S. B. Majmudar, J. - (1.) 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 (reported in 1975 Tax LR 829). 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.
(2.) The common respondent, Kamla Towm 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 question. 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 dated of its execution." While at the instance of Revue the Tribunal referred five question 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. Commr. of Income-tax, (1971) 81 ITR 557, that even the unamended clause 3 (19) of the Memorandum of Association of the settler company viz., M/s J. K. Cotton Spinning and 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 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 trusts 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 De. Gauri Shankar centered round the answers of the High Court to Question Nos. 1 and 2 referred on behalf of the assessee-respondent as well as answers of the High Court on Question Nos. (d) and (e) referred on behalf of the Revenue.
(3.) Before proceedings 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.;