked red TOGETHER
WITH all way wells waters water courses swers ditches
drains trees shrubs liberties easements profits privileges
and appurtenances whatsoever to the said plots of land
respectively belonging or in any wise appertaining with the
same or any part thereof now or at any time heretofore
usually held occupied or enjoyed therewith and all the state
right title interest claim and demand whatsoever at law or
in equity of it was the company into or upon the said two
plots of land and every part thereof TO HAVE AND TO HOLD THE
SAID two plots of land hereby conveyed granted or assured or
expressed so to be and every part thereof unto and to the
use of the Trustees for ever to be by them held upon the
trusts and with the subject to the powers provisions
agreements and declarations in respect thereof hereinafter
appearing and contained.
2. The Trustees do hereby declare that they shall hold and
stand possessed of the said two plots of land upon the
trusts following namely :
(a) To manage the said two plots of land (hereinafter called
“the Trust Properties” which term shall include any security
or securities or investments of any kind whatsoever into
which the same or any part thereof may be converted and
varied from time to time and such as may be acquired by the
Trustees or come to their hands by virtue of these presents
or by operation of law or otherwise however in relation to
these trusts as also all donations funds or endowments
either in the shape of cash shares securities or other
movable or immovable properties which may be given to the
Trustees by any person whosoever for the benefit of the
Trusts hereby created) and to collect and recover the rents
profits and other income thereof and to pay thereout the
expenses of collection of such income and the rates taxes
assessments and other outgoings in respect of any properties
that may at any time be comprised in the Trust properties
including the premia for insurance of any such property
against loss or damage by fire or lightning or civil
commotion air-raids and other risks or losses or damages as
the Trustees may in their absolute discretion think proper
(but so that nothing herein contained shall impose any
obligation on the Trustees to insure any of the premises
comprised in the Trust Properties which they do not wish to
do so) as also to pay the expenses of painting or
whitewashing the buildings and structures that may be
created on the said Trust Properties and of effecting all
repairs additions and alterations thereto as well as to all
plant and machinery which may be lying thereon or affixed
thereto.
(b) To erect, establish, equip, furnish, fit maintain and
repair on the said two plots of land any other land that may
hereafter be acquired by the Trustees on behalf of the
Trust.
(i) residential quarters, chawls or buildings for the
workmen in the town of Kanpur and the surrounding areas and
extensions and for their respective families and dependents
and for such other skilled and unskilled workmen craftsmen
traders merchants technical or professional men whom the
Trustees may permit to reside or work in the said two plots
proved that the benefit in this clause shall be granted only
to those persons who on account of poverty are in need of
help and really deserve help.
(ii) Public schools, pathshalas, colleges, libraries public
halls, hostels or boarding houses.
(iii) Hospitals, dispensaries, museum places or recreation,
instruction, swimming baths, lakes, parks, play-grounds,
temples, mosques, churches, a market or markets and such
other works and institutions of general public utility.
(iv) such other works, building and installations as the
Trustees may in their discretion think fit to provide for
the advancement of any other similar object of general
public utility.
(c) To erect, establish, equip, furnish fit maintain and
repair on the second of the aforesaid two plots a temple, a
hospital with all necessary quarters for housing its staff,
an office or offices for the management and administration
of the Colony or Settlement to be established on the said
two plots and quarters for the office staff and a water
pumping station and similar other works.
(d) To charge such rent or fees for the use and occupation
of any of the said premises as the Trustees may in their
discretion from time to time think fit.
(e) To use and spend the income of the Trust properties or
the corpus of any funds or donations given or endowed for
the benefit of these trusts for the objects herein
mentioned.”
A mere look at the aforesaid objects of the trust which
remained operative and kicking after the second
rectification of 1955 shows that each of the objects
mentioned in clauses (b), (c), (d) and (e) of Object Clause
2 clearly partakes the character of a charitable disposition
meant for the benefit of a well demarcated mass of humanity.
There is not much dispute on this aspect, so far as paras
2(a) and (b)(ii) to (iv), (c), (d) and (e) are concerned.
However learned senior counsel for the Revenue vehemently
submitted that leaving aside the objects mentioned in para
2(b), sub-paras (ii), (iii) and (iv) so far as sub-para (i)
of clause (b) of para 2 is concerned, at least that object
does not create a public charitable trust as the object
mentioned therein namely constructing residential quarters,
chawls or buildings for the workmen in the town of Kanpur
and surrounding areas was a very vague object. It was next
contended that though the object is so widely worded, it in
substance is meant to benefit only the workmen of the
company if the entire history of the trust from 1941 onwards
is minutely scrutinised. It was submitted by Dr. Gauri
Shankar that initially when the two pieces of land were
obtained on concessional rates from the Improvement Trust,
Kanpur in 1941 by indentures of 19.10.1936 and 2.2.1938
respectively, they were meant to be utilised for the
construction of colonies of workmen of the Settlor Company
itself. That the original Trust Deed of 1941 without latter
rectifications of 1945 and 1955 clearly indicated that the
beneficiaries were only the employees of the Settlor Company
and there was no whisper about the benefit to humanity at
large or to members of the general public. Thus it was
clearly a private trust. That though by rectification of
1945 the term ‘workmen in general’ was introduced for
indicating the class of beneficiaries, in substance the
benefit was reserved to the workmen of the Settlor Company
itself, and that even after 1955 rectification, the words
‘workmen in general’ in Kanpur and surrounding areas and
extensions remained a mere camouflage. It is not possible to
agree with the aforesaid submissions of the learned senior
counsel Dr. Gauri Shankar, for the Revenue. The reasons are
obvious. It cannot be said that the indicated beneficiaries,
namely, the workmen in the town of Kanpur and surrounding
areas and extensions are so vague as to make the object of
the trust inoperative or options. Workmen in town of Kanpur
and the surrounding areas and extensions formed a clearly
earmarked class or category of members of general public and
they were certainly a part and parcel of the general public.
It is also not possible to countenance the submission that
the words ‘surrounding areas and extensions of Kanpur town’
introduced vagueness, in the identification of
beneficiaries. Surrounding areas and extensions would
naturally include those areas which are on the periphery of
Kanpur town, and which are adjacent to Kanpur town. They
would not obviously include any areas which are
geographically far removed from and situated at long
distance from Kanpur town and which could not be said to be
in the vicinity of the Kanpur town. The words ‘surrounding
areas and extensions of Kanpur town’ indicate proximity of
such areas with the Kanpur town and have a clear nexus with
the geographical boundary of Kanpur town. It is also easy to
visualise that the trustees will have to make available the
benefit of the clause only to those workmen in the town of
Kanpur and surrounding areas and extensions and to their
respective families and dependents who on account of poverty
are in need of help and really deserve help. Any provision
made for a poor class of public well earmarked as recipient
of such benefits would certainly make the object of such
bounty a charitable one. In fact Dr. Gauri Shankar fairly
stated that if one only goes by the verbiage of the clause
as found in 1955 rectified deed then it would appear to be a
public charitable trust. But he submitted that we have to X-
ray the clause and try to find out as to who are the real
beneficiaries of the said trust. It is difficult to
countenance even this submission. In order to find out
whether the relevant clauses of a trust deed create a public
charitable trust or not we have to go by the express words
employed by the Trust Deed. In our view for finding out the
real intention of the settlor, the words used in the Deed
would be the real vehicle of thought of the settlor
expressing his intention in cold print. This would be much
more so when such recitals in the Trust Deed are not
challenged on the ground that they are a camouflage or a
result of a colourable device. As we have noted earlier,
contention regarding colourable device was not pressed by
Dr. Gauri Shankar for the Revenue and rightly so as it did
not arise out of the judgment under appeal. On the other
hand, on the express language of clause 2(b)(i) of the 1955
rectified deed, it cannot be said that it does not create a
public charitable trust. On the contrary it becomes clear on
a close reading of relevant provisions of this clause that
the objects are specific and charitable in nature. The
beneficiaries are also clearly indicated. There is also no
ambiguity about the trustees or the trust properties. Thus
all the basic requirements for creation of a public
charitable trust do exist on the express language of the
relevant sub-clauses of clause (2) of 1955 rectified deed.
Dr. Gauri Shankar, learned senior counsel for the Revenue
then submitted in any case absolute discretion is vested in
the trustees under the Trust Deed to utilise the trust
income for the benefit of any of the sub-classes of workmen
in the town of Kanpur and they were likely to divert the
entire benefit to their own workmen. To say the least it is
merely a discretion left to the trustees and not an
obligation of the trustees that they must necessarily spend
the income of the trust for the workmen of the settlor
company itself and not for the benefit of any other outside
worker. We shall deal with this aspect in greater details
when we will refer to Contention No. 6 canvassed by learned
senior counsel for the assessee trust that even apart from
the rectification of 1955 the earlier rectification of 1945
did create a public charitable trust. However so far as the
second rectification of 1955 is concerned it has clearly
indicated that only a discretion is vested in the trustees
to utilise the trust income for benefit of poor workmen in
the town of Kanpur and in the surrounding areas and
extensions and that may include even poor and needy workmen
of the settlor company itself. In this connection Shri Verma
also rightly invited our attention to Section 92 of the Code
of Civil Procedure and clause (i), sub-clause (b)(iv)
whereby trustees in their discretion could provide for
advancement of other similar objects of general public
utility. Relying on a series of decisions of this Court in
Commissioner of Income-Tax, Madras v. Andhra Chamber of
Commerce (1965) 55 ITR 722; Ahmedabad Rana Caste Association
v. Commissioner of Income-Tax, Gujarat (1971) 82 ITR 704;
Abdul Sathar Haji Moosa Sait Dharmastapanam v. Commissioner
of Agricultural Income-Tax, Kerala (1973) 91 ITR 5; Sole
Trustee, Loka Sikshana Trust v. Commissioner of Income-Tax,
Mysore (1975) 101 ITR 234; Yogiraj Charity Trust v.
Commissioner of Income-Tax, New Delhi (1976) 103 ITR 777;
and Commissioner of Income-Tax, Madras etc.etc. v. Andhra
Chamber of Commerce etc.etc. (1981) 130 ITR 184 it was
submitted that objects of general public utility would
clearly indicate that they are meant for public benefit and
would create a public charitable trust. That in the light of
the objects of the trust as rectified in 1955 even a workmen
who is not an employee of the settlor company could in
appropriate case seek direction under Section 92, Code
of Civil Procedure, from competent civil court against the
trustees to act according to the object of the trust and
give benefit to such an applicant beneficiary if the
circumstances so permit and the income of the trust is
sufficient to cater to his needs.
When confronted with these very widely worded objects
of the trust, Dr. Gauri Shankar, learned senior counsel for
the Revenue mounted his attack in the light of clause 30 of
the Trust Deed as rectified in 1955 which reads as under :
“30. The Trust premises shall be held by the Trustees hereof
subject to the terms and provisions of the said two
indentures bearing date the 19th day of October 1936 and 2nd
February 1938 and the Trustees shall accordingly duly and
faithfully observe perform and comply with all the terms and
provisions thereof and all such other terms provisions rules
and regulations which the said Cawnpore Improvement Trust
may from time to time impose upon them or require them to
observe perform and comply with or such as may from time to
time be mutually agreed upon between the Cawnpore
Improvement Trust and the Trustees consistently with the
powers reserved by the said Cawnpore Improvement Trust in
that behalf under the said two Indentures.”
It is no doubt true that the trustees are enjoined to
utilise the trust properties subject to the terms and
provisions of the indentures dated 19th October 1936 and 2nd
February 1938 which require the trustees to utilise the
trust property for the benefit of settlor company’s own
workmen. But as rightly submitted by Shri Verma, learned
senior counsel for the assessee-trust, the said clause would
not detract from the public charitable nature of the trust
as projected by the relevant operative parts of the object
clause to which we have made detailed reference earlier.
Shri Verma was also right when he contended that if at all
the trustees diverted the benefit to the beneficiaries other
than the workmen of the company itself it would give a cause
of action to the original vendor, namely, the Town
Improvement Trust, which had taken no steps in all these
years or made any grievance about the same and secondly as
provided by the indentures themselves all that would result
on account of any alleged breach of the conditions of the
indentures on the part of trustees would be that they would
be liable to pay additional quantified amount to the
original vendor and the concessional rate of consideration
for the grant in that eventuality, may stand withdrawn. But
it would not amount to any breach of trust on the part of
the trustees if such benefit is conferred on outside workmen
who fell within the clearly earmarked class of beneficiaries
as per object clause 2(b)(i). On the contrary, the trustees
not only would not be alleged to be guilty of any breach of
trust but can be said to have acted according to the objects
of the trust.
Dr. Gauri Shankar, learned senior counsel for the
Revenue next contended that as observed by the Appellate
Assistant Commissioner in connection with assessment year
1948-49 not a pie of the income of the trust was utilised
during the relevant years by the trust for the benefit of
outside workmen and almost nothing was spent on charity. He
particularly invited our attention to the following
observations as found in Annexure F-2 in Volume II of the
Paper Book which contains the order of the Appellate
Assistant Commissioner of Income Tax, Range II, Kanpur, for
assessment year 1948-49. In paragraph 13 of the judgment the
learned Appellate Assistant Commissioner has observed as
under :
“13. The appreciation of the real nature of the trust would
not be complete without referring to its balance sheets and
the income and expenditure accounts right from the year of
inception of the trust upto the date. I have gone through
the income and expenditure accounts of the various years and
I find that not a single paisa was ever spent by the trust
for charity. The balance sheet of the trust shows that all
its funds were mostly employed by the various companies and
firms of J.K. Group to whom huge advances were made from
time to time. A certain portion of the trust funds was no
doubt employed in the construction, maintenance and repairs
of quarters which were let out to the employees of J.K.
Cotton Spg. & Wvg. Mills Co. Ltd. and to other allied
concerns like J.K. Jute Mills Company, J.K. Hosiery Factory,
J.K. Iron & Steel Co. Ltd. and J.K. Cotton Manufacturers
Ltd. but all the surplus funds available to the trust were
either given over to the various concerns of J.K. Group for
the advancement of their business or advanced to J.K.
Charitable Trust. From the day to day working of the trust
also it is thus quite clear that it ensured for no
charitable purposes.”
Now it must be at once noted that the said observations are
made in connection with the assessment proceedings for 1948-
49. They would be governed by the Trust Deed as rectified by
the first rectification in 1945. Consequently these
observations cannot apply to the interpretation of an
entirely different set of recitals found in the rectified
deed of 1955. Even that apart Shri Verma, learned senior
counsel for the assessee has invited our attention to
various documents which are on record in Volume I of the
Paper Book at pages 21, 28, 176, 179, 183 and 184 to
indicate that in fact benefit of the income from the trust
was made available not only to workmen of the company but to
outside workmen also who resided within Kanpur town. It was
also submitted that the aforesaid documents clearly showed
that the rent recovered from the workmen who occupied these
160 cottages put up by the settlor company on the trust land
was minimal and was highly subsidised as compared to the
market rent. That water and electricity were given free to
the beneficiaries and a part of the land was also made
available to the Municipality to establish a primary school.
It was also contended that the income tax appellate tribunal
itself had noted in the common judgment from which the
references arose, that Appellate Assistant Commissioner had
himself conceded that no exorbitant rents were charged from
the tenants who occupied the residential quarters in
question and in fact the average rent recovered showed that
the rents were only nominal. Shri Verma also submitted that
the Income Tax Tribunal had noted the contention on behalf
of the assessee that as regards rent charged it was pointed
out that the average rent realised from 160 cottages was Rs.
7660/- per annum from 1947-48 to 1964-65. That amenities of
water and electricity were provided free and even the
schools were free. In other words rent including service and
electricity charges work out to less than Rs. 16/- per
mensem for the accommodation whose fair market rate in an
industrial city like Kanpur would be over Rs. 150/- per
mensem. This according to assessee’s counsel shows that
cottages were given to poor employees at concessional rent.
In our view these contentions on behalf of the assessee are
well supported on the evidence on record. It cannot,
therefore, be urged that the trustees had indulged in any
profit making while employing the income of the trust on the
beneficial objects of the Trust Deed and in discharging the
obligations with which they were charged under the said
Trust Deed. In fact in fairness it must be stated that Dr
Gauri Shankar did not also pursue this aspect any further.
Before parting with the discussion on this aspect we may
also mention that at page 410 of the Paper Book Vol. II a
list of tenants not working in J.K. Group of Mills but who
are living in Kamla Town Trust quarters, was furnished by
the respondent-assessee before the Income Tax Tribunal along
with the affidavit of one Shri R.B. Somnath, Engineer of the
respondent-trust. This also showed that the beneficiaries of
the trust income and properties are not only the workmen of
the settlor company but also outside workmen who are
residing in Kanpur town being a part and parcel of the
general public. It must, therefore, be held that the
rectified Trust Deed of 1955 did create a public charitable
trust as rightly held by the High Court. Contention No. 5,
therefore, stands rejected.
Contention No. 6
—————-
So far as this contention is concerned it is canvassed
for the first time before us by Shri Verma, learned senior
counsel for the assessee trust for supporting the ultimate
answer given by the High Court on Question No. 1 referred
for the opinion of the High Court at the instance of the
assessee. Shri Verma submitted that leaving aside 1955
second rectification even the original Trust Deed of 1941 as
rectified in 1945 did create a public charitable trust. The
main plank of his argument was based on the following
premises :
1. Workmen in general and in particular of the company are
also a part and parcel of public and it cannot be said that
they are not members of the general public residing in
Kanpur.
2. We have to judge the correct connotation of the term
‘workmen in general’ in the light of economic and social
conditions that prevailed in 1945 when the deed was
rectified.
According to Shri Verma, construction of residential
quarters, chawls or buildings for the workmen in general and
in particular for the workmen, staff and other employees of
the company or other allied concerns under the management of
or in which the Directors of the company may for the time
being be interested and for their respective families and
dependents and for such other skilled and unskilled workmen
craftsmen traders, merchants, technical or professional men
whom the trustees may permit to reside or work in the said
two plots with a view to supply their needs and requirements
or to render them services or to cater to their wants,
comforts, conveniences and amenities, as enjoined by clause
2(b)(i) of the Trust Deed as rectified in 1945 would
indicate a well defined class out of general members of the
public in Kanpur city. It is trite to note that workmen as a
class would consist of poor and needy persons and it cannot
be said that they would be representing an affluent class of
society or public who would not be in need of a roof over
their head for themselves as well as for their dependents.
Consequently, implicit in the said provision is the object
of charity for these poor and well defined class of needy
persons constituting a part and parcel of the general public
residing in Kanpur.
On this premises it was submitted that even the 1945
deed did create a public charitable trust. It was also
contended that the Tribunal and the High Court had wrongly
taken the view that because of the earlier judgment of the
Allahabad High Court in J.K. Hosiery Factory (supra), the
Trust Deed as rectified in 1945 could not be said to have
created a valid public charitable trust. That in the
proceedings before the Allahabad High Court in the said case
respondent-trust was not a party. The assessment was of the
partnership. Even otherwise the said decision could not be
binding on parties in the present assessment proceedings
pertaining to entirely different years and for entirely
different assessee. Shri Verma relying on a series of
decisions of different courts including this Court submitted
that if the Trust Deed provides a charitable object for the
benefit of a class of public and also gives preference to a
smaller class of public which may consist of even the
workmen of the settlor company or even the poor and needy
relatives of the settlor himself the public charitable
nature of the trust does not get whittled down or effaced.
On the other hand Dr. Gauri Shankar for the Revenue relying
upon number of other judgments including the judgments of
Chancery Division of English Court submitted that workmen by
themselves cannot be treated to be a poor class of citizens
for whom any benefit given under the Trust Deed would
necessarily make it a public charitable object and if the
trustees under the deed are under an obligation to provide
the benefit of the trust properties to the employees of the
settlor company itself the company by giving such benefit
would in turn be exonerating itself from its otherwise
contractual obligation or even statutory obligation of
providing welfare facilities and residential facilities to
its own workmen who because of these facilities would work
more efficiently for the company. Thus there would be quid
pro quo between the settlor on the one hand and the
beneficiaries, namely, the workmen and employees of the
company on the other. That such a provision would detract
from real public charitable nature of the endowment. In the
light of the aforesaid rival contentions on this issue we
shall now proceed to examine this moot question.
Before we deal with these rival submissions, it will be
profitable to have a look at the relevant recitals in the
rectified Trust Deed of 1945. Clause 2(b)(i) of the Deed of
Trust after the said rectification dated 18.8.1945 laid down
amongst others, the following object :
“To erect, establish, equip, furnish, fit, maintain and
repair on the said two plots of land and any other land that
may hereafter be acquired by the Trustees on behalf of the
Trust.
(i) residential quarters, chawls or buildings for the
workmen in general and in particular for the workmen staff
and other employees of the company or other allied concerns
under the management of or in which the Directors of the
company may for the time being be interested and for their
respective families and dependents and for such other
skilled and unskilled workmen craftsmen traders merchants
technical or professional men whom the trustees may permit
to reside or work in the said two plots with a view to
supply their needs and requirements or to render them
services or to cater to their wants comforts conveniences
and amenities.”
Shri Verma submitted that if workmen in general represent a
poor and needy class of persons who are a part and parcel of
the general public residing in Kanpur, as residential
quarters, chawls or buildings had to be constructed in
Kanpur, then even if a preference is given to similarly
needy and poor workmen staff members or the other employees
of the company it could not be said that only because of
such preference the charitable aspect of the endowment would
get frustrated or would become a private trust. In order to
support his contention Shri Verma invited our attention to a
decision of this Court in the case of Trustees of the
Charity Fund v. Commissioner of Income-Tax, Bombay (1959) 36
I.T.R. 513. In that case, the clause in the Deed of Trust
provided for grant of relief and benefit to the poor and
indigent members of Jewish community or any other community
of Bombay or other parts of Idea or of the world and
preference was to be given to the poor and indigent
relations or members of the family of the settlor Sir
Sassoon David. It was held that despite such preference the
trust would remain a public charitable trust. Relying on
sub-clause (a) to (f) of clause 13 of the Deed of Trust it
was held that the deed constituted a valid public charitable
trust and as the relations or members of Sir Sassoon David
did not figure as direct recipients of any benefits under
sub-clauses (b) to (f) and the circumstance that in
selecting the beneficiaries under sub-clause (a) preference
had to be given under the provisos to the relations or
members of the family of Sir Sassoon David could not affect
that public charitable trust, the income from the properties
came within the scope of Section 4(3) (i) of the Income Tax
Act and were exempt. Reliance was also placed on number of
other decisions of various High Courts which obviously fell
in line with the aforesaid decision of this Court and which
had taken the view that if the main benefit of the settled
property in trust had to go to charity, if the trustees were
permitted to give preference to poor relations of the
settlors the trust would remain a public charitable trust.
In this connection our attention was invited to the
decisions of Gujarat High Court in Commissioner of Income-
Tax v. Moosa Haji Ahmed and others (1964) 52 ITR 147.
Calcutta High Court in Commissioner of Income-Tax, Calcutta
v. Board of Mutwallis to the Wakf Estate, Ebrahim Solaiman
Saleji (1968) 69 ITR 758 and three decisions of Bombay High
Court in Commissioner of Income-Tax. Bombay City II v.
Trustees of Seth Meghji Mathuradas Charity Trsut (1959) 37
ITR 419: Commissioner of Wealth-Tax, Bombay City II v.
Trustees of the J.P. Pardiwala Charity Trust (1965) 58 ITR
46: and Commissioner of Income-Tax, Bombay city III v. D.D.
Deshpande (1976) 102 ITR 390.
On the other hand Dr. Gauri Shankar, learned senior
counsel for the Revenue submitted that as the benefit is
made available under the Trust Deed to workmen in general
and in particular to the workmen staff and other employees
of the company it cannot necessarily be held that these
workmen must be poor and needy as no such words are found in
the clause. He submitted that any Trust Deed conferring
benefit on an identified group of persons like workmen or
employees of the company would make the trust a private
trust and not a public charitable trust. In support of this
contention he heavily relied upon decision of the Madras
High Court in Sakthi Charities v. Commissioner of Income-
Tax, Madras (1984) 149 ITR 624. In that case it was held
agreeing with the view of the Tribunal that as the Trust
Deed provided for conferring benefit only on the employees
of M/s Sakthi Sugar Ltd. and the relatives of the deceased
employees, the said benefits could not be available to the
members of the general public not connected with M/s Sakthi
Sugar Ltd. Consequently all these clauses were not
charitable in nature. Our attention was also invited by Dr.
Gauri Shankar to two decisions of the Chancery Division of
the High Court of Justice in England in Trustees of the
William Vernon & Sons, Ltd. Employees Fund v. Commissioners
of Inland Revenue 36 Tax Cases (Chancery Division) 484 and
in Ashworth v. Drummond 1914 (2) Chancery Division 90. In
Trustees of the William Vernon (supra) the question was
whether a bequest under the will directing 20% of the
received moneys to be paid to some organisation or charity
at the discretion of the executors for the benefit of
employees of the firm would constitute a public charitable
endowment. It was held that the objects of the scheme were
not charitable only. Justice Upjohn at page 495 of the
Report observed as under :
“Thirty years ago it was not always appreciated that in
order to constitute a valid charitable trust it must be a
public trust, and that if a trust is limited to the
employees of a company the personal nexus constituted by
that common employment does not satisfy the necessary test
of the character of publicity. That is now well established,
and it was established in a line of authorities after the
last war culminating in Oppenheim v. Tobacco Securities Co.,
Ltd. in the House of Lords in 1951. Therefore, it is common
ground that the scheme does not constitute valid charitable
trusts…”
In Re Drummond (supra) it was held that work people in
question could not be regarded as poor people within the
statute of Elizabeth. In our view the aforesaid decisions of
English Chancery Courts cannot ipso facto be made applicable
to workmen residing in this country and who had to face
entirely different socio-economic conditions, especially in
1945, when the rectified object of the Trust Deed saw the
light of the day. While interpreting the word ‘workmen in
general’ as employed in 1945 rectified Trust Deed, we have
to sit in settlor’s arm chair with a view to visualizing
what was meant by the Settlor Company when it used these
terms in 1945, keeping in view the then prevalent socio-
economic conditions in this country. It is easy to visualise
that workmen who were to toil for their existence would
necessarily represent a class of needy persons requiring a
shelter over their head, when the settlor company in 1945
contemplated to construct residential quarters, chawls or
buildings for workmen it necessarily meant to provide these
facilities for a needy class of persons who could
legitimately be presumed to be a class of down-trodden
persons suffering from penury and want. The socio-economic
situation prevailing in England treating workmen as not
necessarily poor, cannot almost automatically be imported
and applied for judging the economic status of working class
in India especially in 1945 when even the definition of
‘workmen’ under the Industrial Disputes Act, 1947 had also
still to see the light of the day. We, therefore, cannot
agree with the general proposition canvassed by Dr. Gauri
Shankar for the Revenue that any provision made for the
benefit of workmen in general would not necessarily be a
provision for needy or poor class of citizens who may be
forming part of the general public.
Shri Verma, learned senior counsel for respondent-
assessee was also right when he submitted, relying upon
decision of this Court in Trustees of the Charity Fund
(supra) and other decisions of the High Courts to which we
have made a reference earlier, that when any property is
settled for charitable purposes for catering to the needs of
a class of public which is poor and needy, any preference
given to poor and needy workmen of the settlor company would
not necessarily detract from the charitable object
underlying such bequest or settlement. It is trite to
observe that if settlor’s poor relatives can legitimately be
the recipients of charitable benefits under a public
charitable trust, then if such preference is given to poor
workmen of the settlor company who are not even related to
the settlor, they would stand at least on an equal if not a
better footing and in no eventuality on a worse footing, in
judging the public charitable nature of the settlement in
their favour. However, the basic fact must remain that the
settlement is made in favour of a well earmarked class of
needy and poor persons who may form a part of the general
public and for whom such charitable bequest or endowment is
made, and the preferred class of beneficiaries must form a
part and parcel of that very general earmarked class. It
must, therefore, be held that the provision for construction
of houses for ‘workmen in general’ as found in clause
2(b)(i) of 1945 rectified Deed, so far as it went, did
constitute a charitable object.
However, this conclusion of ours does not end the
controversy centering round the aforesaid clause. There are
two clear hurdles in the way of Shri Verma for the
respondent which militate against his submission that the
said clause when read as a whole does create a public
charitable trust in favour of workmen in general. The first
hurdle is that the term ‘workmen in general’ as employed in
the clause is too general and vague but even assuming that
in the context of the residential quarters, chawls or
buildings to be constructed for them on the lands situated
at Kanpur which are settled in trust by the Settlor Company,
it would refer to workmen in Kanpur town, even then the more
substantial hurdle in the way of the respondent is projected
by the fact that there is an obligation cast on the trustees
to construct these residential quarters, chawls or buildings
in particular for the workmen, staff and other employees of
the company or other allied concerns under the management of
and in which the directors of the company may for the time
being be interested and for their respective families and
dependents. In the light of the words ‘in particular’ as
found in this clause, Dr. Gauri Shankar, learned senior
counsel for Revenue rightly submitted, that they represent a
scheme of priority for workmen of the Settlor Company and
not a scheme of preference. In other words the trustees are
bound under an obligation to construct residential quarters
etc. first for the workmen or employees of the Settlor
Company or its allied concerns. They have no choice in the
matter. They cannot in their discretion select an outside
workman as recipient of the benefit under the scheme of the
Trust Deed. In effect the general class of beneficiaries
constituted by the words ‘workmen in general’ gets whittled
down and circumscribed by the words ‘in particular for
workmen of the company etc.’. Thus in substance it becomes a
trust for the benefit of a well defined smaller class of
beneficiaries, namely, employees or workmen of the company
and its allied concerns and it fails to meet the requirement
of a genuine or public or charitable trust. We are in
agreement with this submission of Dr. Gauri Shankar. Once
such an obligation is cast on the trustees the public
character of the endowment gets whittled down and in
substance becomes the settlement for an identified group of
persons. In this connection we may profitably refer to a
Division Bench judgment of the Bombay High Court in the case
of Commissioner of Income-Tax, Bombay City II v. Walchand
Diamond Jubilee Trust (1958) 34 ITR 228 wherein Chagla,
C.J., spoke for the Bench. In that case the question was
whether the provision made in Trust Deed to utilise the
accumulated income of the property of the trust on
charitable objects like giving scholarships to deserving
students or giving medical reliefs of the nature and kind
such as starting maternity homes etc., or giving monetary
help to the poor and needy persons and for providing relief
to the poor and distressed in time of famine would get
adversely affected and would cease to be a charitable object
if preference was to be given to such persons as are
eligible under the aforesaid provisions who are at the time
or have in the past been employees of Premier Construction
Co. Ltd. and of the associated companies and their relatives
and dependents as the trustees may in their discretion think
expedient and proper. In this connection the following
pertinent observations were made by Chief Justice Chagla at
page 236 of the Report :
“… Now, undoubtedly, we would have taken a different view
of this trust if there was an obligation upon the trustees
to prefer the employees. In other words, if the other
members of the public were postponed to the employees of the
Premier Construction Co. Ltd., then, looking to the other
provisions of the deed, we might easily have taken the view
that the main purpose of the trust was to benefit the
employees and the charity to the public was merely illusory.
But there is no obligation cast upon the trustees by this
proviso to prefer the employees of the Premier Construction
Co. Ltd. It is for the trustees to exercise their
discretion. In the first place, they have to utilise the
income for carrying out the four objects, and any member of
the public who comes within these four objects would be
qualified to receive the bounty of the settlor. If a member
of the public also happens to be an employee of the Premier
Construction Co. Ltd., it is open to the trustees to give
him preference. Therefore, the trustees would not be guilty
of committing any breach of trust if they selected for the
bounty of the settlor such members of the public as did not
fall in the category of employees of the Premier
Construction Co. Ltd. That is the real test which we have
got to apply. We must not assume that the trustees will
exercise their discretion dishonestly or improperly. The
test is whether the exercise of the discretion of the
trustees is so fettered that they are bound to select
particular persons in preference to others. That is clearly
not the case here…….”
In our view aforesaid is the correct test evolved by the
High Court. Applying the said test to the clause in question
we find that though residential quarters, chawls or
buildings are to be constructed for the workmen in general
and who, as we have already shown earlier, may be a well
defined class of workmen residing in Kanpur and who may be
poor and needy in the light of their socio-economic
conditions as prevailed in 1945 when the clause was drafted,
once we turn to the second part of this clause which lays
down in clearest terms that in particular the quarters are
to be constructed for the workmen staff and other employees
of the company and of its allied concerns, it becomes clear
that no discretion is left with the trustees and on the
contrary they are enjoined, called upon and under an
obligation to construct these quarters, chawls and buildings
necessarily for the workmen, staff and other employees of
the company and its allies. It is also easy to visualise
that other employees of the company may include even
affluent employees who may not necessarily constitute an
object of charity. Once this conclusion flows from the
wording of the clause, it becomes clear that reference to
workmen in general becomes illusory and the settlement can
be said to be in substance meant only for catering to the
needs of a well defined group of persons, namely, workmen,
staff and other employees of the company and its allied
concerns and in that case on the aforesaid ratio of the
decision of the Bombay High Court, which we approve, the
object clause in question would fall short of creating any
public charitable trust. In this connection we may also
refer to two decisions, one of Calcutta High Court and
another of Allahabad High Court, to which our attention was
drawn by Dr. Gauri Shankar for the Revenue. In the case of
Mercantile Bank of India (Agency), Ltd., (supra) a Division
Bench of the Calcutta High Court speaking through
Derbyshire, C.J., held that in order to constitute a valid
charitable trust it should be for the benefit of the public
or the specified section of it. A fluctuating body of
private individuals such as the present and future officers
and members of the staff and other employees of a company
could not be a part of the general public or of any section
of the public and therefore the income of the trust fund was
not exempt from the payment of income-tax under Section
4(3)(i). It was further observed that Andrew Yule & Co.
Ltd., and their subsidiary concerns for whose employees
benefit was conferred under the deed employed a large number
of persons. The trust was for the benefit of the past,
present and future officers, members of the staff and other
employees of those concerns. Anyone from the Secretary or
some other highly paid member of the staff down to the
lowest menial may be included within the benefit of this
fund. Necessitous circumstances might include the case of a
superior employee earning some thousands of rupees per
month, who owing to some misfortune – say the burning down
of his house, or the loss of his property – might find
himself suddenly in Necessitous circumstances, and in need
of money to replace his lost property. The learned Judge
could see no reason why the administrators of the fund
should not be in a position to make a grant to such a person
to make up his loss. It might be a most desirable thing to
do and the administrators might justly think that they had
used some of the funds to the best advantage. But such use
cannot be said to be for the relief of poverty. Even if (as
had been argued) the administrators are bound to use this
fund solely “to relieve persons suffering from indigence,
ill-health or other Necessitous circumstances,” it was
impossible to say that the fund is – to use the words of the
section – “property held in trust wholly for charitable
purposes.” A Division Bench of the Allahabad High Court in
the case of J.K. Hosiery Factory (supra) had an occasion to
consider the very same clause of the rectified deed of 1945.
It is of course true that the said decision was rendered in
assessment proceedings of the firm wherein respondent-
assessee was a partner and not in the assessment proceedings
of the respondent firm itself. Still the interpretation
placed on the very same Trust Deed as rectified in 1945 in
proceedings to which respondent-assessee was a party in
another capacity cannot be said to be totally irrelevant.
H.N. Seth, J., speaking for the Division Bench made the
following observations in this connection :
“We are doubtful whether the construction of residential
colony for workmen in general can be regarded as an object
of public charity. While enabling the trustees to construct
residential quarters, etc., for the benefit of the workmen
in general, the settlor made it clear that such buildings
were not to be constructed for the benefit of the public in
general. The expression “workmen in general” does not fix a
definite class of public which is intended to be benefited
under the deed. What types of employees or workers can be
said to be covered by this expression is not at all clear.
Moreover, the precise language used by the settlor is “to
erect … residential quarters, etc., for the workmen in
general and in particular for the workmen, staff and other
employees of the company or other allied concerns under the
management of …”. This shows that the expression “workmen
in general” was not intended to mean merely poor labourers.
The expression was intended to cover even such classes of
persons who might be employed in any concern in any capacity
whatsoever and who may be drawing high salaries. Making a
provision for constructing residential quarters, etc., for
the benefit of the employees irrespective of whether they
are poor or not, can hardly be said to be a charitable
object or a work of general public utility.”
As we have discussed earlier the term ‘workmen in general’
when read in the context socio-economic situation prevailing
in 1945 in this country and when also considered in the
context of construction of residential quarters, chawls or
buildings in Kanpur may partake the character of a well
defined class of workmen in Kanpur city who may be poor and
needy, still as the trustees are enjoined to construct
residential quarters, Chawls or buildings in particular for
the workmen, staff and other employees of the company it
follows that other employees of the company who are the
beneficiaries may not necessarily be poor or needy or
affluent. We, therefore, concur with the second part of the
reasoning of Allahabad High Court in the aforesaid judgment
though we are not in a position to subscribe to the general
proposition that construction of residential colonies for
workmen in general cannot by itself be regarded as an object
of public charity. As a result of the aforesaid discussion,
therefore, it must be held that rectified clause 2(b)(i) of
1945 deed fell short of projecting an object of a public
charitable nature and it could not be said that under the
rectified deed of 1945 the trust properties were held by
respondent-trust wholly for religious or charitable
purposes. It is of course true that rest of the sub-clauses
of clause 2(b) did refer to charitable objects but as one of
the objects was not of a public charitable nature it could
not be held that the entire trust was wholly for religious
or charitable purposes.
Now is left the consideration of one submission of Shri
Verma, learned senior counsel for the Respondent who relied
upon Explanation to sub-section (3) of Section 4 of 1922 Act
which read as under :
“In this sub-section ‘charitable purpose’ includes relief of
the poor, education, medical relief and advancement of any
other object of general public utility, but nothing
contained in clause (i) or clause (ii) shall operate to
exempt from the provisions of this Act that part of the
income from property held under a trust or other legal
obligation for private religious purposes which does not
ensure for the benefit of the public.”
In our view the said Explanation cannot be of any avil to
the respondent-assessee so far as the rectified deed of 1945
is concerned. The emphasis in the Explanation is on
charitable objects of general public utility like relief of
poor, education, medical relief and advancement of any other
object of general public utility. Once it is held that
clause 2(b)(i) of 1945 rectification deed imposed an
obligation on the trustees to utilise the trust property for
the benefit of the settlor company’s own workmen and
employees, it would cease to be projecting an object of
providing relief to poor workmen only. Nor would it advance
any other object of general public utility but would be
confined to the utility of a well defined class of employees
and workmen of the settlor company and its allied concerns
only. For all these reasons, therefore, it is not possible
to accept the submission of Shri Verma, learned senior
counsel for respondent-assessee based on this Explanation.
This contention, therefore, stands rejected.
Conclusions
———–
The aforesaid decisions on the contentions canvassed on
behalf of the rival contesting parties by their learned
senior advocates, yield the following result :
(i) For assessment years 1949-50 to 1955-56 the respondent-
assessee would not be entitled to get the benefit of Section
4(3)(i) of the 1922 Act and income derived by it from its
properties would not get exemption from income tax under the
said provision.
(ii) For the assessment years 1956-57 to 1961-62 the income
derived by the respondent-assessee from trust properties
during these years will get exempted under Section 4(3)(i)
of 1922 Act as the 1955 rectified Trust Deed is held by us
to be having objects of wholly charitable nature.
(iii) For the assessment years 1962-63 to 1965-66 the income
derived from trust properties by the respondent-trust will
be entitled to exemption from income tax under Section 11 of
the 1961 Act subject to the compliance with the conditions
laid down therein as even during this period the rectified
Trust Deed of 1955 as interpreted by us will be treated to
have held the field.
Final Order
———–
In the light of the aforesaid discussion and the
conclusions to which we have reached the questions referred
for opinion of the High Court will stand answered as under :
Questions referred at the instance
———————————-
of the assessee in ITR No. 18/73
——————————–
Question No. 1
————–
Answered in the affirmative in favour of the Revenue
and against the assessee.
Question No. 2
————–
Answered in the affirmative in favour of the Revenue
and against the assessee as the answer of the High Court on
this question was not supported by the learned counsel for
the respondent.
Question referred at the instance
———————————
of Revenue in ITR No. 715/72
—————————-
Question No. (a)
—————-
Answered in the affirmative in favour of the assessee
and against the Revenue as answer of the High Court was not
challenged before us by learned counsel for the Revenue.
Question No. (b)
—————-
Answered in the negative in favour of the assessee and
against the Revenue as the answer of the High Court was not
challenged by learned counsel for the appellant-revenue.
Question No. (c)
—————-
Answered in the affirmative in favour of the assessee
and against the Revenue as the answer of the High Court was
not challenged by learned counsel for the Revenue.
Question No. (d)
—————-
Answered in the negative in favour of the assessee and
against the Revenue.
Question No. (e)
—————-
Answered in the negative in favour of the assessee and
against the Revenue.
In the result, out of these 17 appeals filed by the
Revenue seven appeals pertaining to assessment years 1949-50
to 1955-56 will stand allowed while Revenue’s remaining ten
appeals pertaining to assessment years 1956-57 to 1965-66
will stand dismissed. In the facts and circumstances of the
case there will be no order as to costs in these appeals.