Subba Rao, J. - (1.) In the town of Nagore in Tanjore District, Madras State, there is a Durgha consecrated to Hazerath Sayed Shahul Hameed Quadir Ali Ganja Savoy Andavar, who lived some 400 years ago. The said Durgha receives large income from immovable properties endowed to it and the offerings in cash and kind made by the devotees. The Durgha and its properties are now being administered under a scheme settled by the Madras High Court on March 16, 1955. Under the scheme the management of the administration of the affairs of the said Durgha vests hereditarily in 8 trustees called Nattamaigars, who constitute a board of trustees. The said board of trustees shall from among themselves elect one as a managing trustee and he shall hold office for a term of 3 years. The managing trustee shall at the end of each fasli prepare a balance sheet verified by the manager and ascertain the net amount available for payment to kasupangudars, who are the descendants of Saiyed Muhammed Eusoof, the foster son of the saint. The Managing Trustee shall declare the amount due to each of the kasupangu (share) and shall allocate the amount to each kasupangudar (sharer) in the list to be prepared for that purpose in each year. He shall pay the amount to each kasupangudar in accordance with the list. It is said that at present there are 640 kasupangudars. Briefly stated under the scheme the management of the properties of the Durgha, both movable and immovable, vests in Nattamaigars, and the kasupangudars are entitled to the surplus in accordance with their shares.
(2.) For the assessment years 1953-54 and 1954-55 the Income-tax Officer assessed the surplus income in the hands of the Managing Trustee as an association of persons. The Appellate Assistant Commissioner, on appeal, confirmed the same. On further appeal, the Income-tax Appellate Tribunal took the same view. At the instance of the assessee, the Tribunal submitted the following question for the opinion of the High Court of Madras under S. 66 (1) of the Income-tax Act, 1922, hereinafter called the Act: "Whether the provisions of S. 41 can be said to apply to the assessee in this case.' A Division Bench of the High Court, which heard the reference, held that the Managing Trustee qua the surplus income managed the property and deprived the income on behalf of the kasupangudars and that the assessment should be made on the said Managing Trustee to the extent of the interest of each of the kasupangudars in the income received by him. In the result it answered the question in the affirmative and in favour of the assessee. The Commissioner of Income-tax, Madras, on a certificate of fitness granted by the High Court, has preferred the present appeals against the said Order.
(3.) The learned Additional Solicitor General, appearing for the Revenue, contended that the Nattamaigars being trustees, the properties of the Durgha vested in them and, therefore, they or the Managing Trustee administered the trust properties in their own right and not on behalf of the kasupangudars and hence, S. 41 of the Act did not apply, with the result the Income-tax Officer had rightly assessed the surplus income in the hands of the trustees as an association of persons.;