M.S.MENON, J. - (1.) BY this application under section 66(1) of the Indian Income-tax Act, the applicant requires the Appellate Tribunal to refer a question of law said to arise out of the Tribunals order in I.T.A. Nos. 2295 to 2298 and 4903 of 1957-58 dated February 28, 1958, to the High Court. Inasmuch as, in our opinion, a question of law does arise out of the above order, we hereby draw up a statement of the case agreed to by the parties and refer it to the High Court of Kerala.
(2.) P.S. Warriar was a noted and eminent Ayurvedic physician who was carrying on business in Ayurvedic drugs under the name and style of Arya Vaidyasala. He was also running a hospital named by him as Arya Sikitsa Sala. He was also meeting the full deficit in the finances of Aryavaidya Patasala, a school teaching Ayurvaidyam conducted by the Aryavaidya Samajam, an independent institution with which he was associated. Warrier died on January 30, 1944, leaving a will, under which, besides private bequests, he vested the business of Arya Vaidyasala aforesaid to a trustee which was directed to apply the profits therefrom in various ways. Copies of the Malayalam original and English translation thereof of the will are annexed hereunto as annexures "A-1" and "A-2" and form part of the case. According to the aforesaid annexure, the annual income was to be applied as follows : (1) 40% to two thavazhis represented by Kunji and Lakshmi Varassia, out of which 25% was to be paid cash from time to time and 15% to be invested in their account and for their benefit for a limited period of 20 years. (2) 10% to meet the deficit of the Arya Vaidya Patasala (school). (3) 25% to the Arya Vaidyasala itself to be devoted to its development along with the surplus from the 10% allotted to the school above. (4) 25% to the Arya Vaidya Sikitsa Sala (hospital). The 40% allotted under (1) above was to revert to the beneficiary after the period of 20 years fixed for them.
(3.) CLAUSE "J" of the aforesaid annexure is as follows : "The trustees are to run the above institutions according to the intentions expressed above with such modifications as the circumstances may warrant." Up to the assessment year 1951-52, the profits of Arya Vaidyasala, the assessee, were assessed in the hands of the trustees as an association of persons to the extent of 40% thereof being the part of the income of the trust payable to the two thavazhis aforesaid. The rest of the 60% was exempted under section 4(3)(i).;