JUDGMENT
Sarjoo Prasad, J.
1. This is a reference made under Section 66 (1), Income-tax Act, by the Income-tax Appellate Tribunal, Bombay Bench. The point of reference is
“whether the income from the properties mentioned in Schedule C is taxable at the maximum rate under the first proviso to Section 41. ”
The answer to the question depends upon the interpretation of a certain deed of trust executed by the Maharajadhiraj of Darbhanga on 23-7-1929, in favour of the applicant, Raja Bahadur Visheswar Singh, his brother.
2. The facts are that in the Darbhanga Raj, which is claimed to be an impartible estate, maintenance grants are made in favour of the junior members of the family. They are commonly known as Babuana grants. In pursuance of this practice it appears that the present Maharajadhiraj of Darbhanga executed the deed aforesaid under which a Babuana grant was given to the applicant in respect of a number of villages in separate enjoyment. I shall briefly refer to the relevant terms of the document in question. After the preliminary recitals, it proceeds to state as follows:
“Now these presents witness that in accordance with the family custom or usage, otherwise called Dastcor Khandan or Kulachar of Darbhanga Raj, of assigning a maintenance of Babuana grant to the younger son or sons of the family and also in pursuance of the aforesaid amicable settlement and arrangement the said Mabarajadhiraj Kameshwar Singh Bahadur doth hereby grant and convey to the said Maharajadhiraj Kumar Visheswar Singh such interest in all the villages or parts of villages & other classes of lands, appertaining to and in fact constituting the Bajnagar Circle of Darbhanga Raj as per detailed list given in Schedule A below with all arrears of rent due in respect thereof with all buildings, structures, erections, standing thereon, except such as are hereinafter specified as trust properties and all rights appertaining thereto as are usually conveyed under a Babuana grant to the junior members of the family to have & to hold the same as a maintenance or Babuana grant according to the custom of the family subject amongst’ others to the conditions here in under specifically set forth.”
This recital shows that the applicant received a. grant of all the villages given in Schedule A of the document except such as were hereinafter specified as trust properties. Now, the specification of the trust properties is contained in para. 5 of the recitals in the document. I propose to reproduce a part of this para. which has been the subject-matter of interpretation by the parties before this Court. Para 5 says :
“That the late Maharajadhiraj Sir Rameshwar Singh constructed a palace known as ‘Rajnagar Palace’ as also several temples of marble and masonary all of rare architectural beauty and value and installed therein various deities., viz. Sri Durga, Sri Kali, Sri Ardh Narishwar, Sri Bajeshwari, Sri Ramshwarnath Mahadeva, Sri Radhakrishna, Sri Ramjanki. Sri Soorj, Sri Criba Debi(Goswan), Sri Vishun and Sri Mahadeva, the said palace and temples are situated in village Bajnagar except two temples which are situated in villages Barrooar and Korabia, Perganna Bachhaur and all the three villages aforesaid form part of this grant. The late Maharajadhiraj, Sir Rameshwar Singh used to celebrate the Puja, Path, Raj, Bhog Utsab and Samaiya of the various deities aforesaid on a grand scale befitting his position as Maharajadhiraj of Darbhanga. Hence, it is the pious duty of the parties to these presents to make suitable provision for the performance of the daily worship, Raj Bhog, periodical festivals & ceremonies of tee said deities as well as for the upkeep, preservation, repair and maintenance of these monumental works of art with their appurtenances of gardens, tanks, etc. Therefore out of the villages mentioned in Schedule A at foot hereof, the villages detailed and specified in Schedules B and C hereunder written are granted to the said Maharajadhiraj Kumar Visheswar Singh subject to the trust that the income of the villages specified in Schedule B would be wholly devoted to the performance of the Pooja, Path Raj Bhog Utsab and Samaiya of the deities aforesaid and that of the villages in Schedule C would be entirely devoted to the maintenance, upkeep, repair and preservation of the said palaces, temples, gardens tanks, and other appurtenances. The said Maharajadhiraj Kumar shall stand possessed of the said palace, temples with their appurtenances and the villages mentioned in Schedules B and C below upon trust for the purposes above mentioned and shall be the first trustee in respect thereof.”
I may also refer to another relevant recital in the document as contained in para 6. The relevant portion is
“The aforesaid palace and temples as also the villages mentioned in Schedules B and C shall not be liable to be partitioned, sold, exchanged or otherwise disposed of or dealt with by the trustee nor shall the income of the aforesaid villages or any of them be used or spent otherwise than for the purposes set forth above.”
These recitals indicate that the properties specified in Schedules B and C of the document were given to the Raja Bahadur to be held as a trustee for disbursing the income thereof over the performance of the daily worship, Raj Bhog periodical festivals and. ceremonies of the deities as well as for the upkeep, preservation, repair and maintenance of the monumental works of art with their appurtenances of gardens, tanks, etc. The recitals also show that the income from Schedule B properties was to be wholly devoted to the performance of Puja Path, Raj Bhog, Utasab and Samaiya of the deities, and that We income from Schedule C properties was to be devoted to the upkeep, repair preservation of the palaces, temples, gardens tanks and other appurtenances. The contention of the asses-see is that the properties both in Schedules B and C were part and parcel of the same endowment in favour of the deities who were the cesti qui trust, and that the properties being vested in the deities or hold in trust for them by the applicant, who was the first trustee, under the terms of the proviso to Section 41 of the Act, it should be deemed that each of the deities installed in the various temples enumerated in the document has an equal share out of the income of both the properties mentioned in Schedules B and C of the document, and therefore, the assessment should be on this basis. The contention of the Department, however, is that the document really speaks of two separate trusts, one in respect of the deities and the other for the purposes of maintaining the palaces, temples, gardens, tanks, and other appurtenances; and although, in so far as Schedule B properties are concerned, it may be held that the dedication was in favour of the deities but in respect of Schedule C properties, the properties being vested in the trustee himself and not in the palaces, temples, gardens etc. which were not juridical persons, the assessment in respect of the income from Schedule C properties should be at the maximum rate under the first proviso to Section 41.
3. The Income-tax officer held that the income of the properties mentioned in the trust deed was not receivable on behalf of any particular person; the shares of the beneficiaries being indeterminate, be, therefore, assessed at the maximum rate. The appellate Assistant Commissioner of Income-tax upheld the assessment. He observed that, on the terms of the deed the individual shares of the persons on whose behalf the incomes of the trust properties were receivable were indeterminate or unknown and that the mere fact that the trustee disbursed or appropriated the income in a certain manner did not affect the legal position. When the matter came to the Income-tax Tribunal, the Tribunal was of the view that in respect of Schedule B properties mentioned in the document the income of which was wholly devoted to the worship of the deities is of the different temples, the assessment should not be at the maximum rate but at the rate applicable to each beneficiary and deity. In doing so, they relied upon a decision of this Court Sri Sri Jyotishwari Kalimata v. Commissioner of Income tax, B & O., (A. I. R (34) 1947 Pat. 178: 1916-14 I. L. R. 703. In regard to Schedule C properties, however, they took the view that the income from these properties stood on a different footing. They held that the income of these properties was to be utilised for the upkeep of she palaces, gardens, tanks, temples, etc. As these objects were not juridical persons, it could not be said that the properties were vested in them; nor could it be said that the income was to be disbursed over these objects according to some determinate shares. They, therefore, held that the assessment in respect of the income from these properties in Schedule C should be at the maximum rate; in other words, they allowed the objection of the assessee in respect of Schedule B properties but rejected his claim in respect of Schedule C properties. And this they did on the basis that in their view the document created two different trusts, one for the Puja Path etc. of the deities, & the other for the maintenance of the palaces, gardens, tanks, temples, etc. They also observed that in regard to the second trust, if it had been restricted to the up keep of temples only, it might well have been assumed that it was intended for the benefit of the deities. But the objects mentioned therein include other objects also, & therefore the principle that a trust in favour of the temple means a trust in favour of the deities installed therein, & therefore, a trust in favour of a juridical person does not apply to such a case. In my opinion, the members of the Tribunal were in error in thinking that the document created two different kinds of trusts. It is true that the provision in the document that the income from Schedule C properties was to be utilised entirely for the maintenance, upkeep, repair & preservation of the said palaces temples, gardens & other appurtenance may apparently load to this impression; but this recital has to be read in the light of the recital in the earlier part of the para, which quite clearly shows that the intention was to provide for the performance of the daily worship of the various deities installed in the several temples of marble & masonary, all of rare architectural beauty, & also to provide for the upkeep of those monumental works of art with their appurtenances of gardens, tanks, etc. It was, therefore, in substance a dedication of all the properties to the deities of which the applicant was appointed the first trustee under the terms of the document & in making the dedication, it separately provides on the one hand for the performance of the pujas & observance of the festivals etc. & on the other for the repair & upkeep of the temples & other appurtenances. The mere fact that the palaces, gardens & tanks have also been mentioned does not in any manner affect the position because these things go along with the temples & the idols which are installed therein. The intention of the document was not to treat these objects as separate entities, & it is difficult to hold that the trust created in respect of Schedule C properties in view of their small income was something quite apart from the trust in favour of the idols in the temples. Beading the whole para together, the impression is that they are all part & parcel of the same trust though is enjoined upon the trustee to spend the income from the properties in the two schedules in different ways, one exclusively for the purposes of worship & the other for the upkeep of the temples, gardens & other appurtenances thereof- If the above construction of the documents is adopted, then it is quite clear that both Schedules B & C properties have the same characteristics, & in that case the income from both the properties is to be spent over determinate objects, namely, the deities which are undoubtedly juridical persons. It is true that; the shares of these deities have not been defined but all the various deities have been mentioned in the document, & as such, it will have to be assumed that in the eye of law they had equal shares in the income of the properties, & in the circumstances, the income of the properties in Schedule C also should be assessed in the same manner as the income of the properties in Schedule B. The Tribunal have relied upon a decision of this Court in Sri Joytishwari Kalimata v. Commissioner of Income-tax, B. & O., A. I. R. (34) 1947 Pat. 178, which clearly lays down the principle that the income of the trust property in the hands of the trustee is not liable to be assessed at the maximum rate under the first proviso to Section 41 (1), Income tax Act, but should be assessed at the rate applicable to the individual income of each of the deities.
4. It is contended by Mr. S. N. Dutt for the Department that it is not really a trust at all. According to him, the properties in Schedules B & C are also vested in the applicant though he holds subject to certain conditions, namely, that the income of Schedules B & C properties is to be spent for the purposes specified & earmarked in the document. In his submission, Schedule C properties have nothing to do with the deities at all. Ha says that the purpose for which the disbursement of these properties is to be made is entirely a different purpose, & although the temples might bra included, yet there are the palaces, gardens, etc. also mentioned therein, & as it is not known that part of the income is to be spent over these palaces, gardens, etc., the amount to be spent over the temples is indeterminate. Therefore, he says that there is no option but to assess the income of the Schedule C properties at the maximum rate as it has been done by the revenue authorities. The learned counsel relies upon the finding of the Tribunal which is to the effect that there was no evidence or material to show that the palaces, gardens, tanks, etc., were parts of the temples. He points out that a trust in favour of palaces, gardens, tanks etc., would not be a trust at all. & therefore, it must be held that the properties in Schedule C were vested in the trustee himself, namely, the applicant assessee. It is true that if the disposition in respect of Schedule C properties is treated on a separate footing, then the properties would be vested in the trustee himself, but, as I have already discussed above, this interpretation will not be a correct interpretation of the document. Section 41 of the Act does not make any distinction whether the properties are vested in the trustee or vested in the benefeciaries thereof. It is only concerned with the disbursement of the income over determinate objects of the trust in defined shares or otherwise. Therefore, in my opinion, this contention is without any merit & is not sustainable in view of the true interpretation of the document.
5. For the above reasons, the reference should be answered in the negative, & the income from the Schedule C properties should be taxed not at the maximum rate under the first proviso to Section 41, but on the same basis as the income from Schedule B properties as directed by the Tribunal already. The assessee, in the circumstances of this case, will not be entitled to any costs of the hearing of this application.
Shearer, J.
6. I agree to the order proposed to be passed by my learned brother, but desire to say that I am inclined to doubt the correctness of the decision in Joytishwari Kalimata v. Commissioner of Income-tax B. & O., A. I. R. (34) 1947 Pat. 178, & think that when a suitable occasion arises, it may have to be reconsidered.