C.S.P.SINGH, J. - (1.) TWO questions have been referred to us by the Income -tax Appellate Tribunal, Delhi Bench 'A', the same being ; '(1) Whether, on a proper construction of the lease deeds dated May 3, I960, and May 5, 1962, and accompanying facts and circumstances of the case, the sum of Rs. 10,000 is the income of the assessee and not that of Chhadami Lal Jain Degree College ? (2) Whether, on the facts and circumstances of the case, the income of Rs. 14,100 from properties purported to have been transferred to Seth Chhadami Lal Jain Trust was not assessable in the hands of the assessee family ?'
(2.) SO far as the second question is concerned, the Tribunal while discussing this question placed reliance on its decision in Income -tax Appeal No. 17157 of 1963 -64 and Income -tax Appeal No. 11774 of 1964 -65. It did not give any separate reasons for the present assessment year for holding that the income could not be included in the assessment of the assessee. A reference in respect of certain questions, arising out of the decision of the Tribunal in respect of those years was made to this court, and has been decided by us [being I.T.R. No. 72 of 1969 - -Commissioner of Income -tax v. Chhadami Lal Jain Trust : [1977]106ITR179(All) ] and we have held that the trust did not purport to create a trust in respect of the properties. That being so, the income which the assessee received from those properties were liable to be included as taxable income. We, therefore, hold that the income of Rs. 14,100 was assessable in the hands of the assessee. The facts relevant for the decision of the first question may now be set out. The assessee, Messrs. Motilal Chhadami Lal Jain, Firozabad, District Agra, is a Hindu undivided family. The assessment in dispute pertains to the assessment year 1962 -63, for which the corresponding previous year ended on July 12, 1961. During the year under consideration, the assessee enjoyed income from property, hire rent, commission, etc. It also owned buildings, furnaces and lands attached thereto on which Messrs. Jain Glass Works (P.) Ltd. has a factory for the manufacture of glassware. On 3rd May, 1960, the Hindu undivided family gave a perpetual lease of the said premises to the said company on an annual rental of Rs. 21,000 plus 1% of the total sales. By Clause (3) of this lease deed, it was provided as follows : 'It is further mutually agreed that the lessee shall make payment of annual rent of Rs. 21,000 in the following manner : (a) Rs. 10,000 to Shri Chhadami Lal Jain Trust Degree College, Firozabad. (b) Rs. 11,000 direct to the lessor, Messrs. Motilal Chhadami Lal, Hindu undivided family, the payment shall be made quarterly (every three months) or as mutually agreed upon.'
(3.) BY another document dated 5th May, 1962, executed between the lessee, Sri Chhadami Lal Jain Trust, and Shri Chhadami Lal Jain Degree College, it was, inter alia, agreed as follows: '...... Therefore, the parties agreed upon the following terms and conditions regarding document and all the parties will abide by the conditions : (1) That we the party No. 1 (Chhadami Lal, son of Lala Motilal, and Bimal Kumar, adopted son of Chhadami Lal) has leased out the following properties on May 3, 1960, to party No. 2 (Jain Glass Works Pvt. Ltd.) for carrying on business of party No. 2 on an annual rent of Rs. 21,000 for ever and party No. 2 has taken over in the capacity of the director of the company. (2) That the party No. 2 shall be paying Rs. 10,000 per annum out of the rental of Rs. 21,000 to party No. 4 in four equal instalments, i.e., Rs. 2,500 quarterly, and similarly balance money of Rs. 11,000 per annum to party No. 1 in four equal instalments of Rs. 2,750 every quarter. (3) That in case party No. 2 makes default in quarterly payment or violates any terms and conditions, the party No. 4 will be authorised to realise rent of Rs. 11,000 per annum through court of law in any manner whatsoever and will have first charge on the under -mentioned property of Rs. 11,000 per annum including expenses and damages from party No. 2 for which party No. 2, Kayam Mukaman, will have no objection.' ;