C.S.P.SINGH, J. - (1.) TRIBUNAL , Delhi Bench "B", has in respect of the asst. yrs. 1958 -59 and 1959 -60 referred the following question for our opinion : "Whether, on the facts and in the circumstances of the case, the income from the properties in question covered by the deed of trust dated November 14, 1947, were exempt from income -tax under S. 4(3) of the Indian IT Act, 1922 ?"
(2.) THE facts necessary for the decision of this question may now be stated. One Sri Chhadami Lal Jain, by a deed dated November 14, 1947, purported to create a trust known as "Chhadami Lal Jain Trust". In the preamble to the deed in question, reference is made to the neceesity for building a college hostel and for maintaining an Aushadhalaya in Firozabad district, Agra. The relevant portion of the deed runs of follows : "1. That the name of this trust shall be Chhadami Lal Jain Trust. 2. That the following institutious shall be under this Trust : (a) Boarding House, (b) Dharamshala including temple. (c) Commiercial and Industrial Institute, (d) Jain Religious School, (e) Jain dispensary including Medicine Department, (f) Scholarship Fund, (g) Public Library and Reading Room. 3. That the expenses of the above Trust and those of fulfilling the objects mentioned above, will be met from the income of the following propertis. I shall have no personal interest/ concern with the income of the Trust nor shall it be utilised for my personal use. The same will be utilised solely for the purpose of the Trust." Thereafter, details of three items of immovable property were given viz., (a) a bungalow, (b) properties situated in village Sukhmalpur, Nizamabad, Sub -Division Firozabad, district Agra, and (c) a house situated in Mohalla Chhapati -Kalan Firozabad, district Agra, where a dispensary called "Motilal Jain Aushadhalaya" was running. There was a note attached to this deed which stated that Rs. 18,000 was the maximum annual rental income of the aforesaid properties which were valued at Rs. 6,12,000. The deed pruported to have been written out by the pen of one Master Sunharilal Jain, general attorney of Lala Chhadami Lal. The deed, it appears, was submitted under S. 32 of the Stamp Act to the Addl. Collector and he issued a certificate under the section certifying that a sum of Rs. 28 -2 -0 was the proper stamp duty in respect of the deed and that the deed was duly stamped. This certificate of the Collector is dated 17th November, 1947. The deed was thereafter registered on the 30th December, 1947. The income from the properties which were mentioned in the trust deed was assessed in the hands of the HUF up to the asst. year 1949. In the year 1949 -50, a part of the said income was exempted by the ITO, Firozabad, holding that the trust was exempt under S. 4(3)(i) of the Indian IT Act, 1922. In the asst. yrs. 1958 -59 and 1959 -60, with which the present reference is concerned, the ITO took the view that inasmuch as the income from the property was transferred to the trust and not the properties, no exemption could be granted in respect of the income under S. 4(3)(i) of the Act. On appeal, the AAC confirmed the view of the ITO. The assessee, thereafter, filed an appeal before the Tribunal. The Tribunal considered the trust deed and came to the conclusion that the wordings of the deed were not clear and as such there was scope for doubt as to whether the properties mentioned in the deed were the subject - matter of trust of only the income of the aforesaid properties. It, however, on a consideration of a number of circumstances, which we shall presently set out, came to the conclusion that the intention of the founder of the trust was to create a trust in respect of the properties detailed in the deed and not only in respect of their income. The various circumstances relief upon by the Tribunal to reach this conclusion were: (1) The registration fee paid was on the value of the properties and not on the amount of income of the properties. (2) The renunciation of Chhadami Lal Jain to the effect that he would have nothing to do with the income from the aforesaid property for his life. (3) That fact that the trust had started issuing receipt in respect of various amounts received in respect of the properties. (4) The payment of land revenue by the trust. (5) The fact that the trust applied for mutation in respect of certain] properties. (6) The fact that the Department itself had in the earlier year accepted the position that the properties themselves were the subject of trust.
(3.) AFTER coming to this conclusion, the Tribunal gave two other reasons for holding that the income derived from the properties was exempt from tax. Firstly, it took the view that the right to receive income from the trust properties constituted property within the meaning of S. 4(3)(i) of the Act and was as such exempt under S. 4(3)(i). Secondly, that in any event, the income which the trust received fell under S. 4(3)(ii) of the Act., for ti coould be said that the amounts received were in the nature of voluntary contribution by Lal Chhadami Lal Jain, and there being no dispute that the said income was applied for charitable purposes, the income was entitled to exemption under this section.;