- (1.) This appeal under Section 260A of the Income-tax Act, 1961 is at the instance of an assessee and is directed against an order dated 12th November, 2003 passed by the Income-tax Appellate Tribunal, "SMC" Bench, Kolkata, in ITA No.83/K/03 for the assessment year 1997-98 by which the Tribunal affirmed the order of the Commissioner of Income-tax (Appeals) of holding that remuneration payable to Shebaits which is fixed by the founder of the Deed of Settlement does not amount to annual charge on the property and thus, no deduction under Section 24 of the Act is permissible.
(2.) Being dissatisfied, the assessee has come up with the present appeal. The facts giving rise to filing of this appeal may be summed up thus. a) By a Will executed on July 26, 1921 one Sri Kali Das Paul, since deceased, created a Trust dedicating the properties mentioned in Schedule- Ga of the said Will in favour of Sree Sree Iswar Radhakishan Jew which is a regular assessee under the Act. b) For the assessment year 1997-98, the appellant filed its return disclosing the total income amounting to Rs.2,83,210/-. The appellant is the estate of a deity and has income from house property and also earns interests on fixed deposits assessable as income from other sources under Section 56 of the Act. The appellant claimed deduction of an annual charge amounting to Rs.1,44,000/- paid as remuneration to the Shebaits in view of the order passed by this Court dated 5th June, 1978 and 28th March, 1995 in suit No.1586 of 1946 where the remuneration of the Shebaits was enhanced. c) The Assessing Officer made scrutiny and passed an order under Section 143(3) of the Act and while making assessment, he disallowed the claim of Rs.1,44,000/- being the expenditure on remuneration paid to the Shebaits which was increased in view of the aforesaid order passed by this Court in Title Suit No.1586 of 1946. d) Being dissatisfied, the appellant preferred an appeal before the CIT (Appeals) and by order dated 21st October, 2002, the CIT(Appeals) dismissed the appeal with respect to the aforesaid disallowance of the claim of Rs.1,44,000/- and upheld the order of the Assessing Officer. e) Being dissatisfied, the appellant preferred an appeal before the Tribunal below and as indicated above, the Tribunal by the order impugned in this appeal affirmed the order of the CIT (Appeals).
(3.) At the time of admission of the present appeal, a Division Bench of this Court framed the following substantial question of law: "Whether in view of the facts and circumstances of the case the ld. Tribunal ought to have held that the amount of remuneration paid to the trustees as fixed by the Hon ble High Court constitute deductible expenditure from the income of the Trust as per provisions of Section 24(1)(iv) of the Income-tax Act, 1961." Mr. Khaitan, the learned senior Advocate appearing on behalf of the appellant, has strenuously contended before us that by the Deed of Arpannama, the settlor of the debutter property having fixed the remuneration of the Shebaits and such remuneration having been enhanced by this Court in a suit for administration of the Trust, the enhanced amount of remuneration payable to the Shebaits by virtue of the order passed by this Court should be deemed to be a charge on the property owned by the deity and thus, is deductible in terms of Section 24(1)(d) of the Act. Mr. Khaitan submits that the learned Tribunal below committed substantial error of law in holding that the remuneration paid to the Shebaits @ Rs.12,000/- as against Rs.100/- per month as authorized by the Will was not in accordance with the Deed of Settlement. Mr. Khaitan contends that the said amount having been enhanced by the Court, the same should be treated to be a legal remuneration payable to the Shebaits in accordance with law. Mr. Khaitan submits that the finding of the Tribunal that the remuneration of Shebaits does not amount to annual charge is not proper. Mr. Chowdhury, the learned Advocate appearing on behalf of the Revenue has, on the other hand, supported the order passed by the Tribunal below and has contended that in view of the Division Bench decision of this Court in the case of Commissioner of Income-tax Vs. Saradeswar Siva Linga & Ors., 1983 140 ITR 953, there is no scope of any argument that the amount spent as remuneration of the Shebaits should come within the expression "annual charge" within the meaning of the Section 24(1)(iv) of the Act.;