COMMISSIONER OF INCOME TAX Vs. RAMASWAMI PILLAI T P ESTATE OF LATE SRI

JUDGEMENT

(1.) THE following question has been referred to us under section 66(1) of the Income-tax Act for decision :

(2.) THE facts giving rise to this reference are these : One T.P. Ramaswami Pillai who was carrying on business as abkhari contractor died on August 23, 1948, leaving considerable properties valued at nearly Rs. 20,00,000. THEre were also liabilities for very nearly that amount. One of the principal creditors was the income-tax department itself, which had to be paid nearly Rs. 6,34,018. On April 25, 1948, T.P. Ramaswami Pillai executed a will substantially devoting his properties to a number of religious charities. THE will stated that it was the intention of the testator that the charities which he himself was performing during his lifetime and certain other charities should be performed after his death on a permanent basis and for that purpose he appointed two trustees, namely, his son, Sivakumaran, and his brother-in-law, Ramaswamy Pillai. THE relevant clauses of the will are these :

(3.) SIVAKUMARAN and Ramaswamy Pillai filed "Nil" returns during the four assessment years 1950-51 to 1953-54, the year of account of the assessee ending with 30th of September of the previous year. They stated that as they had become the trustee for the various purposes set out in the will and as the trust was one which was wholly for religious and charitable purposes, the income from the properties was exempt from taxation. It was also contended that the trustees had shed their character as executors which character they filed by implication and became trustees for the purposes mentioned in the will and that therefore the assessment should be made under the provisions of section 41 of the Income-tax Act.