Malik, C.J. - (1.) THIS is a reference under Section 66(1), Income-tax Act, made on behalf of the Commissioner of Income-tax against an order made by the Tribunal that the assessee was entitled to exemption under certain provisions of Section 4(3), Income-tax Act.
(2.) THE assessee is the Dayalbagh Satsang Sabha (hereafter called the Sabha in this judgment). This Sabha is a body registered under the Charitable Societies Registration Act (Act No. 21 of 1860). It may be necessary here to mention that in the year 1861 a new faith or religion was founded by Swami Shiv Dayal Singh, the followers of which were known as Satsangis to which Hindus, Mohamedans, Parsis or Christians could be initiated provided they were found to be fit and suitable by the spiritual head. The object of the religion, as described by their Lordships of the Judicial Committee in -- 'Chhotabhai v. Janan Chandra', AIR 1935 PC 97 at p. 99 (A) was to attain true and perfect salvation by the liberation of the spirit from the bondage of mind and matter which can only be achieved by following the practices prescribed by the religion. The history of the growth of this new religion is described in the judgment of their Lordships of the Judicial Committee in Chhotabhai's case (A)', but that judgment is mostly concerned with the sect now known as Swamibagh sect. There was, however, a schism in the year 1907 when the sect with which we are concerned, i.e., Dayalbagh Sect, was founded with Babu Kamta Prasad Sinha as its Guru. The main difference between the Swamibagh and the Dayalbagh sects was in their conception of the position of the Guru. The followers of Swamibagh sect believed that the Sant Satguru was the personification of their deity Radhaswami Dayal (which is the name given to the Supreme Creator) and, consequently all offerings made were held by the Sant Satguru himself. The Dayalbagh sect did not identify the Sant Satguru as Radhaswami Dayal but revered him as a representative of the Supreme Creator on earth who received inspiration from the Creator so that the offerings, made even through the Sant Satguru, did not vest in him personally but were held by him on behalf of the Supreme Creator. The Dayalbagh sect flourished as its Gurus were very capable men who commanded great respect and increased in many ways the activities of the Dayalbagh Satsang with the result that the property now in the possession of the Dayalbagh sect is said to be of considerable value. After the decision of the Judicial Committee in 'Chhotabhai's case (A)', mentioned above, the Income-tax Department wanted to assess to income-tax the then Sant Satguru Sir Anand Sarup for the entire income of the properties whether vested in the Sabha or held by any other society or institution connected with Dayalbagh. The Radhaswami Satsang Sabha, as plaintiff filed a suit in the court of the Additional Civil Judge of Agra against the Secretary of State for India in Council and the Commissioner of Income-tax for a declaration that the properties held by the Sabha were held as religious and charitable trust and were not the properties belonging to the Sant Satguru, and the Commissioner could not, therefore, assess him to Income-tax. The Sant Satguru, Sir Anand Sarup, was impleaded as a defendant to the suit and after his death his widow Lady Sohan Bai and his sons were impleaded as his legal representatives. This suit was decreed on 12-8-1938. A First Appeal was filed in this Court by the Secretary of State and the Commissioner of Income-tax which was dismissed and the decree of the lower court was affirmed.
(3.) AFTER the decision of the suit by the lower court, the Income-tax Officer of Agra started proceedings against the Sabha for assessment for the year 1936-37 which was followed by assessment for the years 1937-38, 1938-39, 1939-40, 1940-41 and 1941-42. The assessee filed appeals against the assessments before the Appellate Assistant Commissioner who held that the assessee was not entitled to the exemption claimed under Section 4(3). Income-tax Act, though he made certain modifications in the amount assessed. There were appeals filed before the Income-tax Appellate Tribunal, which were dealt with by a common order dated 28-2-1948. The Tribunal held that the Sabha was not assessable to Income-tax and was entitled to claim exemption under Section 4 (3) (1), 4(3) (ia) and 4 (3) (ii) with the result that the orders of assessment passed in all the six years mentioned above were set aside. The Commissioner thereupon asked for a reference under Section 66 (1), Income-tax Act, and the Tribunal decided to make a reference and has referred to this Court six questions for decision.;